- As 19 stocks depreciate, market sheds N50bn
The Federal Government has approved the implementation of a new commercial model targeted at encouraging sponsors to invest in the restoration of the efficiency levels of the nation’s three refineries.
Mr Anibor Kragha, Chief Operating Officer (COO) Refineries, Nigerian National Petroleum Corporation, NNPC, said this on Wednesday in Abuja at a plenary at the ongoing 2017 Nigeria Oil and Gas Conference and Exhibition (NOG).
The plenary was on ‘Harnessing the Opportunities in Nigeria’s Downstream Sector’.
Kragha said under the new model, President Muhammadu Buhari also approved the engagement of strategic investors.
“As a result of what is happening and the global trend, President Muhammadu Buhari gave approval for strategic investments to be made in the refineries.
“So the investment model is basically this way, strategic investors who can bring refining expertise and funding will partner with local partners who have downstream experience to actually go into the refineries.
“They invest money and within 24 months get us to 90 per cent capacity utilisation,’’ he said.
Kragha, however, said within the new model, investors would be repaid from incremental production of the refineries on prior agreed terms.
To meet the deadline, Kragha said: “I need to first draw on funds latest by July, which is the only way we can meet the 24-month timeline.
“What we are doing now is that in parallel, we are doing evaluation of the technical stuff and we are going to engage financial advisers to start building a model.
“I will like to reiterate that there is no mandate to sell any equity in the refineries; we are not selling anything.
“This is just a strategic investment for a defined period, after which they recover their capital negotiated with term and that will help us ramp up very quickly in the next 24 months.’’
He disclosed that the corporation had met with the original builders of the Kaduna and Port Harcourt refineries who because of their consistence, could get parts and pricing at better rates for the corporation.
The Warri, Port Harcourt and Kaduna refineries, which even with combined efforts, cannot meet the nation’s demand for petroleum products, have for years operated below their capacities.
Other panelists at the event were former Managing Director of Kaduna and Port Harcourt refineries, Alexander Ogedengbe; NNPC’s COO Downstream, Henry Ikem-Obih, and President Nigeria Liquefied Petroleum Gas Association, Dayo Adeshina.
The 2017 NOG, which began on Feb. 27, will end on today.
In the meantime, the equities market on Wednesday went down again by N50bn after 19 stocks closed in the red.
At the close of trading on the floor of the Nigerian Stock Exchange, the NSE market capitalisation dropped to N8.715tn from N8.765tn, while the All-Share Index closed at 25,183.10 basis points from 25,329.06 basis points.
A total of 228.023 million shares valued at N2.39bn were traded in 2,958 deals.
The equities market declined further, shedding 0.58 per cent at the close of the day’s trading to settle the year-to-date returns at -6.29 per cent. The volume and value of transactions declined by 48.70 per cent and 34.47 per cent, respectively. There were eight gainers in all.
Vitafoam Nigeria Plc was the best-performing stock after advancing by 4.65 per cent to close at N1.80. The ticker was closely followed by the NPF Microfinance Bank Plc, Seplat Petroleum Development Company Plc, NEM Insurance Company Nigeria Plc and Nigerian Aviation Handling Company Plc, which advanced by 4.46 per cent, 3.09 per cent, 2.47 per cent, and 2.04 per cent, accordingly.
On the other hand, Cadbury Nigeria Plc shares dropped by 8.77 per cent, recording the highest decline, to close at N7.80. The losers’ train was followed by Guinness Nigeria Plc, FCMB Group Plc, Zenith Bank Plc and FBN Holdings Plc, which dropped by 4.96 per cent, 4.88 per cent, 4.76 per cent and 4.43 per cent, respectively.
All the NSE sector indices recorded declines, save for the NSE oil/gas and NSE insurance indices which advanced by 1.01 per cent and 0.01 per cent, respectively. The NSE banking and NSE food/beverage indices recorded the largest declines, after paring by 1.18 per cent, 1.27 per cent, respectively.
Commenting on the outcome of the market, analysts at Meristem Securities Limited said, “We note that the few earnings results released have not stimulated positive investor sentiments in the market, as a few companies which have declared disbursements with attractive dividend yields have witnessed share price declines.
“We, however, advise dividend-inclined investors to take position in fundamentally justified counters with attractive expected dividend yields, while we caution that there might be no attendant capital appreciation.”
Meanwhile, at the close of Wednesday’s trading session, the open buy-back and overnight rates recorded respective declines of 1.00 per cent and 1.33 per cent, to settle the average money market rate at 12.09 per cent.
In the Treasury bills space, bullish activities were recorded as the average yield declined by 1.33 per cent to settle at 14.50 per cent at the close of trading. The one-month, three-month and six-month instruments logged declines of 1.81 per cent, 1.58 per cent and 0.61 per cent, respectively.
There were slightly bullish sentiments in the Treasury bonds space, as the average bond yield declined by 0.25 per cent to settle at 16.36 per cent. Yield declines were recorded on all instruments save for the May-2018, June-2019, March-2024 and July-2034 bonds, which advanced slightly by 0.07 per cent, 0.04 per cent, 0.04 per cent and 0.03 per cent, respectively.
The naira traded flat at the parallel foreign exchange market, closing the day at N455/dollar. However, at the interbank forex market, the currency appreciated marginally by 0.08 per cent, to close at N305.25/dollar.
Additional report from Punch
