14 Mar

Daily Watch – Etisalat mulls Nigeria exit strategy, BoI snaps ₦2b Kebbi SME deal

  • A Nigerian court case in which Royal Dutch Shell and Italy’s Eni are seeking to have a government seizure of a long-disputed oilfield lifted has been adjourned until March 17, a judge said on Monday. The court in January ordered the temporary seizing of assets and the transfer of operations of the OPL 245 field owned by Shell and Eni, among others, to the federal government on request of the EFCC financial crime agency. The inquiry is investigating whether the $1.3 billion purchase of OPL 245 involved “acts of conspiracy, bribery, official corruption and money laundering”, court papers seen by Reuters in January showed. It followed inquiries by Dutch and Italian authorities into the 2011 purchase of the block, which industry figures suggest could hold up to 9.23 billion barrels of oil. The oilfield’s licence was initially awarded in 1998 by former Nigerian oil minister Dan Etete to Malabu Oil and Gas, a company in which he held shares. It was sold for $1.3 billion in 2011 to Eni and Shell. A ruling on whether the temporary seizure would be lifted was scheduled to take place on Monday but Malabu Oil and Gas applied to the court to join the legal battle.
  • Abu Dhabi telecoms group, Etisalat, may sell its stake in Etisalat Nigeria, which has defaulted on a $1.2 billion loan but wants the company’s debt restructured before it does so, Reuters reports. The CBN and the NCC on Friday agreed with local banks to pursue a default deal rather than a receivership for Etisalat Nigeria so as not to deter investors and to avoid a wider debt crisis. Etisalat is due to meet with creditors in Nigeria on Tuesday or Wednesday to discuss the default, the source said. It was not clear whether Etisalat, which has a 45 percent holding in Etisalat Nigeria after converting a loan to equity in February, would divest completely. Ahmed Bin Ali, senior vice president of Etisalat, declined to comment. “It is at an early stage,” one source told the news agency of the sale. Etisalat Nigeria signed a $1.2 billion medium-term facility with 13 Nigerian banks in 2013, which it used to refinance an existing $650 million loan and modernise its network. But an economic downturn, a currency devaluation and dollar shortages on Nigeria’s interbank market led to it missing payment, Ibrahim Dikko, vice president for regulatory affairs at Etisalat Nigeria, has said. Banks involved in the loan include Zenith Bank, GT Bank, First Bank, UBA, Fidelity Bank, Access Bank, Ecobank, FCMB, Stanbic IBTC Bank and Union Bank.
  • Nigeria’s debt office opened bidding on Monday for a new two-year savings bond targeted at retail investors and carrying a coupon of 13.01 percent. The Debt Management Office has said the savings bond will help broaden the country’s funding base. It will be available for purchase on a monthly basis and have a maximum subscription of ₦50 million. The bond will pay interest quarterly with a bullet repayment for principal at maturity. The initial offer will close on March 17, the DMO said. Nigeria forecasts it will have a budget deficit of ₦2.36 trillion in 2017, half of which it aims to fund through domestic borrowing. Outstanding local debt rose to ₦13.88 trillion last year from ₦8.83 trillion in 2015 and is set to increase further with an aggressive debt acquisition strategy for 2017 – the government has said it will raise ₦130 billion at its third domestic debt sale this year on March 15 and sell ₦1.13 trillion worth of treasury bills by the second quarter.
  • The CBN sold the U.S. dollar on Monday at its highest level on the official interbank market since August, traders said, pushing down the naira. At the interbank, the local currency fell to ₦306 per dollar from the ₦305.50 level it has traded since last year. Traders said the central bank intervened at ₦305.50 on Monday and then commercial lenders resold dollars at an ₦0.50 margin. A total of $6.25 million was traded. At the black market, the naira ended Monday at ₦455 per dollar.
  • Neimeth International Pharmaceutical, on Monday, said a fire incident which affected its raw materials warehouse at Billings way, Oregun, Lagos may put a dent in its earnings. The company disclosed this in a statement filed with the NSE on Monday. The inferno, which occurred on March 7, consumed the company’s entire stock of raw materials, which as of December 31, 2016, was worth ₦441.29 million. Analysts say the development did not bode well for Neimeth, given that as of the first quarter of 2017, the company posted a loss to the tune of ₦258.36 million after a significant decline of 65 percent in revenue and a 43 percent increase in operating expenses. “We expect this incident to stall manufacturing operations and consequently thwart revenue and earnings growth in the near term,” analysts at Meristem Securities said in a response.
  • The Bank of Industry and the Kebbi State Government have agreed to set up a ₦2 billion loan scheme to support entrepreneurship development in the state. The BoI Acting Managing Director, BoI, Waheed Olagunju stated this during a meeting with Kebbi Governor, Abubakar Bagudu. He said the fund, which would be contributed by each party in an equal sum of ₦1 billion each, would be dedicated to assisting the development of Micro, Small and Medium Enterprises in the state. The BoI boss also maintained that the agricultural sector would be given priority in the disbursement of the fund.