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NNPC Celebrates Crashing Diesel Prices By 42%

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NNPC discovers crude oil, gas in Northern Nigeria
  • As 15 manufacturing companies borrow N418bn from banks

NNPC at the weekend celebrated the crashing of diesel prices by as much 42 percent, noting that the Corporation brought the price from around N300 per litre in January 2017, to about N200 at the end of May, 2017.

The Group General Manager, Public Affairs Division of the Nigerian National Petroleum Corporation (NNPC), Mr Ndu Ughamadu indicated this on Sunday, highlighting that Automotive Gas Oil (AGO), popularly called diesel enjoyed a huge slide downwards over the last six months, following strategic interventions by NNPC.

”In the first quarter of 2017, retail prices of AGO, which is one of the deregulated products, shot to an all-time high of N300 per litre in major demand centres across the country.

”Such unpleasant situation placed a huge burden on truck drivers, who need the product for transporting their vehicles; and the nation’s manufacturing sector, which requires it to run its operations.

“”It also affected the masses, who need it for household power generation.

”However, following strategic intervention efforts by the NNPC toward sustained improvement in the supply of diesel, the product’s retail prices as at the end of May ranged from N175 to N200 across the country (a significant price drop of about 42%).

”Ex-depot prices also dropped to between N135 and N155,” Ughamadu observed, adding that the strategic interventions included improving the supply of AGO and remodeling of the product distribution to address sufficiency issues across the country.

”Since January this year, we have worked very hard with relevant stakeholders to improve distribution from refinery depots, by implementing a robust loading programme.

”The Corporation was able to resuscitate its critical pipelines and depots in places such as Atlas Cove-Mosimi, Port-Harcourt Refinery-Aba and Kaduna Refinery – Kano.

”Efforts are also ongoing to revamp and commission other critical pipelines across the country,” he said.

The spokesman noted that another key intervention that enhanced supply and distribution of diesel was the corporation’s ”robust engagement” with critical downstream stakeholders where salient issues were raised and duly addressed.

”These stakeholders include: Major Oil Marketers Association of Nigeria (MOMAN), Nigerian Association of Road Transport Owners (NARTO), Petroleum Tanker Drivers (PTD) as well as Independent Petroleum Marketers.

”Furthermore, as a result of consistent positive engagement with the Central Bank of Nigeria (CBN), NNPC equally extended the expansion of Premium Motor Spirit (PMS) Foreign Exchange Intervention Scheme to accommodate Diesel and Aviation Fuel.

”The general public is hereby assured that the corporation wil continue to ensure seamless supply and distribution of diesel and other petroleum products across the country,” Ughamadu concluded.

In the meantime, at the backdrop of funding exigencies and inability to raise longer term and cheaper capital from the capital market, top 15 companies in the manufacturing sector, listed on the Nigerian Stock Exchange, NSE, were compelled in 2016, to seek expensive and short term bank loans to bridge funding gaps.

Thus, they spent N127 billion servicing about N418 billion loan they borrowed. This represents a 30 per cent increase in their loan liabilities from N322.5 billion recorded in the corresponding period of 2015.

Financial Vanguard investigations revealed that the loan expenses got escalated by the persisting liquidity challenges in the banking sector coupled with subdued credit appetite of the banks as a result of huge loan defaults during the period.

Consequently, lending rates escalated to over 25 per cent. The immediate impact was adverse on the bottomline of the companies with their profitability forced to a 24 per cent decline in the cumulative profit before tax in 2016. But three of them escaped with good profits.

The breakdown showed that the cumulative Profit Before Tax, PBT, declined by 24 per cent to N268.5 billion in 2016 from N351.7 billion in 2015. But they also attributed this downturn partly to the economic recession impact and other macroeconomic variables as most of them were unable to secure Foreign Exchange, forex, and this escalated their cost of fund during the period under review.

Findings by Financial Vanguard revealed that the 15 companies paid a total interest of N127.253 billion to the banks, representing a 44 per cent increase from N88.403 billion recorded in the corresponding period of 2015. The total interest paid by the 15 manufacturing companies also represents 47.4 per cent of the total profit recorded in 2016. Earnings reports from the companies indicate that most of them were constrained by increasing financing charges, otherwise known as interest expenses, leading to steep declines in profits in most of them.

Out of the 15 companies in this coverage, 11 companies’ PBT declined during the year under review as finance charges contributed to the major cost constraints. Management of these companies had stated that their inability to source new equity capital due to the meltdown at the capital market had forced them to continue relying on high-interest bank loans.

A review of the report  showed that while other macroeconomic conditions, especially slowdown in top-lines due to decline in purchasing power and increase in costs of sales due to exchange rate depreciation, contributed to weak performances by the companies. High cost of funds was the major factor that wiped off positive trading and operating profit performance to undermine pre-tax profit. It was further discovered that PZ Cussons and GlaxoSmithKline Consumer, GSK Nigeria Plc did not borrow money during the year under review, but paid interest to banks for previous borrowing.

