12 Apr

Daily Watch – FG increases tomato tariff, Power supply costs Nigeria dear

  • Nigeria’s is currently losing $29.3 billion yearly due to inadequate power supply, according to the draft document of the Power Sector Recovery Programme. Capacity utilisation among companies is very low because of lack of power, as they have to spend about 40 percent of their production cost on generating electricity for themselves. Power challenges and foreign exchange difficulties were cited as major reasons why 272 manufacturing firms shut operations in Nigeria last year. The PSRP is said to be the government’s response to yawning electricity gaps which account for heavy dependence on generators, raising daily consumption of petrol to 49 million litres and diesel at 11 million litres last month. According to the World Bank’s Africa Infrastructure Country Diagnostic and a 2015 McKinsey report, African countries are losing 1% of GDP per annum due to poor power infrastructure. Nigeria’s estimated GDP loss from 1999 to 2015, which was used in computing the yearly economic loss, shows that the country has lost ₦71 trillion due to under- investment in power infrastructure. The national electricity grid collapsed on Tuesday that resulted in a drop in power generation from over 3,000 megawatts to just 108.7MW. Power generation plunged from 3,069.5MW on April 8 to 108.7MW on April 9 and moved up marginally to 240MW the following day. Power ministry officials said heavy rainfall at three transmission stations led to load reduction that prompted high frequency in the system which subsequently resulted in the transmission line tripping at Onitsha, Benin and Alaoji transmission stations.
  • The FG on Tuesday raised the tariff on imported tomato concentrate to 50 per cent. The government also imposed an additional levy of $1,500 on each metric tonne of tomato concentrate imported into the country. Before now, the tariff on tomato concentrate was 40 percent, while the duty payable was put at 10 percent of the value based on the Common External Tariff by the Nigeria Customs Service. The Minister of Industry, Trade and Investment, Okechukwu Enelamah said the move was in line with the government’s objective of boosting tomato production, improving the value chain and attracting investment. The new policy, according to Enelamah, is expected to create at least 60,000 additional jobs in fresh fruit production and processing.
  • The Consumer Protection Council has released the outcome of its investigation into the level of additives contained in Fanta, Sprite as well as two other soft drinks with a recommendation that the current standards in respect of Benzoic acid limits in soft drinks be reviewed. The council’s investigation followed the public outcry that trailed a Lagos court judgment between Fijabi Adebo Holdings, the Nigerian Bottling Company and NAFDAC. The CPC Director-General, Dupe Atoki explained that the level of two additives, benzoic acid and sunset yellow, had been confirmed through laboratory analysis to be within the Nigerian Industrial Standards limits. Atoki said although the additives were within the NIS limits, there were issues of inconsistencies in benzoic levels in the samples of Fanta Orange and Sprite, Mirinda, produced by the 7UP Bottling Company, and Lucozade formerly manufactured by GlaxoSmithKline.
  • The naira eased 1.2 percent against the dollar on the black market on Tuesday despite the CBN’s attempt to improve dollar supply and prop up the local unit. On Monday, the bank auctioned $100 million in forwards to be settled between one week and 30 days’ time, as against 60-day contracts it had written previously, shortening the settlement period on forward contracts to inject liquidity. The naira was quoted at ₦410 per dollar on the black market on Tuesday, weaker than the ₦405 it closed at the previous day. It closed flat on the official market at ₦306.10.
  • May & Baker has stated that a 420.5 percent increase in tax led to a 143 percent reduction in profit before tax growth, resulting in a net loss in the 2016 financial year. According to the company, the highlights of its audited report and account for the year ended December 31, 2016, submitted to the NSE showed that the healthcare group recorded steady growth across key fundamentals, except profit after tax. Specifically, the firm’s profit before tax rose by 142.9 percent from ₦142.40 million in 2015 to ₦345.94 million in 2016. However, taxation surged from ₦74.36 million in 2015 to ₦387.03 million in 2016. This, according to the company, displaced a net profit of ₦68.03 million in 2015 to a net loss of ₦41.09 million. It explained further that the huge tax expense resulted from a cumulative of back duty tax of ₦128 million, deferred tax charge of ₦208 million and current tax of ₦51 million. The directors recommended the distribution of ₦58.8 million as cash dividend for the 2016 business year. Shareholders will receive a dividend per share of 6.0 kobo if approved by shareholders at the firm’s yearly general meeting.
  • GTBank’s shareholders have approved a total dividend payout of ₦58.89 billion for the 2016 financial year. The shareholders gave the approval at the bank’s AGM in Lagos. They also hailed the management of the bank for its policy of constantly paying them a dividend. During the 2016 financial year, GTB’s board of directors declared and paid an interim dividend of 25 kobo per share and a final dividend of ₦1.75, bringing the total dividend per share to ₦2 per share, which amount to a total dividend payout of ₦58.89 billion. Speaking to shareholders, the managing director of the bank, Segun Agbaje, said that the bank was leading the future of payments and service delivery with the 737 platform it introduced a year ago. The bank’s 737 payment and service delivery platform is a USSD-based service delivery channel that provides simple banking for customers through mobile phones. The bank boss said within a year of the introduction of the service, the bank recorded an uptake of over three million customers and ₦1 trillion in transactions on the platform.