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Economy

$3b down the drain, oil in north remains elusive

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Oil prices drop amid supply glut, fears of second coronavirus wave

…As Firms set to trade at one kobo following NSE new pricing rules***

Stakeholders remain divided about the wisdom in the continued search for hydrocarbon resources in the north, especially as $3 billion has already been sunk without making a commercial find.

While those in favour of the search disregard the economic waste, but are encouraged by the success of oil finds in neighbouring countries like Niger, Chad and others, geologists who are mindful of the soil composition of hydrocarbon reserves, think it’s an effort in futility.

The experts noted that nature has blessed each region of Nigeria with peculiar resources, and while the south is enriched with hydrocarbons, the north is blessed with solid minerals, thus, solid minerals and hydrocarbons cannot coexist.

Industry experts, who spoke with The Guardian, said the persistent push by some northern leaders, including President Muhammadu Buhari, points to an underlining reason far beyond the quest, which is far from being of economic benefit to the country.

Already, there have been visits by some northern governors to the Nigerian National Petroleum Corporation (NNPC) on the issue. The President, Governors Ibrahim Gaidam of Yobe; Aminu Waziri Tambuwal of Sokoto; and Abubakar Badaru of Jigawa states were recently in separate closed-door meetings to discuss oil exploration in the region.

The Executive Director, Civil Society Legislative Advocacy Centre (CISLAC), and Head of Transparency International Nigeria, Auwal Musa, described the move as unnecessary and not in the best interest of the country.

Musa said: “We should not bring regional politics to everything that can benefit the entire country. The project has not been seen as a national effort to diversify revenue. If it is seen as something meant for national interest, I don’t think there is the need for the Sokoto State governor or anyone to lobby. There are signals that it is going to favour one particular region.”

Senator Shehu Sani, during a visit of members of the Kaduna State Students Union to his office in Kaduna, noted that “past leaders have amassed wealth through this venture,” and instead called Buhari to investigate the over $3billion already spent on the project.

This also raises the issue over lack of transparency and accountability in the NNPC, as only Prof. Jerry Gana, in 2013, while serving as chairman of the Northern Nigeria Economic Summit, disclosed that N27billion was spent on oil and gas exploration in the Lake Chad Basin at that time with additional $340million budgeted.

About 40 years after the Federal Government started the search for oil in the north, many Nigerians are convinced that its intensification by the President Buhari administration may be more politically motivated, and will end up enriching a few individuals from the region.

Described as a mere geopolitics of oil, some experts insisted that the drive, if not dropped, especially now that the country’s economy is in turbulence, would remain a waste of the nation’s scare resource.

But a new directive from the Buhari-led administration has compelled the NNPC to aggressively pursue oil search in the frontier basins, its Group Managing Director, Maikanti Baru, has said. Regardless of the criticisms, Baru said the corporation would not give up on the mandate given to it by President Buhari to aggressively explore the inland basins, including Anambra, Bida, Benue, Chad, Gongola, and Sokoto.

Baru said based on preliminary results from the exploration in the inland basins so far, especially the Benue Trough, there was a strong indication that commercial quantity oil and gas find would soon be a reality.

This came amid a backlog of over $6billion Joint Venture cash call arrears, lack of support from the International Oil Companies (IOCs), global shift from fossil fuel to renewable energy, loss of interest in encouraging production of already discovered reserves and poor economic outlook.

Rather than continuing with the search, some experts argued that Nigeria should take opportunity of the rise in oil prices at the international market to produce already discovered reserves, and maximise the benefits thereof in view of the global shift to renewables.

Some, like the Managing Director, Xenergy Gas Limited, Emeka Ene, in response to The Guardian’s enquiry, drew attention to global developments, saying: “OPEC’s World Oil Outlook published in 2016 clearly indicated that global oil demand would start declining from 2030. Natural gas will still be relevant; however, it is imperative that policymakers and oil industry players factor in this shift by incorporating alternative energy in long-term economic and investment decisions moving forward.”

