21 Apr

Daily Watch – FG to negotiate CFTA, NLNG posts lowest revenue since 2009

  • While Nigeria’s total current debt is relatively low compared to GDP, the interest rate payment is not sustainable with current revenue flows, the World Bank has said. Senior Economist at World Bank office in Nigeria, Yue Man Lee, said this in Abuja on Wednesday on the sidelines of the release of the 15th edition of Africa’s Pulse, an analysis of issues shaping the continent’s economic future. For interest payments to be sustainable, according to Lee, the country either has to increase revenue or work towards balancing the debt profile to make way for more foreign debt rather than allow the continued dominance of local debt with high-interest rates.
  • Nigeria LNG, the biggest gas exporter in the country, said it earned a total of $4.723 billion last year, the lowest in seven years. The company, which was created to harness the nation’s vast natural gas resources and produce Liquefied Natural Gas and Natural Gas Liquids for export, saw its revenue peak at $11.592 billion in 2012. The NLNG is owned by the FG, represented by the NNPC (49 percent), Shell (25 percent), Total LNG Nigeria (15 percent) and Eni (10.4 percent). Following the sharp decline in crude oil prices, NLNG’s revenue dropped from $10.791 billion in 2014 to $6.843 billion in 2015. Dividends to the NNPC plunged from $1.044 billion in 2015 to $356.127 million last year, the lowest in 10 years, according to the ‘Facts and Figures on NLNG 2017’ released on Wednesday. The international oil companies got $380.959 million in dividends last year, down from $1.117 billion in 2015. NLNG CEO, Tony Attah, while presenting the document in Lagos, noted that the company took a beating from the fall in crude oil prices in the global markets along with drying demand from Asia where appetite had grown since 2015 because of the Fukushima nuclear disaster in Japan.
  • Nigeria’s trade with the United States rose by 70.44 percent from $799.93 million in January and $1.36 billion in February, according to the latest U.S. Census Bureau data. Data obtained from the Fact Sheet on Nigeria – U.S. Relations, showed that petroleum products dominated the U.S. import from Nigeria during the period in review. For instance, U.S. crude oil import from Nigeria stood at $936.65 million while gasoline import was $83.43 million. Petroleum gases, other gaseous hydrocarbons totalled $16.94 million. The previous year, there were no imports in this category. Also, nitrogenous fertilisers totalled $16.66 million, but there were no imports in this category the previous year. According to the data, through February, 22 Customs districts posted trade surpluses with Nigeria while 13 had deficits. This compares with 25 surpluses and nine deficits for the same period a year ago.
  • The FG has inaugurated a twenty-one-man national committee to negotiate the Continental Free Trade Area (CFTA) deal. According to the government, the move will help to moderate, diversify and grow the Nigerian economy as well as rebrand infrastructure for the country’s trade policy and produce welfare gains and development while reinforcing the process of national economy recovery. The Minister of Industry, Trade and Investment, Okechukwu Enelamah said the team will also identify the opportunities and challenges facing the country in trading with other African countries. At a 2012 African Union Heads of State and Government summit, it was decided that a Continental Free Trade Area would be created, as part of a plan to industrialise the continent by 2063 as well as boost Intra-Africa trade which currently stands at a paltry 19 percent.
  • Presco, a fully integrated palm oil company, will pay a dividend of 150 kobo per share for the year ended December 31, 2016, showing an increase of 50 percent compared with 100 kobo paid in the previous year. The improved dividend follows impressive annual results. According to them, Presco recorded gross revenue of ₦15.7 billion, showing an increase of 50.4 percent from ₦10.4 billion in 2015. Cost of sales rose by 15.5 percent. Gross profit rose by 70.5 percent from ₦6.6 billion to ₦11.3 billion. Operation expenses rose by 46.6 percent to ₦4.6 billion, from ₦3.1 billion, while operating profit jumped by 92 percent to ₦6.7 billion, from ₦3.5 billion in 2015. However, gains on biological assets of ₦24.7 billion recorded in 2016, compared with ₦1.1 billion in 2015, shot the profit before tax by 641 percent to ₦31.2 billion compared with ₦4.2 billion in 2015. Although tax rose significantly from ₦1.7 billion to ₦9.5 billion, profit after tax soared by 772 percent to ₦21.7 billion from ₦2.5 billion in 2015. Hence, the directors have recommended a dividend of 150 kobo per share. Presco is a subsidiary of Siat s.a., a Belgian agro-industrial company, that specialises in industrial as well as smallholder plantations of tree crops. The company is a fully integrated agro-industrial establishment with oil palm plantations, palm oil mill, palm kernel crushing plant and vegetable oil refining plant.