Details of the borrowing are as follows:  Dangote Cement N71.732 billion in 2016 as against N31.352 billion in 2015; Cadbury Nigeria Plc N151 million in 2016 as against nill in 2015; Nestle Nigeria Plc N50.620 billion in 2016 as against N29.944 billion in 2015; Unilever Nigeria Plc N20.916 billion in 2016 as against N8.018 million in 2015 ; Flour Mills Nigeria Plc N64.421 billion in 2016 as against N114.96 billion in 2015; Honeywell Flour Mills Plc N51.289 million in 2016 as against N42.129 billion in 2015; Dangote Flour Mills N36.237 billion in 2016 as against N40.824 billion in 2015; Lafarge Wapco Plc N59.482 billion as against N11.822 billion in 2015

Others include: Guinness Nigeria Plc N39.168 billion as against N20.69 billion; Nigerian Breweries Plc N17 billion as against N17 in 2015; Dangote Sugar N2.036 billion in 2016 as against nill in 2015; May & Baker Nigeria Plc N2.972 billion in 2016 as against N3.129 billion in 2015; Fidson HealthCare Plc N2.232 billion in 2016 as against N2.6 billion in 2015.

Findings showed that Dangote Cement led the chart on interest payment in 2016 in terms of value with N45.6 billion; it was followed by Flour Mills Nigeria Plc N22.4 billion.  Nestle occupied the third position with N20.9 billion, followed by Lafarge Wapco with N15.5 billion, while Guinness Nigeria came fifth with N7.9 billion.

Additional report from Vanguard

Economy

Equity Market Opens With N324bn Gain, eTranzact, Champion Lead Losers Table 

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Equity Market Opens With N324bn Gain, eTranzact, Champion Lead Losers Table 

 The Nigerian equity market on Monday opened the week on a positive note with a gain of 0.58 per cent.

Consequently, investors gained N324 billion or 0.58 per cent, as the market capitalisation which opened at N56.128 trillion, closed at N56.452 trillion.

The All-Share Index also closed 0.58 per cent or 573 points stronger to close at 99,793.71 as against 99,221.14 recorded on Friday.

As a result, the Year-To-Date (YTD) return rose to 33.46 per cent.

The market’s positive performance was primarily driven by gains in Seplat, Guaranty Trust Holding Company (GTCO) Zenith Bank, United Bank For Africa(UBA), Transcorp Hotel and Nigerian Breweries, among other advanced equities.

Market breadth closed positive with 30 gainers and 10 losers on the floor of the Exchange.

On the gainers’ chart, Flour Mill led by 10 per cent to close at N41.80 per share.

Total Energies followed closely by 9.98 per cent to close at N353.60 per share.

Access Corporation gained 9.86 per cent to close at N18.95, Chams rose by 9.74 per cent to close at N1.69, and Veritas Kapital Assurance advanced by 9.52 per cent to close at 69k per share.

On the other side, eTranzact led the losers’ chart to close at N4.55, and Daar Communications trailed at 9.52 per cent to close at 57k per share.

Champion lost 6.67 per cent to close at N2.80, Unity Bank shed 6.67 per cent to close at N1.12 and Wapic Insurance went down by 2.86 per cent to close at 68k per share.

Market analysis revealed that trade turnover settled higher relative to the previous session with the value of transactions up by 83.55 per cent.

A total of 963.54 million shares valued at N13.50 billion were exchanged in 8,657 deals, compared to 388.02 million shares valued at N7.35 billion exchanged in 7,106 deals.

Meanwhile, Fidelity Bank led the activity chart in volume and value with 605.26 million shares worth N6.03 billion, Access Corporation followed by 93.07 million shares valued at N1.74 billion.

UBA transacted 58.73 million shares worth N1.26 billion, Nigerian Breweries traded 45.26 million shares valued at N1.27 billion and Zenith Bank sold 16.08 million shares worth N539.55 million.

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Economy

Strike: Labour records 100% compliance in Niger, As Anambra Records 90% Compliance

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Strike: Labour records 100% compliance in Niger, As Anambra Records 90% Compliance

Mr Ibrahim Gana, Chairman of Trade Union Congress (TUC) in Niger, on Monday, said the union recorded 100 per cent success compliance with the ongoing strike over the minimum wage in the state.

He said this in an interview with newsmen shortly after monitoring the level of compliance in Minna, the state capital.

Gana said that unlike in the past, the officials of organised labour did not struggle with workers in their offices this time around.

“This is a fantastic strike we have ever had, the level of compliance is 100 per cent, and we didn’t struggle with people in their offices this time around.

“Just a circular that workers should comply with the national directive of both NLC and TUC and virtually everywhere we have gone we have 100 per cent compliance.

He said that the level of compliance indicates that workers were beginning to listen to the labour leaders and also understanding the yearnings of the union in the country.

