14 Jul

Daily Watch – Nigeria will ‘conditionally’ join OPEC cut, Rice imports to end by peak season

  • Agriculture and Rural Development Minister, Audu Ogbeh has announced that Nigeria will stop the importation of rice by December as the country has commenced the large scale production of the essential commodity. Speaking during a visit to the Osun governor, Rauf Aregbesola in Osogbo, he said his ministry has been restructured to meet the nation’s needs for food production so as to bring an end to all forms of food importation. Nigeria spends about $5 million on rice importation daily according to the minister, saying the FG seeks collaboration from the various authorities to improve agricultural practice in Nigeria. According to Ogbeh, “We have no choice in this country now but to get back to go back to the farm and begin to cultivate it so as to be able to free ourselves and the land from poverty because oil and gas can no longer do it.”
  • Etisalat Nigeria has changed its brand name to 9Mobile. Last month, Mubadala, its major investor from the United Arab Emirates, along with Etisalat UAE, pulled out of Nigeria’s fourth largest mobile operator, due to a ₦541 billion debt overhang. On July 4, a new board was appointed at Etisalat Nigeria, to handle the smooth transition of the telecommunications company after a reallocation of shares. Boye Olusanya, former deputy managing director of Celtel Nigeria (now Airtel Nigeria), was appointed as the chief executive officer of Etisalat Nigeria to oversee the transition. The transition of the telco, with 21 million subscribers, was brokered with the aid of the CBN and the NCC, the latter warning the company’s creditors, a consortium of banks, that the licence awarded to Etisalat Nigeria is not transferable, effectively stopping the banks from taking ownership of the company.
  • Nigeria sold 10 and 20-year naira denominated bonds at 16.25 percent, the same as the inflation rate, at an auction on Wednesday, auction data showed on Thursday. The country’s annual inflation eased for the fourth straight month in May to 16.25 percent from 17.24 percent in April, while analysts expect the consumer price index to have declined further in June. However, the DMO sold less of the five-year bond at the auction than it initially offered as the yields on offer failed to attract investors seeking higher returns on the debt, auction data showed. Nigeria’s debt office sold a total of ₦105.96 billion worth of five, 10 and 20-year bonds at the auction. The amount raised was less than the ₦135 billion it had initially proposed to issue at the auction. A total of ₦47.01 billion of the 10-year paper was raised at 16.25 percent from 16.19 percent previously, while ₦55.05 billion worth of the 20-year bond was sold at 16.25 percent, compared with 16.19 percent previously. It sold ₦3.90 billion worth of the five-year debt at 16.24 percent compared with 16.19 percent at last month’s auction. The amount raised was short of the ₦35 billion initially offered by the DMO.
  • Henry Nkem Obi, chief operating officer of the PPMC says Capital Oil chairman, Ifeanyi Ubah, has returned ₦2 billion out of ₦11 billion worth of diverted petroleum products. Obi made the disclosure in testimony on Wednesday at a two-day investigative hearing organised by the House of Representatives Committee on Petroleum (Downstream) on the disappearance of products belonging to the NNPC. He informed the committee that before the diversion of the petroleum products, the NNPC had an agreement with Capital Oil that required both parties to cease from tampering with any product consignment in its custody without the other’s consent. He said after it was discovered that Capital Oil had diverted the petroleum products in its custody, the NNPC reached out to the relevant and sister public agencies. “We’ve since engaged in the process of negotiations for the defaulting party to return the products to the NNPC. Capital Oil has paid N2 billion and negotiations to get the full payment are on-going,” he said. The House Committee requested for Ubah and Capital Oil to appear before it on Thursday to explain their role in the matter.
  • Nigeria has signalled a willingness to cap its oil production to support OPEC’s efforts to ease a global supply glut. The output limit would come into play when Nigeria can stably pump 1.8 million barrels a day, oil minister Emmanuel Kachikwu said. That’s about 100,000 barrels more than it’s currently producing. The country’s output has recovered this year after militant attacks had damaged export pipelines and other facilities. Nigeria and Libya were exempted from cuts agreed to by OPEC and other large producers in an effort to trim a global glut. OPEC decided late last year to reduce its output by 1.2 million barrels a day to 32.5 million starting Jan. 1. Other producers including Russia joined the deal, which was extended through March 2018. Iran was allowed to raise production by 90,000 barrels a day as it was recovering from sanctions. “We still are below the 1.8 million barrel a day benchmark set for us by OPEC,” Kachikwu said. “I think that over the next one or two months, hopefully, we can get to that point where we can say the recovery has been tested, it is systemic and predictable.”