26 Apr

Daily Watch – Bonga oilfield reopens, Lagos pays some creditors off

  • Nigeria’s distributable government revenues rose to ₦467.81 billion ($1.53 billion) in March from ₦429 billion naira in February due to higher royalties from oil production. Distributable revenue is government income that is shared at various levels of the state including the FG, state governments and local government councils. The revenues were boosted by “a noteworthy increase in revenue from oil royalty,” said a statement. However, the rise was slightly offset by low levels of crude oil production, despite prices rising from $44.74 to $52.86 per barrel in March, the statement said. Revenues from crude exports fell by $6.4 million due to a “decrease in crude oil export volume,” said the statement, adding that production fell largely due to sabotage to pipelines causing leaks and the shutdown of major terminals such as Forcados.
  • Lagos State has redeemed ₦57.5 billion ($183 million) worth of local currency bonds it issued seven years ago, it said on Tuesday. Finance Commissioner, Akinwunmi Ashame, said the state was paying off its debts to create space for new issuance to raise funds for infrastructure investment. He said the state has saved more than ₦103 billion in a sinking fund to redeem bonds maturing in 2019, 2020 and 2023. Lagos, which accounts for around a third of Nigeria’s economic output, sold the bonds in 2010 to fund badly-needed infrastructure projects, Ashade said. Lagos redeemed ₦167.5 billion in bonds last year.
  • Production from the Bonga oil field, Nigeria’s first deepwater development, has resumed following the completion of the turnaround maintenance on the offshore field. Early last month, Shell Nigeria announced the shutdown of the field to enable it to commence the maintenance exercise. The company’s spokesman, Precious Okolobo, said that the maintenance was completed on schedule, with the first well opened up on April 8, adding that production was ramping up. A major focus of the maintenance was the Bonga Floating, Production, Storage and Offloading vessel, which is at the heart of the Bonga operations. The Bonga FPSO has the capacity to produce 225,000 barrels of oil and 150 million standard cubic feet of gas per day. Shell operates Bonga in partnership with Esso; Total and Nigerian Agip under a Production Sharing Contract with the NNPC.
  • Nigerian Breweries has announced plans to intensify its local sourcing of raw materials as well as seek further improvements in its sorghum value chain. The brewer also noted that it would be consolidating its earnings and profitability through improved market penetration with its products, adding that it would carefully assess its price adjustment strategy in ensuring a balance in the management of input costs and price consumers are willing to pay for its products. At a current sourcing level of about 50 percent of its raw materials locally, the brewer is optimistic of achieving its 60 percent target before 2020. The Managing Director of Nigerian Breweries, Nicolaas Vervelde, said the company is making progress with its partners – International Fertilizer development Centre (IFDC), and Psaltry International, a local processing company, on value extraction from cassava. Vervelde said Nigerian Breweries was also making progress in the deployment of new hybrid sorghum varieties, adding that yields have increased over time in line with the firm’s growth projections.
  • Stanbic IBTC Holdings posted another impressive performance despite the headwinds in the economy. The lender, which recorded a ₦28 billion profit after tax (PAT) for the 2016 financial year, consolidated on the performance, recording improved results for the first quarter (Q1) ended March 31, 2017. The bank recorded gross earnings of ₦47 billion in 2017, up by 35 percent from ₦34.8 billion recorded in the corresponding quarter last year. Net interest income rose by 18 percent from ₦17.1 billion in Q1, 2016 to ₦20.2 billion. Operating expenses followed the upward trend rising from ₦14.8 billion to ₦17 billion. However, Stanbic IBTC grew its profit before tax by 78 percent from ₦10.5 billion to ₦18.6 billion, while profit after tax soared by 101 percent from ₦8.0 billion to ₦16.1 billion. Net margin improved to 34 percent, compared with 23 percent in Q1, 2016. Commenting on the result, CEO Yinka Sanni, said the group “achieved significant growth in profit after tax by over 100%, despite the challenging trading environment which was characterised by challenges with FX liquidity, difficult credit environment and an increasing cost of operations.”