…As IEA says Natural gas to become largest energy source by 2030***

The Federal Government has raised funds from its external debt requirements to finance the 2018 budget at a considerably lower cost than projected.

Following the successful pricing, Minister of Finance Mrs Zainab Ahmed said: “Nigeria is investing strategically in critical capital projects to bridge our infrastructure deficit, provide a better operating environment for the private sector, and improve the standard of living of our citizens.

“The proceeds of this issuance will provide critical financing for projects in transportation, power, agriculture, housing, healthcare and education as well as the capital elements of our social investment programmes. Nigeria’s Economic Recovery and Growth plan is delivering results.”

A statement last night by Paul Ela Abechi of the federal ministry of finance said Nigeria successfully raised the funds “despite significant oil and wider macro market volatility.”

Abechi, media adviser to the minister, noted that “the successful transaction follows closely behind Nigeria’s successful engagement with the Fitch rating agency, and their subsequent decision to change the outlook on Nigeria’s sovereign rating from B+ (negative) to B+ (stable), based on improving macro-economic fundamentals.”

He added: “The Federal Republic of Nigeria (the “Republic”) today announces that it has priced its offering of $2.86 billion aggregate principal amount of triple series notes (the “Notes”) under its Global Medium Term Note Programme.

“The offering has attracted significant interest from leading global institutional investors with a peak combined order book of over $9.5 billion, which reflects an over-subscription of more than three times and demonstrates the on-going confidence of international capital market investors in Nigeria’s investment story.”

The Notes he said “comprise a US$1.18 billion seven-year series, US$1.00 billion 12-year series and a US$750 million 30-year series. The seven-year series will bear interest at a rate of 7.625 per cent, while the 12-year series will bear interest at a rate of 8.75 per cent, and the 30-year series will bear interest at a rate of 9.25 per cent. In each case, they will be repayable with a bullet repayment of the principal on maturity.”

The offering is expected to close on or about November 21, 2018, subject to the satisfaction of various customary closing conditions.  “Nigeria intends to use the proceeds of the Notes towards funding of the fiscal deficit and other financing needs. The Notes represent the Republic’s sixth Eurobond issuance, following issuances in 2011, 2013, two in 2017 and one in early 2018 and its first triple-tranche offering” Abechi said.

When issued, the Notes will be admitted to the official list of the UK Listing Authority and available to trade on the London Stock Exchange’s regulated market.  Nigeria can also apply for the Notes to be eligible for trading and listed on the Nigerian FMDQ OTC Securities Exchange and the Nigerian Stock Exchange.

The pricing Abechi pointed out “was determined following a series of meetings with investors in London and conference calls with investors globally attended by the Nigerian delegation, which comprised the Minister of Finance, Zainab Shamsuna Ahmed, the Minister of Budget and National Planning, Senator Udoma Udo Udoma, Central Bank Governor, Godwin Emefiele, Director General of the Debt Management Office (DMO), Patience Oniha, and Director General of the Budget Office of the Federation, Ben Akabueze.

The Joint Lead Managers for the issuance were Citibank Global Markets Limited and Standard Chartered Bank and the financial advisors were FSDH Merchant Bank Limited.

Commenting on the Notes’ pricing, the DMO Director General, Patience Oniha said:

“Nigeria’s continued ability to access the international markets to raise capital is a testament to investor’s confidence which has been supported by continuous engagement with them on various reform initiatives and outcomes.”

She added that “the issuance of the Eurobonds, which received the prior approval of the Executive and Legislative arms of government, will not only provide capital to finance various projects, but also contribute towards the achievement of the Debt Management Strategy. The ability to raise US$2.86 billion, which is the exact amount government needed in volatile and challenging market conditions has been described as a stellar outcome ”

In the meantime, there are indications the world is fast moving into gas as major source of energy with a report by the International Energy Agency (IEA) saying that Natural gas is expected to overtake coal as the world’s second largest energy source after oil by 2030.

The Paris-based IEA said in its ‘World Energy Outlook 2018’ that energy demand would grow by more than a quarter between 2017 and 2040. Global gas demand would increase by 1.6 percent a year to 2040 and would be 45 percent higher by then than today, it said.

The estimates are based on the IEA’s “New Policies Scenario” that takes into account legislation and policies to reduce emissions and fight climate change. They also assume more energy efficiencies in fuel use, buildings and other factors.

The IEI, in its ‘New Policies Scenario’ stated: “Natural gas is the fastest growing fossil fuel in the New Policies Scenario, overtaking coal by 2030 to become the second-largest source of energy after oil”.

The IEI also said that China, already the world’s biggest oil and coal importer, would soon become the largest importer of gas and net imports would approach the level of the European Union by 2040.

According to Reuters calculations, based on China’s General Administration of Customs data, China has already overtaken Japan as the world’s top natural gas importer.

Although China is the world’s third-biggest user of natural gas behind the United States and Russia, it has to import about 40 percent of its needs as local production cannot keep pace. Emerging economies in Asia would account for about half of total global gas demand growth and their share of LNG imports would double to 60 percent by 2040, the IEA report said.

“Although talk of a global gas market similar to that of oil is premature, LNG trade has expanded substantially in volume since 2010 and has reached previously isolated markets,” it added.

The Nation with additional report from Vanguard