CBN introduces guidelines for non-interest financial institutions

The Central Bank of Nigeria has introduced guidelines on the management of investment account holders for Non- Interest Financial Institutions in Nigeria.

The regulatory body said the objectives of the guidelines was to provide the minimum standard to be met by NIFIs operating in Nigeria before they could recognise Profit Sharing Investment Account Holders deposits as risk absorbent and deduct same from the computation of Risk Weighted Assets.

This would enable them to calculate the Capital Adequacy Ratio as specified in the guidance notes on regulatory of capital for NIFIs in Nigeria issued by the CBN.

It stated that the guidelines complemented the regulations for NIFIs in Nigeria issued by the CBN such as guidance notes on calculation of capital requirements for NIFIs;  Guidelines on income soothing for NIFIs; and guidance notes on disclosure requirements to promote market discipline for NIFIs.

According to the CBN, NIFIs mobilise large percentage of their funds using Mudarabah and Wakalah contracts.

In Mudarabah, the bank is acting as the Mudarib (entrepreneur) and the fund providers as the Rabb-ul-Mal otherwise called PSIAHs.

It  explained that, “In Wakalah, the bank acting as Wakeel (investment agent) for the PSIAHs, earns a Wakalah fee, and an incentive fee in the event of the realised profit exceeding an agreed threshold, and the agreed profit goes to the PSIAHs.

“Mudarabah contract by its nature entails the sharing of profit between the contracting parties based on pre-agreed profit sharing ratio and the bearing of loss by the fund provider except in cases of proven negligence, misconduct or breach of contract by the entrepreneur in which case the entrepreneur would bear such loss.”

The CBN explained that NIFIs in Nigeria essentially maintained two different types of Mudarabah accounts used for deposit mobilisation “which are Restricted Investment Accounts and Unrestricted Investment Accounts.”

Under the RIA contract, it added, the bank would act strictly based on the investment mandate of the customer, while under URIA contract, the bank was free to invest the funds as it deemed fit.

In practice, NIFIs co-mingle such PSIA deposits with other funds like shareholders’ funds and current account deposits into different pools and invest in profitable ventures.

“Being an equity-based contract, the PSIAHs are expected to bear the credit risk of any counterparty the funds are invested with, as well as the market risk of the assets in which the funds were invested,” it stated.

DPR seals three filling stations in Oyo

Following reports that some filling stations in Oyo State are hoarding Premium Motor Spirit, otherwise known as petrol, the Department of Petroleum Resources has sealed three filling stations in Ogbomoso area of the state.

The Punch had reported on Sunday that some filling stations in Ajegunle, Saki, Oke Ogun area of the state were either selling petrol at N160, above the pump price of N145, or shut their gates against motorists, in anticipation of fuel increase.

The Operation Controller of DPR, Ibadan Field Office, Mr Oluyemi Olaonipekun, told journalists on Monday that more stations were on the watch list.

He explained that the filling stations were sealed in Ogbomoso East when operatives of the DPR who were sent to the field discovered that the three stations had supply of PMS, which they refused to dispense.

Olaonipekun stated that the personnel of DPR were sent to every part of Oyo State as a result of artificial scarcity and panic buying of petrol experienced in Ibadan, and other parts of the state last weekend.

CBN to auction N58.5bn Treasury bills this week

The Central Bank of Nigeria will conduct a primary market auction on Treasury bills this week, offering a total of N58.5bn across the 91-day (N5.8bn), 182-day (N29.2bn) and 364-day (N23.4bn) tenors.

The 91-day tenor recorded the last stop rate of 10.29 per cent on Friday, the 182-day tenor recorded the last stop rate of 12.6 per cent, while the 364-day tenor had the last stop rate of 12.85 per cent.

The Treasury bills secondary market sustained its bullish run into the second trading week of the second quarter of 2019.

Analysts at Afrinvest Securities Limited said the bullish trend was sustained due to the absence of Open Market Operation auctions as well as N33bn worth of maturities that bolstered the system last week.

Consequently, average yields across all tenors declined by seven basis points week-on-week to settle at 13.3 per cent from 13.4 per cent the previous week.

Although buying interests were witnessed across all tenors, more investors positioned at the shorter end of the curve, causing yields on short-term instruments to contract by 20bps week-on-week, while the medium- and long-term bills depreciated by 17bps and 10bps week-on-week, respectively.

Analysts at Afrinvest said, “Going into the week, we expect to see a boost in system liquidity on the back of OMO and T-bills maturities worth N107.4bn and N58.5bn, respectively.

“On the back of these inflows, we anticipate that the CBN will resume its liquidity management via OMO auctions, which will keep yields around current levels across the curve.”

