18 Nov

Daily Watch – Solar plants stall on cash concerns, Ashaka Cement exits NSE

  • Major buyers of Nigerian crude in North and South America have slashed their imports from the country, the latest NNPC report shows. According to the report, monthly imports of Nigerian crude by Brazil, the United States and Canada fell to their lowest levels this year in August at 974,577 barrels, 4.14 million barrels and 905,116 barrels, respectively. In July, Brazil bought 2.92 million barrels of oil from Nigeria; the US imported 6.79 million barrels; while Canada imported about 2.99 million barrels from the country. Out of the five regions buying Nigerian crude, only Western Europe and Asia recorded an increase in oil imports from the country in August. Europe, Nigeria’s biggest regional market, increased its imports to 20.77 million barrels from 9.94 million barrels in July. France’s imports rose the most in August as it bought 7.57 million barrels, up from 1.56 million barrels in July. Spain bought 4.34 million barrels, up from 2.53 million barrels in July; while the Netherlands imported 3.95 million barrels of Nigerian crude in August, compared to 1.97 million barrels in July. Asia and the Far East was the second largest regional market of Nigerian crude in August as its imports rose to 14.44 million barrels from 10.62 million barrels in the previous month, the increase led by 12.54 million barrels in oil purchases from India. Nigeria’s oil exports to other African countries fell to 8.89 million barrels from 9.14 million barrels in July. The country’s total oil export stood at 53.61 million barrels in August, up from July’s 46.04 million barrels, the lowest level this year.
  • The fate of the 14 Power Purchase Agreements (PPAs) – commercial terms for power contracts – solar energy developers signed with government-owned Nigerian Bulk Electricity Trader (NBET) on July 20 this year hangs in the balance as the non-availability of the $2.5 billion required to build the solar plants is stalling the take-off of the project. Developers who are obligated to handle the upfront costs of sizing, procuring and installing the solar PV system now have to contend with rising forex and inflation which have pushed the cost of solar infrastructure above initial projections. NBET had reached an agreement with solar developers, endorsing 11.5 cents, which is half of MYTO II, down from 23 cents per kWh for the solar energy sale price, first proposed when negotiations began in 2015. Analysts say that although the PPAs represent a good deal, the power companies may struggle on making reasonable margins on the agreed tariff. The fourteen companies in question include Pan Africa Solar, which is developing a 75Mw solar plant in Katsina; Nigerian Solar Capital Partners (100Mw) in Bauchi; Afrinergia Power Limited (50Mw) in Nasarawa; Motir Dusable Limited (100Mw) in Nasarawa; Nova Solar 5 Farm Limited (100Mw) in Katsina; Kvk Power Limited (100Mw) in Sokoto; Middle Band Solar One Limited (100Mw) in Kogi; LR Aaron Power Limited (100Mw) in the FCT; Nova Scotia Power Development Limited (80Mw) in Jigawa; CT Cosmos (70Mw) in Plateau; En Africa (50Mw) in Kaduna; Oriental Renewable Solutions (50Mw) in Jigawa; Quaint Abiba Power Limited (50Mw) in Kaduna and Anjeed Innova Group (100Mw) also in Kaduna.
  • The CBN and BDCs have agreed to set up US dollar collection centres outside Lagos. The move is aimed at ensuring availability of dollar at the retail end of the foreign exchange market. The CBN and the ruling body of Bureau De Change operators met on Wednesday to discuss on how other operators outside Lagos could purchase US dollars. Consequently, the two regulating bodies agreed to set up three collection centres outside Lagos where qualified BDCs can receive dollars from IMTOs. Aminu Gwadabe, acting president, Association of Bureau De Change Operators of Nigeria (ABCON) told BusinessDay that BDCs will start funding their account next Monday, in anticipation of getting the American currency on Wednesday. Last week, the CBN in collaboration with the security agencies clamped down on BDCs who sold dollar above N400/$.
  • The total comprehensive loss recorded by The Tourist Company of Nigeria significantly increased to ₦1.660 billion in the first-quarter (Q1) ended September 30, 2016, compared to a loss of ₦155.099 million the company reported in the corresponding period in 2015. The company’s condensed unaudited statement of comprehensive income for the three-month period shows revenue declined to ₦679.611 million from ₦789.071 million in Q1’15. The results, presented at the NSE showed TCN earned ₦352.374 million from gaming business in Q1’16 against ₦366.966 million in Q1’15; while from its hospitality business it earned ₦327.237 million in Q1’16, down from ₦422.105 million in Q1’15. Its operating loss spiked to ₦244.288 million in Q1’16 from an operating loss of ₦17.886 million in Q1’15. The company’s finance costs rose to ₦1.416 billion from ₦137.213 million in Q1’15. Its loss per share increased remarkably to 74 kobo from 7 kobo in Q1’15. The Tourist Company of Nigeria is a public, listed company. Incorporated in 1964, the company converted from a private company to its current form in 1994. The Tourist Company of Nigeria is a major player in the gaming and hospitality businesses in Nigeria. It owns and operates the Federal Palace Hotel and Casino in Victoria Island, Lagos. The company also operates a casino, a banqueting facility, and a pool club.
  • Ashaka Cement has opted for a voluntary delisting of its shares from the NSE. In an explanatory note to the exchange, the company’s directors said the voluntary delisting follows the company’s violation of the exchange’s Free Float Deficiency provision of 20 percent. According to the directors, Lafarge Africa currently holds 84.97 percent of Ashaka Cement, bringing the free float that is tradable on the NSE to 15.03 percent compared to the 20 percent stipulated by the exchange. The directors say it is not improbable that given this free float deficiency, the NSE could take enforcement action and initiate a regulatory delisting, given that the free float deficiency is not likely to be remedied, hence the decision to delist and operate as an unlisted company. Over the last five years, there has been little or no trading activity with only 0.20 percent of the shares held by the minority shareholders being traded. AshakaCem minority shareholders may exit prior to the delisting by trading their shares or receive 57 shares of Lafarge Africa in exchange for 202 AshakaCem shares held as at the date of the special resolution approving the voluntary delisting.