In the meantime, the Nigerian Stock Exchange (NSE) is to begin the implementation of new pricing rules that will remove the stopgap that has supported stocks at their nominal value. The new rules will allow shares of quoted companies to trade for as low as one kobo.

The new rules will effectively remove the current rule, which places minimum allowable price to trade for any stock at its nominal value, irrespective of the market forces.

The new rules stipulate that “notwithstanding its par value, the price of every share listed on the Exchange shall be determined by the market, save that no share shall trade below a price floor of one Kobo per unit”.

Par value is the nominal value of a share as stated in the Memorandum of Association of the company while price floor means the amount below which the price of one unit of a share shall not be permitted to trade, and the minimum amount which must be paid for a share in the event of a drop in the unit price of that share.

Regulatory documents obtained at the weekend also indicated that the amendments to the pricing technology at the stock market will see a categorisation of quoted companies under three groups with different pricing rules.

The tick size, the minimum price movement by which the price of a trading instrument can change, will also be lowered to as low as one kobo. Although all quoted companies shall continue to trade within the current pricing band of 10 per cent maximum allowable change per day.

Under the new groupings and pricing rules, which shall take effect on Monday January 29, 2018, stocks under the first category, Group A, shall consist of large-cap equities that are priced at N100 per share or above for at least four of the last six trading months, or new security listings that are priced at N100 or above at the time of listing on the Exchange.

The second category, Group B, shall consist of medium-priced equities that are priced at N5 per share or above, but less than N100 per share for at least four of the last six months, or new security listings that are priced at N5 per share or above but less than N100 per share at the time of listing on the Exchange.

The third category, Group C, where majority of listed companies fall, shall consist of equities that are priced at one kobo per share or above, but below N5 per share for at least four of the last six months, or new security listings that are priced at one kobo per share or, but below N5 per share at the time of listing on the Exchange.

The new rules expectedly link price movements and minimum quantity of equities traded that will change the published price of an equity security. Stocks under Group A shall have price change with minimum of 10,000 units; stocks under Group B shall have price movement with a minimum of 50,000 units while stocks under Group C shall have price change with minimum volume of 100,000 units.

The tick size, which is the minimum price movement that any equity shall trade, shall also be linked to the groups. Group A will have a tick size of 10 kobo, Group B, five kobo while Group C will have a tick size of one kobo. This implies that the share price of each stock shall be allowed to move up or down in multiples of its tick size.

The Nation’s check at the weekend indicated that there were only nine stocks under the “high-priced stocks” category of Group A. These include Dangote Cement Plc; Mobil Oil Nigeria Plc; Nestle Nigeria Plc; Nigerian Breweries Plc; SIM Capital Fund; Skye Shelter Fund; Nigerian Energy Sector Fund (NESF); Total Nigeria Plc and Seplat Petroleum Development Company Plc

The Nation’s check also indicated that at least two-thirds of quoted companies fall under the Group C and about a quarter of quoted companies may drop below their nominal values upon the implementation of the new pricing rules.

A large part of quoted companies have been stagnant at their nominal value for many years and have been on supply, a market euphemism for shares glut and sell pressure. Most of the stocks have been sustained by the current rule of a stopgap of nominal value.

Market pundits said the new pricing rules will enhance the price discovery mechanism of the stock market, noting that the new rules are in tandem with the market’s principle of demand and supply as price-determinant at the stock market.

Guardian NG with additional report from Nation

Economy

Eid-el-Fitr: Tinubu Urges Sacrifice, Integrity For National Rebirth

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Eid-el-Fitr: Tinubu urges sacrifice, integrity for national rebirth

 President Bola Tinubu has urged Nigerians to continue to make sacrifices and exhibit integrity for national development.

Tinubu said this after observing the Eid-el-Fitr prayer at the Eid Ground at Dodon Barracks on Wednesday in Lagos.

The President also called on Nigerians to continue to have faith in his government and remain patriotic citizens.

