18 Apr

Daily Watch – Power firms warn of ‘centralisation,’ Microfinance loans decline

  • The 11 electricity distribution companies in the country on Monday condemned an alleged plan by the FG to escrow and centralise their revenue accounts over poor market performance with respect to their various monthly remittances to NBET. Speaking under the aegis of their umbrella body, the Association of Nigerian Electricity Distributors, the power firms said such a move would be a nationalisation of the 11 Discos privatised just three years ago. The NBET had on several occasions published reports, as well as announced that the Discos remitted only about 30 percent of their monthly energy invoices in 2016. ANED’s Director of Research and Advocacy, Sunday Oduntan, said in a statement that, “Any attempt to centralise or escrow the Discos’ revenue accounts will be tantamount to nationalisation or expropriation of the distribution companies.” According to him, such an action is contrary to the objectives of the National Electricity Power Policy, 2001 and the Electric Power Sector Reform Act, 2005 of a private sector-owned and managed electricity sector. “It will also send very wrong signals to domestic and international investors that Nigeria is not fully open for private sector investment and that we are still partial to the old habits of nationalisation, preventing the injection of the cheap and sorely needed capital that is critical to the rehabilitation and improvement of the electricity infrastructure.”
  • Deposit Money Banks lacked naira liquidity to bid for the $100 million offered for sale by the CBN on Thursday last week. Findings showed that banks were unable to buy over $39 million out of the $100 million offered for bid by the regulator. Interbank lending rates rose sharply by around 100 percentage points on Thursday, as commercial lenders scrambled for cash to pay for bond purchases and cover their positions. Overnight lending rates rose to around 300 percent from 200 percent at the end of trading on Wednesday, as naira liquidity dried up in the banking system and some banks were forced to borrow from the CBN. The FG raised ₦105.32 billion from bond sales last week, and payment for the debt sale was due on Thursday, draining liquidity in the market and pushing further up the cost of money in the market.
  • Total loans provided by microfinance banks across the country to Micro, Small and Medium Enterprises in the second half of last year amounted to ₦183.96 billion, according to the latest CBN report. The figures, however, revealed that the loans declined by ₦48.7 billion (about 20.96 percent) from the ₦232.73 billion they advanced to the microfinance banks in June 2016 to ₦183.96 billion at the end of December 2016. Microfinance banks total assets decreased to ₦341.68 billion at the end of December 2016, from ₦455.96 billion as of the end-June 2016, reflecting a decrease of 25.06 percent. In the same vein, the report said shareholders’ funds for the microfinance banking sector decreased by 42.91 percent from ₦135.09 billion to ₦77.12 billion as of the end of December 2016. The decrease in shareholders’ funds was largely attributed to losses by the microfinance banks resulting from an increase in non-performing loans.
  • C&I Leasing posted a Profit After Tax of ₦920.9 million in its 2016 operations, against ₦148.8 million recorded in the corresponding period in 2015. Specifically, the firm’s audited results for the period ended December 31, 2016, showed a 519 percent growth in profit after tax, from ₦148.8 million in 2015 to ₦920.9 million in 2015. According to the company, the improved performance was achieved through a combination of cost-cutting measures, more efficient utilisation of assets, in addition to improved asset quality and foreign exchange gains. The group also reported profit before tax of ₦1.0 billion, an increase of 122.5 percent from ₦465.6 million achieved in 2015. Its revenue rose by 16.7 per cent to ₦17.0 billion from ₦14.6 billion reported in 2015 while lease rental income of ₦9.1 billion, up 11.4 percent year-on-year from ₦8.2 billion. The company’s net operating income stood at ₦5.7 billion, up 23.1 percent from ₦4.6 billion in 2015 while shareholders’ funds was ₦8.1 billion, an increase of 42 percent from ₦5.7 billion a year earlier.
  • The Executive Secretary of the Nigerian Content Development and Monitoring Board, Simbi Wabote said about $5 billion out of the $20 billion spent annually in Nigeria’s oil and gas is retained in-country as a result of the implementation of the seven-year-old Nigerian Oil and Gas Industry Content Development Act of 2010. Wabote said the target of the NOGICD Act was to retain $10 billion of the yearly expenditure. All fabrication, engineering, and procurement were done abroad resulting in estimated capital flight of $380 billion in 50 years before the Act’s enactment according to Wabote, while estimated job lost opportunities was in the region of two million. “The narrative then was that nothing can be done in-country. Plants and modules fully fabricated offshore together with the technical, and even non-technical, manpower was ‘imported’ into the country without any structure in place to achieve knowledge transfer. The level of Nigerian Content was far less than five percent,” he said. Wabote said the country currently has five pipe coating yards and two pipe mills out of the four pipe mills targeted before 2010. “Before 2010, only three per cent of marine vessels are Nigerian owned or Nigerian flagged; today, we have 36 percent of marine vessels owned by Nigerians. Before 2010, we had no active dry-dock facilities. The few we had were abandoned and left to rot away. Today, we have four active dry docking facilities in Port Harcourt, Onne, and Lagos. Over 35,000 jobs have been created on the back of implementation of the Act,” Wabote explained.