11 May

Daily Watch – Nigeria needs ‘right-of-way- reform, Negotiations set to begin over rail

  • The CBN plans to auction an undisclosed amount of dollars on Wednesday through book building to settle a backlog of demand for airlines, fuel and raw material imports, traders said. Traders said the central bank had asked lenders to bid for hard currency for specific sectors in efforts to improve dollar liquidity. It said a cut-off rate at the auction would be applied at the marginal rate and that obligations due on fuel imports must have matured before Jan. 31 to qualify for the intervention. The bank has been intervening aggressively since February to try to narrow the spread between the official and black market rates and has sold more than $4 billion. In theory, greater liquidity should lead rates to converge. The naira was quoted at ₦381.71 per dollar at the investor window, according to the market regulator FMDQ OTC Securities Exchange. It fetched ₦305.60 in the interbank window and ₦390 on the black market.
  • Nigeria will enter negotiations with GE over a railway project, transport minister Rotimi Amaechi said on Wednesday. Economic growth has been hampered for decades by its dilapidated rail network, built mainly by British colonial rulers before independence in 1960. U.S. company GE had submitted the only bid for the $2 billion project connecting northern cities to the south of the country, according to a procurement process adviser, doing so in partnership with Transnet of South Africa, Dutch-based APM Terminals and China’s Sinohydro Consortium. “Cabinet has approved that we commence negotiations,” Amaechi told reporters after a cabinet meeting. The concession will cover about 3,500 km of existing narrow-gauge lines from Lagos to Kano in the north and from Port Harcourt to Maiduguri in the northeast. The Senate said in November that it would investigate the railway concession over possible violations by Nigerian officials.
  • Nigeria’s neighbours, Benin and Niger have paid a total of $159,773,116.61 (₦48.84 billion) as electricity charges to the Nigeria Bulk Electricity Trading, the FG has said. Both countries had a combined balance of $92,315,986.20 (₦28.22 billion) to pay to the NBET. The payments made were remitted to the power generation companies and service providers in Nigeria. The Ministry of Power, Works and Housing disclosed this in the communique issued at the end of the 15th monthly meeting of the minister, Babatunde Fashola, with power sector operators in Jos. The ministry stated that the two African countries made the payments through their power companies, NIGELEC of the Republic of Niger and Community Electric du Benin of the Republic of Benin.
  • The National Pension Commission on Tuesday released the accrued benefits of retired workers of federal Ministries, Departments and Agencies who retired from service between January and August 2016. The total amount released for payment of the retirees was about ₦54 billion, according to the Punch newspaper. PenCom said that arrangements were being made to pay the next batch of retirees consisting of those who retired between September and December 2016. Federal workers who had retired since January 2016 had, on March 16, staged a protest at the finance ministry building over their unpaid pensions, estimated at about ₦200 billion.
  • Cement group LafargeHolcim will take part in a capital increase by Nigeria-based Lafarge Africa to avoid diluting its nearly 73 percent stake. Lafarge Africa wants to raise ₦140 billion ($460 million) in fresh equity and convert some loans into shares as part of a planned rights issue after it reported losses last year. A company spokesman in Switzerland said the parent’s stake was around 72.6 percent, adding “we do not expect to be diluted”. The process will be launched once shareholders have approved the transaction at the annual meeting in June and is expected to be finalised by October at the latest, he added. The move aimed to reduce dollar-denominated debt exposure and simplify the ownership structure in Nigeria.
  • Nigeria’s government should simplify taxes and reduce fees involved in laying fibre optic cables to encourage the development of infrastructure for the technology industry, Google’s manager in the country said. Juliet Ehimuan-Chiazor told Reuters boosting the technology industry would help diversify Nigeria’s oil-dependent economy. The government aims to create 2.5 million new technology jobs in 2017-2020 via a state-run training programme. “The private sector can play a very strong role,” Ehimuan-Chiazor said, adding that internet service providers regularly complained that multiple taxes at the federal and state level raised the cost of expanding the required infrastructure. “Where the government can help is just removing some of those obstacles – for example, bringing down right of way fees and removing this challenge around multiple taxation,” she said. Right of way fees are the charges paid when securing permission to lay cables. A reduction of fees by Lagos state government helped bring fast broadband to Yaba, a district of commercial capital that is now Nigeria’s technology hub. Ehimuan-Chiazor said Google had laid fibre optic cables in Uganda’s capital Kampala and in Abidjan in Ivory Coast but said it had no similar plans in Nigeria.