Tinubu said that the Renewed Hope Agenda of his administration, aimed at bringing prosperity to Nigerians, was being diligently implemented.

Encouraging Muslims to extend the values of sacrifice and resilience beyond the fasting period, Tinubu emphasised the need for Nigerians to prioritise the exhibition of love for their country.

‘’The resilience and sacrifice that we have shown and made during these months should be preserved.

“Be a kind and cheerful giver. We must love our country more than any other country because this is the only one we have.

‘’We must continue to protect the integrity of our government and leadership. The Renewed Hope Agenda is alive, well and fine, and Nigerians should continue to be very hopeful. Without hope, there is no salvation.

“Without hope, there is no development. Without hope, there is no life. Eid Mubarak,’’ the President said at the end of the prayers led by the Chief Imam of Lagos State, Sheikh Sulaiman Abou-Nolla.

Earlier in his sermon, the Chief Imam urged Nigerians to shun all acts of violence, ensure peaceful co-existence, and continue to have faith in the country.

He asked those in leadership positions to remain faithful to their oaths of office and work towards alleviating the suffering of the less privileged.

‘‘Let us not forget our brothers and sisters in Gaza and other areas of conflict,’’ the Chief Imam said.

He offered prayers of God’s guidance, wisdom, and protection for the President and the Lagos State government, as well as for peace and stability in the country.

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Economy

Lawmaker Secures Release of 4 Persons Involved in Illegal Arms Manufacturing in Delta

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Lawmaker Secures Release of 4 Persons Involved in Illegal Arms Manufacturing in Delta

Sen. Ned Nwoko (PDP-Delta), on Wednesday, disclosed that he had secured the release of four family members involved in manufacturing arms at the Onicha-Olona Illegal Arms Factory in Delta.

Nwoko representing Delta North Senatorial District, who disclosed this in an interview in Abuja, said that the release of the four persons was through collaborative efforts.

On March 12, troops of 63 Brigade, Asaba, uncovered an illegal arms manufacturing factory in Onicha-Olona, Delta North Senatorial District and arrested eight family members in connection with the crime.

Nwoko disclosed that efforts have been made to ensure fair treatment for those involved, balancing justice with the opportunity for rehabilitation and contribution to society.

“Following my recent visit to the headquarters of 63 Brigade, Asaba and productive discussions with the Brigade Commander, I am pleased to announce progress in addressing the situation regarding the illegal arms factory discovered in the Onicha-Olona community, Delta.

“Efforts have been made to ensure fair treatment for those involved, balancing justice with the opportunity for rehabilitation and contribution to society.

“I am pleased to reveal that through collaborative efforts, I have successfully secured the release of four family members implicated in the illegal activity.

“However, our commitment to upholding the law remains unwavering, and endeavours continue for fair judgment and potential pardon for the remaining four individuals,” he said.

The lawmaker stressed that the underlying issue highlighted by the discovery, however, remained of paramount importance.

“We must seize the opportunity to redirect the talents demonstrated by those involved towards lawful and productive endeavours.

“The young man in the family, known for his passion and ability to build drones, exemplifies this potential.

“His skills should be harnessed and put to good use,” he said.

Nwoko added that the Industrial Revolution served as a pertinent historical precedent where individual efforts catalysed transformative change and made possible by governments that created conducive environments.

“We can emulate this model here. We can provide support and opportunities for talented individuals like the young drone builder, and stimulate a new wave of innovation and economic growth in Nigeria.

“As previously stated, Nigeria’s economy faces significant challenges exacerbated by escalating imports, particularly in the realm of arms and weaponry.

“Therefore, we must harness our indigenous talents for the greater good and bolster our local industries,” he said.

Nwoko further said that the Defence Industries Corporation of Nigeria (DICON), as well as the Ministry of Science and Technology, have crucial roles to play in this regard.

According to him, by engaging with individuals possessing such skills, we can offer them legal avenues for their expertise to flourish.