Investors were advised to take advantage of T-bills with attractive yields, as well as available OMO bill offerings.

In view of the moderating T-bills yields, the commercial papers from corporates resumed last week as Nigerian Breweries Plc announced its plan to raise N15bn in the first and second series of its N100bn commercial paper programme to support its short-term funding requirements.

Meanwhile, activities in the bond market maintained a bearish outlook as the average yield trended northwards by 12bps to settle at 14.2 per cent last week due to sell-offs experienced across most segments of the curve.

However, major sell-offs persisted on the May-19 and Jul-21 instruments.

Analysts said a quiet trading session in the bond market was anticipated as investors await clearer policy directions.

I’ll advise Buhari on fuel subsidy, says Kachikwu

 Against the backdrop of the International Monetary Fund’s call for the removal of fuel subsidy in Nigeria, the Minister of State for Petroleum Resources, Dr Ibe Kachikwu, has said he will advise President Muhammadu Buhari on what to do.

The Managing Director, IMF, Christine Lagarde, had during a press conference last week at the joint annual Spring meetings with the World Bank in Washington DC urged the Federal Government to remove fuel subsidy, describing it as the right thing to do.

Lagarde had said that with the low revenue mobilisation that existed in Nigeria in terms of tax to Gross Domestic Product, it was important for the country to remove fuel subsidies and move available funds into improving health, education, and infrastructure, among others.

Kachikwu, while fielding questions from journalists on the sidelines of the annual international conference of the Oil and Gas Trainers Association of Nigeria in Lagos, said the removal of fuel subsidy in 2016 helped the country.

The Federal Government had on May 11, 2016 announced a new petrol price band of N135 to N145 per litre, a move that signalled the end to fuel subsidy payment to private marketers.

But the government later resorted to subsidy regime following the increase in the landing cost of petrol on the back of rising crude oil prices, with the Nigerian National Petroleum Corporation, the sole importer of the product, bearing the burden of subsidising it.

“There is no doubt about the logic of trying to remove subsidy. However, the reality is that Nigeria has a very unique situation. You see the reaction immediately from the Nigeria Union of Petroleum and Natural Gas Workers and the Petroleum and Natural Gas Senior Staff Association,” Kachikwu said.

NUPENG and PENGASSAN had in a joint statement on Sunday described as poisonous the IMF’s advice to the Federal Government on fuel subsidy.

Kachikwu added, “So, any president who is going to make that decision will have to weigh all the factors. I did this in 2016 when we took out what was then the subsidy because without that, the country would not have survived

“But things have changed since then. So, I need to go back, sit down, look at the [IMF] advice, look at the circumstances, and advise Mr President on what I think is best for the country.”

The Minister of Finance, Ms Zainab Ahmed, said during a ministerial press briefing at the 2019 IMF and World Bank Spring Meetings that the Federal Government had “no imminent plan to remove fuel subsidy.”

“We are here to discuss with the global community on various policy issues. One of the issues that always come up in the report, especially the IMF World Economic Outlook report, is how we handle fuel subsidies. So, in principle, the IMF will say fuel subsidies are better removed so that we can use the resources for other important sectors. And in principle, that is a fact to do so,” she had said.

FG shortlists four firms for Afam Power, Yola Disco’s sale

 The Federal Government has given its nod to three firms to proceed with the financial bids opening in the bid to acquire Afam Power Plc, an electricity generation company.

It has also given approval to one firm, Quest Electric Nigeria Limited, to proceed with financial bid opening for Yola Power Plc, anelectricity distribution company covering the North-eastern part of the country.

Head of Public Communications at the Bureau of Public Enterprises, Amina Othman, disclosed these in a statement made available to our correspondent in Abuja on Monday.

According to Othman, the National Council on Privatisation chaired by the Vice-President, Prof Yemi Osinbajo, gave the approvals at its first meeting in 2019 in Abuja last week.

Another major decision taken by the council was the decision to put up Nigeria Communications Satellite Limited, operator of Nigeria’s communications satellite, for privatisation through a strategic core investor sale.

A major characteristic of the decision on Afam Power Plc is the offering of 100 per cent equity to the prospective core investor. Government had retained about 40 per cent stake in the other generation and distribution companies that were earlier sold by the government in 2013.

Othman said, “The NCP has granted approval to Diamond Stripes Consortium, Transcorp Power Consortium and Unicorn Consortium to proceed to the financial bids opening stage for the acquisition of 100 per cent shares in the Afam Electricity Generation Company (Afam Power Plc and Afam Three Fast Power Limited).