The chairman said both Federal and state organisations observed total compliance, adding that the strike would continue until the union received further directives from its national body.

It was reported that parts of organisations shut down by NLC included the Minna General Hospital, Bola Ahmed Tinubu International Airport, Federal Inland Revenue and the state High Court.

Other places visited by the union officials were the Niger State House of Assembly, the state Secretariat, the Office of the Secretary to the Niger Government and the Office of the Deputy Governor.

It was also recalled that NLC had on June 1, announced a nationwide strike commencing on June 3, following the tripartite committee’s failure to reach an agreement on a new minimum wage for workers.

In addition, unions are protesting against recent hikes in electricity tariffs, which they said have placed an undue burden on workers and consumers across the country. 

In a related development, Mr Humphrey Nwafor, Chairman of the Nigeria Labour Congress (NLC) in Anambra on Monday, said that the organised labour recorded 90 per cent compliance in the state.

Nwafor told newsmen after going around Awka to monitor compliance in Awka and its environs.

Offices at the federal and state secretariats, the state House of Assembly schools, banks and courts did not open for business.

Nwafor, while commending union leaders for their cooperation, said the strike would continue until the federal government yielded to their demands

“To be honest with you, I am very much delighted with the Anambra workers’ total compliance to the strike.

 “Picketing is ongoing across the state according to the directive from the national body, and it will continue until 6 p.m. to ensure that no office is open for any administrative businesses,” he said

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Economy

NGX: Investors Lose N103bn As Trading Continues Amid Strike

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Equity Market Opens With N324bn Gain, eTranzact, Champion Lead Losers Table 

…ETranzact, Jaiz Bank lead losers’ table

Opening the week, the equity market halted last session’s winning streak as investors lost N103 billion, following sell-offs in Tier-one banking stocks and cautious trading.

Specifically, sell-offs in FBN Holdings, United Bank For Africa (UBA) and Access Corporation, Fidelity Bank, Transnational Corporation, Nigerian Breweries, WAPCO, and ETranzact, among other declined stocks, drove the market’s weak performance.

Consequently, the market capitalisation which opened at N56.172 trillion, lost N103 billion or 0.18 per cent to close at N56.069 trillion.

The All-Share Index also shed 0.18 per cent or 112 points, to settle at 99,118.86, as against 99,300.38 recorded on Friday.

As a result, the Year-To-Date (YTD) return fell to 32.56 per cent.

However, while investors traded cautiously, the losses recorded on the Exchange were not related to the ongoing indefinite strike embarked upon by workers under the auspices of the Nigeria Labour Congress (NLC) and the Trade Union Congress(TUC).

Reacting, a Stockbroker with Global View Capital Ltd., Mr Haruna Kebira, said that trading on the Exchange was not usually affected by such national industrial actions, except public holidays declared by the Federal Government.

Kebira explained that this was because the Exchange Group did not belong to any workers’ union, hence labour union leaders usually did not interrupt trading on the floor of the Exchange during strikes.

The stockbroker noted that the first week of a new month usually experienced a slowdown of activities that might lead to such losses experienced at the day’s trading.

He stated that the bullish run that dominated the equity market last week was a result of month-end effect activities.

“The market is expected to pick up positively by mid-week.

“The month of June is usually positive for the market because investors who just received their dividends are investing back into the market, so the market will surely bounce back,” Kebira said.

However, the market breadth closed positive with 23 gainers and 17 losers on the floor of the Exchange.

On the gainers’ table, Cornerstone Insurance, and Deap Capital Management and Trust Plc led by 10 per cent each to close at N2.09 and 44k per share respectively.

Oando followed by 9.75 per cent to close at N12.95, Veritas Kapital Assurance rose by 8.47 per cent to close at 64k and RTBriscoe gained 8.33 per cent to close at 52k per share.

On the other hand, ETranzact led the losers’ table with 9.82 per cent to close at N5.05 while Unity Bank trailed closely by 9.80 per cent to close at N1.38 per share.

Jaiz Bank declined by 9.65 per cent to close at N2.06, McNichols Plc shed 9.09 per cent to close at N1.00 and Japaul Gold lost 4.78 per cent to close at N1.99 per share.

Analysis of the market activities showed trade turnover settled lower relative to the previous session, with the value of transactions down by 38.92 per cent.

A total of 349.59 million shares valued at N5.24 billion were exchanged in 8,082 deals, compared to 434 million shares valued at N8.58 billion exchanged in 8,525 deals posted in the previous session.

Veritas Kapital led the activity chart in volume with 57.95 million shares worth N35.94 million, while Guaranty Trust Holding Company (GTCO) followed by N47.63 million shares valued at N47.63 billion to lead in value.

Access Corporation traded 46.32 million shares valued at N796.32 million, AIICO Insurance transacted 30.71 million shares worth N30.79 million and Regency Alliance Insurance sold 14.55 million shares worth N5.64 million. 

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