02 Feb

Daily Watch – FG reaches truce over ALSCON, Nigeria rank 158 in KPMG index

  • The head of the NNPC has called for private investment to help the group repair and build more pipelines across the country. Maikanti Baru told the new board of downstream subsidiary Nigerian Pipeline Storage Company that the company should form partnerships with the private sector and double the number of its pipelines over the next 10 years. “Your work also is to look at refurbishing these pipelines and storage along a PPP arrangement by getting willing private companies to invest in these pipelines,” Baru said at a ceremony to inaugurate the NPSC board. Baru also said the NNPC was ready to engage security agencies to protect pipelines against any act of economic sabotage. Attacks on energy facilities, including pipelines in the Niger Delta oil production heartland, pushed the country into recession in 2016.
  • The FG reached an out-of-court settlement with Russia’s United Co. Rusal over the sale of the Aluminium Smelter Co. of Nigeria, ending a decade-long ownership dispute over the company. The parties agreed Alscon would resume operations in six months as part of the settlement, Mines and Steel Development minister, Kayode Fayemi announced in Abuja. The smelter had been idled since 2012. “We feel that apart from the legal issues, Rusal is actually best placed to be able to reactivate the plant,” Fayemi said. The FG now owns a minority 20 percent of the smelter and Rusal 80 percent, the minister said. These numbers were disputed by Rusal whose spokesperson said the company retained 85 percent and Nigeria 15 percent. The settlement follows a decision in September to opt for mediation after a Supreme Court ruling in 2012 that voided the sale of Alscon to Rusal. The court ruled that the BPE did not have the right to cancel an earlier sale of the smelter to Bancorp Financial Investment Group in 2007.
  • Nigeria raised ₦252.88 billion ($827 million) at a treasury bill auction on Wednesday as investors piled demand into the higher yielding one-year debt, traders said on Thursday. The CBN sold ₦177.22 billion of one-year debt at a rate of 13.7 percent. It auctioned ₦6.09 billion of three-month debt at 12 percent and ₦69.57 billion of six-month maturity debt at 13.65 percent. Total subscription stood at ₦355.2 billion. Traders said some offshore funds participated in the auction, helping boost dollar liquidity on the currency window for investors to keep naira rates stable. The bank has maintained tightened liquidity to attract foreign buyers. Nigeria’s debt office plans to raise $2.5 billion through Eurobonds in the first quarter to refinance a portion of its domestic treasury bill portfolio at lower cost. It repaid ₦198 billion worth of treasury bills in December, instead of rolling them over, to lower costs. Investors bid as high as 18.5 percent for the one-year paper. However, the government has been offering debt at lower yields to track declining inflation, which fell for the eleventh straight month in December to 15.37 percent.
  • Nigeria dropped five places to be ranked 158 in a new report released by audit and financial advisory firm KPMG. The report, titled Growth Promise 2018, ranked countries based on macroeconomic stability, institutional strength, openness and human capital. Nigeria ranked 158 of the 181 countries. Mauritius, Botswana and Rwanda were the highest ranked African countries in the report. The country also got a score of 7.45 on macroeconomic stability, which considers government debt and government stability. This was the third highest score obtained by an African country on the chart. Nigeria had a score of 1.27 on human development, which considers education and life expectancy. In the openness category, which considers total trade and foreign direct investment, Nigeria was rated 0.29. For infrastructure which considers financial services; transport and technology, Nigeria got 2.24. Nigeria also had 3.64 in the quality of institutions, which considers regulatory quality; judicial independence; government effectiveness; corruption; business rights and transparency of government policy-making.