“Rising from its first Meeting for 2019, held on Friday, April 12, 2019 at the Presidential Villa, Aso Rock, Abuja, council noted that the three consortia met the benchmark score of 750 points after evaluation in accordance with the criteria set out in the Requests for Proposal.”

Other decisions taken by the Council include approval for Quest Electric Nigeria Limited to proceed to the financial bids opening stage for the reprivatisation of the Yola Electricity Distribution Company.

The council also approved the appointment of Lead Capital Consortium as Financial Adviser for the restructuring, recapitalisation and partial privatisation of the Bank of Agriculture.

It also delisted Transcorp Hilton Hotel, Abuja from post Privatisation monitoring by the BPE as well as gave approval for the appointment of Vesta Healthcare Partners as consultant to carry out a diagnostic review of the Nigerian health sector.

The privatisation of Afam Electricity Generation Company could not be concluded during the first round of the power privatisation in 2013 due to issues stemming from gas supply to the plant.

For the YEDC, although it was successfully privatised and handed over to the core investor in 2013, a force majeure was declared in 2015 by the core investor citing insecurity in the North-East region of the country.

Following this, the company was duly repossessed by the Federal Government.

NNPC pays $1.5bn cash call debt to IOCs

 The Nigerian National Petroleum Corporation says it has reduced cash call arrears owed to international oil companies, its Joint Venture partners, by $1.5bn. The corporation has cash call arrears of $5.1bn.

Group Managing Director of NNPC, Dr Maikanti Baru, said this at the 12th National Conference of the Nigerian Association for Energy Economics/International Association for Energy Economics,in Abuja on Monday.

He also disclosed that 783 million Standard Cubic Feet of gas per day was flared in 2018.

Baru said that 2018 marked the second year without the corporation incurring any cash call arrears.

Baru said, “So far, we have repaid over $1.5bn out of the $5.1bn cash call arrears to date, a development that has not only restored the confidence of international oil companies, IOC, JV partners, but has also led to improved reserves growth and crude oil production.

“It was quite fulfilling that in 2018,  that is for the second year in a row,  we concluded the fiscal year without any cash call arrears.”

He said that the average of 783 million SCF of gas per day was flared in 2018 was 2.9 per cent higher than 761 mmscfd supplied to the power sector within the same period.

According to him, in 2018 the national average daily gas production stood at 7.90bn Standard Cubic Feet, representing an increase of three per cent above 2017 average daily gas production of 7.67bn SCF.

He said, “Of the 7.9bn SCF per day produced in 2018, an average of 3.32bn SCF per day (42 per cent) was supplied to the export market, 2.5bn SCF per day (32 per cent) for re-injection/fuel gas, 1.3bn SCF per day (16 per cent) was supplied to the domestic market and about 783 million SCF per day (10 per cent) was flared.

“Domestic gas supply capacity was marginally stable at about 1700 million SCF per day, with an average of 1.3bn SCF per day actually supplied to the domestic market. This is due to power evacuation challenges resulting from frequency management caused by rejection of allocated load by distribution companies as well as transmission line constraints.

“However, of the 1.3bn SCF per day supplied to the domestic market, an average of 761m SCF per day was supplied to the power sector while 470 million SCF per day was supplied to the industries and the balance of 69m SCF per day was delivered to the West African Market through the West African Gas Pipeline.”

He added that the automation of its crude oil marketing operations had helped remove the opacity in the management and sale of Nigeria’s crude oil grades.

AXA Mansard unveils insurance education product

In response to the growing needs of its customers and as part of its quest to ensure continuous access to quality education, AXA Mansard Insurance has launched its revamped education plan product.

In a statement made to reporters, the firm’s Managing Director, Kunle Ahmed stated that the  plan was designed to reward customers for their loyalty and assist parents achieve their lofty goals for their children in terms of education.

He said customers would have  access to a free yearly health check and receive three months’value of their premiums in the first five years of policy period.

He said: “These rewards align with our continued focus on living benefits as well as promoting healthy living in our society. The plan gives parents and guardians the opportunity to ensure they have funds for educational expenses of their child(ren)/wards, especially when they reach university entry age.

“It also ensures that their education is not derailed in the event of any unforeseen circumstance, such as death or permanent disablement of the parents/guardians.”

Nigerian Breweries to list N15b CPs on FMDQ

Nigerian Breweries Plc will list its ongoing N15 billion commercial papers issuance on the FMDQ OTC Securities Exchange to provide investors opportunity to trade on their holdings.

The brewer is offering 90-day and 182-day CPs to investors with a view to raising short-term funds for its operations. The issuance is part of the company’s N100 billion CP programme.

