11 Oct

Daily Watch – PMB asks for yet more loans, Oranto scores big in Uganda

  • The International Monetary Fund says Nigeria’s economy will grow faster than South Africa’s in 2017. This is a reverse from the fund’s earlier projection in July that South Africa’s economy will grow by 1% in 2017 while Nigeria will experience a 0.8% economic expansion. Speaking on Tuesday during the unveiling of the World Economic Outlook report at the organisation’s headquarters in Washington, Maurice Obstfeld, IMF’s chief economist, said rising political uncertainty has reduced consumer and business confidence in South Africa. While Nigeria’s projected growth remains at 0.8%, South Africa’s contracted to 0.7%. “Nigeria is expected to emerge from the 2016 recession caused by low oil prices and the disruption of oil production. Growth in 2017 is projected at 0.8% owing to recovering oil production and ongoing strength in the agricultural sector. However, concerns about policy implementation, market segmentation in a foreign exchange market that remains dependent on central bank interventions (despite steps to liberalise the foreign exchange market) and banking system fragilities are expected to weigh on activities in the medium term.”
  • President Muhammadu Buhari has sought approval from lawmakers in the upper chamber of parliament for $5.5 billion of foreign borrowing, according to a letter read in the Senate on Tuesday. Nigeria expects a shortfall of $7.5 billion in its record ₦7.44 trillion ($24.33 billion) 2017 budget, which it plans to offset with foreign loans. The $5.5 billion of external borrowing would include $2.5 billion for plugging part of the 2017 budget deficit, and $3 billion for refinancing maturing domestic debt with dollar borrowing, to lower costs and improve the country’s debt position, the president’s letter said. “Current market conditions are considered more favourable than at the time of Nigeria’s last issuances of the Eurobond in March 2017,” said the letter. The government aims to raise $2.5 billion through Eurobonds, if possible, the letter said, adding that Diaspora Bonds will be issued to offset any shortfall. A further $700 million of borrowing from “multilateral sources” is being proposed, it said without specifying those sources.
  • Three aviation unions on Tuesday gave the FG a 15-day ultimatum to halt its planned concession of the four viable airports in the country. The unions, which gave the ultimatum at a joint news briefing in Lagos, threatened to shut down the aviation industry if government failed to accede to their demands. The unions are the Air Transport Services Senior Staff Association of Nigeria and the National Union of Air Transport Employees and its ally, the Nigeria Union of Pensioners. The General Secretary of NUATE, Olayinka Abioye said the ultimatum was the unions’ last resolve to force the Minister of State for Aviation, Hadi Sirika, to fully involve them in the concession process. “Immediately at the expiration of the 15 days ultimatum, we are going to shut down the industry. We want the minister to talk to us and share ideas with us on what they want to concession and how it will affect our members,” Abioye said. The government had initiated moves to concession the Lagos, Abuja, Kano and Port Harcourt Airports to enable them meet international standards.
  • Oranto Petroleum has signed two production sharing agreements with Uganda to explore for oil and gas around Lake Albert, the company said on Tuesday. Oranto was among several companies, including Australia’s Armour Energy, that last year bid in Uganda’s first competitive oil exploration licensing round. “We are excited to enter this agreement … Lake Albert is home to some prime petroleum acreage,” Prince Arthur Eze, chairman of Oranto Petroleum, said in a statement. The deal covers the Ngassa Shallow Play and Ngassa Deep Play exploration blocks located near the southern part of Lake Albert, Uganda’s ministry of energy and mineral development said. Uganda discovered oil in 2006 in the Albertine rift basin along its border with the Democratic Republic of Congo. Recoverable crude reserves are estimated between 1.4 and 1.7 billion barrels and the first production is due in 2020.