“The aim is not only to prevent the proliferation of illegal arms or other weapons manufacturing but also to channel these talents towards legitimate industries for national development.

“I reiterate the need for the government to support and integrate such offenders with specialised skills and talents into the formal economy.

“This initiative should focus on recognising their capabilities and providing opportunities for them to contribute to the development of our local indigenous technology.

“As noted earlier, an individual capable of modifying an AK-47 magazine, originally designed to hold 30 rounds, to accommodate 60 rounds using rudimentary equipment, holds immense potential for greater achievements.

”Such individual can do more with proper legal support and access to adequate resources.”

He disclosed that he was committed to proposing or supporting a new law aimed at assisting talented and skilful individuals involved in illegal activities and also partnering with law enforcement agencies in these endeavours.

“I am committed to proposing or supporting a new law aimed at assisting talented and skilful individuals involved in illegal activities and also partner with law enforcement agencies in these endeavours.”

“They have the intelligence and insights of the potential beneficiaries of this “amnesty” drive towards creating a new cadre of indigenous technologists.

“This law would establish an agency dedicated to providing government support and resources to rehabilitate and engage these individuals in legal and productive activities.

“I tentatively suggest naming this proposed law the “National Talent Rehabilitation and Integration Act”.

“This legislation will not only focus on rehabilitation but also on harnessing the skills and talents of offenders for the benefit of society.

“By providing a structured environment and necessary support, this agency will facilitate the transition of individuals from illicit activities to lawful and productive ventures.

”And they will be contributing to both their personal rehabilitation and national development,” Nwoko added.

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Economy

NGX Market Capitalisation Gains N836bn

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Stock Market Gains N18bn; FTN Cocoa Processors, Prestige Assurance lead Losers’ Chart 

…Tantalizers, NASCON lead the losers’ chart 

The Nigerian Exchange Ltd.(NGX) market capitalisation, which opened at N57.697 trillion on Tuesday, gained N836 billion or 1.45 percent closing at N58.533 trillion.

Also, the All-Share Index rose by 1.45 percent or 1,480 points to close at 103,524.44, as against 102,044.84 recorded on Monday.

As a result, the Year-To-Date (YTD) return rose to 38.45 percent.

Interest in Telco heavyweight and Tier-one banks such as MTN Nigeria, UBA, Access Corporation, Guaranty Trust Holding Company(GTCO), and sustained interest in Transcorp Power(TransPower) kept the market in the green.

Market breadth closed positive with 35 gainers and 14 losers.

On the gainer’s chart, UBA led in percentage terms of 10 to close at N25.30, followed by MTN by 9.98 percent to close at N243.50 per share.

Julius Berger also gained 9.71 percent to close at N61, While Access Corporation rose by 9.51 percent to close at N22.45 per share.

Veritas Kapital Assurance went up by 9.38 percent to close at 70k per share.

Conversely, Tantalizers led the loser’s chart by 7.89 percent to close at 35k, and National Salt Company of Nigeria(NASCON) trailed by 6.77 percent to close at N53.70.

Morison Industries Plc shed 6.62 percent to close at N1.41, C&I Leasing lost 6.45 percent to close at N3.48, while Cutix Plc dropped 6.30 percent to close at N2.53 per share.

However, analysis of the market activities showed trade turnover settled lower, relative to the previous session.

The value of transactions was also down by 16.76 percent.

A total of 565.79 million shares valued at N14.23 billion were exchanged in 11,519 deals,  compared to 436.90 million shares valued at N17.09 billion exchanged in 11,344 deals traded on Monday.

On the activity chart, Transcorp led in volume with 170.72 million shares traded at a value of N3.13 billion, Access Corporation followed by 48.57 million shares valued at N1.06 billion.

GTCO sold 39.04 million shares worth N165.80 million, Jaiz Bank traded 36.78 million shares valued at N72.51 million and UBA transacted 31.96 million shares valued at N796.24 million

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