The 90-day CPs carry effective and discount yields of 11.590 per cent and 11.2680 per cent respectively while the 182-day CPs carry 14.430 per cent and 13.4614 per cent respectively. Both issuances have been rated Aa by Agusto and AA by Global Credit Rating (GCR).

The Series 1 90-day CPs are expected to mature on Monday July 22, 2019 while the Series 2 182-day CPs will mature on Tuesday, October 22, 2019. The offers opened on Thursday, April 11, 2019 and will close on Thursday, April 18, 2019. The settlement date is Tuesday, April 23, 2019.

In a statement at the weekend, Company Secretary and Legal Director, Nigerian Breweries Plc, Uaboi Agbebaku said the new CP programme would support the company’s cost management and complement traditional sources of financing to include non-bank financing options.

He said the CPs also provide opportunity for non-equity investors to invest in the company.

He noted that following the success of the company’s first N100 billion CP programme between 2015 and 2018, the board of directors of the company had approved a new N100 billion programme last July.

CCNN posts N5.7b net profit

Image result for Company of Northern Nigeria (CCNNCompany of Northern Nigeria (CCNN) Plc grew its net profit by 77 per cent to N5.7 billion in 2018.

In its first report since the merger with Kalambaina Cement Company, CCNN’ turnover rose by 62 per cent to N31.7 billion. Earnings before interest, taxes, depreciation and amortization ( EBITDA) rose by 86 per cent to N7.9 billion.

The top-line growth was due largely to increased domestic sales and exports. Overall, CCNN produced 0.76 million metric tonnes of cement and sold over 0.74 million metric tonnes, an increase of about 59 per cent. Sale of cement in Nigeria rose by 49 per cent to N28.9 billion while exports jumped from N0.2 billion in 2017 to N2.9 billion in 2018. Earnings before interest and taxes rose by 86 per cent to N7.9 billion profit before tax increased by 81 per cent to N7.6 billion.

While the merger was completed in fourth quarter of 2018, the management elected to report the performance of the merged entities as if the merger took place at the start of the year. Consequently, earnings per share shrunk by 83 per cent to 44 kobo as shares outstanding jumped over nine times to 13.1 billion units.

The board of directors of the company has recommended payment of a dividend per share of 40 kobo, representing some 92 per cent of the net earnings per share.

The management of the company stated that it plans to extend product distribution to the northeast and central regions of Nigeria, as it does not expect the northwest of the country to absorb the company’s current, larger 2.0 metric tonnes capacity.

There are however predictions that CCNN will record significant upside to its net income in 2019 and beyond upon approval of pioneer status by the Nigerian Investment Promotion Commission (NIPC) and a moderate chance of CCNN receiving approval on the new line.

Heidelberg Cement Group had in 2008 divested its majority equity stake in CCNN to Damnaz Cement Company Limited, a Nigerian company. In 2010, BUA International Limited acquired Damnaz Cement Company Limited and became indirectly the majority shareholder in CCNN and its technical partner. CCNN currently operates as a subsidiary of BUA International Limited.

SAHCO to list shares on Stock Exchange

Following the completion of its initial public offering (IPO), Skyway Aviation Handling Company (SAHCO) Plc, will this week list its shares on the Nigerian Stock Exchange (NSE). SAHCO will be the second ground handling company to be listed at the stock market, after Nigerian Aviation Handling Company (Nahco) Plc.

SAHCO had floated an IPO of 406.074 million ordinary shares of 50 kobo each at N4.65 per share. The IPO was an offer for sale, implying that the net proceeds of the IPO would go to the existing majority core investor in SAHCO, which was divesting partially to allow retail minority ownerships. Ten per cent of the shares offered for sale were earmarked for staff of SAHCO under an Employee Stock Ownership Plan to be set up and administered by a Trustee.

The IPO, which opened on November 5, 2018 and was scheduled to close on December 19, 2018, was extended for 12 working days to January 09, 2019.

The IPO was, however, undersubscribed by 35.35 per cent as the company was only able to raise N1.22 billion out of IPO value of N1.89 billion. Official final allotment report for the IPO showed that a total of 1,212 applications were received for 262.52 million ordinary shares of 50 kobo each at N4.65 per share, totaling N1.22 billion.

SAHCO was privatised by the Federal Government in 2009. Sifax Group acquired the entire share capital of the company. The Share Sale Purchase Agreement (SSPA) however mandates the majority core investor to divest 49 per cent of the shares of the company to the general Nigerian investing public.

The board of the company had stated that SAHCO planned to ride on the back of the success of its IPO to further push its vision of becoming the leading provider of aviation handling services in the West African region.