Nigeria in talks with oil majors to repay debt, invest in refineries

Nigeria is in talks with oil majors and banks to raise capital for new drilling and to repay up to $4 billion in debt that the state oil firm has accumulated over years of mismanagement, the firm's head told Reuters.

Emmanuel Ibe Kachikwu, who is also the minister of state for petroleum, said he wanted to increase output to up to 2.5 million barrels per day by the end of 2016. Currently, the OPEC member pumps 2.3 million bpd.

President Muhammadu Buhari has made reforming the oil sector a priority as a slump in oil prices hammers the economy. The former military ruler has fired the NNPC board and appointed Kachikwu to overhaul a company whose opaque structures have allowed corruption and oil theft to flourish.

Nigeria's oil and gas output has been relatively stagnant as big offshore projects have been held up by much-delayed government funding and uncertainty over fiscal terms.

Africa's biggest economy produces oil with foreign and local firms through production-sharing contracts and joint ventures (JVs) but investments have been held up because NNPC has been unable to pay its part: bills have been piling up since 2012.

Kachikwu said debt as of November stood at $3.5-$4 billion, which NNPC wanted to cut through deals such as a $1.2 billion multi-year drilling financing signed with Chevron in September.

"The target is that over 2017, we'll begin to look at zero," he said in an interview, referring to debt and the goal of ending the need for JVs to depend on NNPC cash.

NNPC was in talks with oil majors such as Italy's Eni and oil traders Vitol and Gunvor, seeking partnerships to revamp assets such as refineries after decades of neglect. Cash-strapped for years, it reported a loss of 267.14 billion naira ($1.3 billion) for 2015. 

30 ships laden with petroleum products, food items, to arrive Lagos On February 15, 20165:18 pmIn NewsComments Thirty ships laden with petroleum products, food items and other goods are expected to arrive Apapa and Tin-Can Island Ports in Lagos from Feb. 15 to Feb. 24. The Nigerian Ports Authority (NPA) stated this in its publication – `Shipping Position’, – a copy of which was made available to the News Agency of Nigeria (NAN) on Monday in Lagos. NPA explained that the expected ships contained buck wheat, bulk salt, containers, steel products, gypsum, Rubber Tyred Gantry (GTR) cranes, base oil, petrol, kerosene and diesel. The document noted that nine other ships had arrived the ports, waiting to berth with petrol and containers. NAN reports that 16 other ships are at the ports discharging buck wheat, general cargoes, soda ash, bulk rice, buthane, containers, base oil and petrol.

Read more at: http://www.vanguardngr.com/2016/02/30-ships-laden-with-petroleum-products-food-items-to-arrive-lagos/

Sterling Bank may acquire Keystone Bank

Sterling Bank Plc is planning to buy one or two mid-sized commercial lenders before the end of the year, The Nation has learnt.

Investigations showed that the lender is seriously eyeing Keystone Bank Limited the last of the three bridged lenders bought by the Asset Management Corporation of Nigeria (AMCON).

Sterling Bank an insider source said, is also considering buying another mid-tier lender with strong presence in the northern part of the country.The targeted bank  has been grappling with low liquidity in recent months due to sharp falls in the value of the naira, crude oil prices and increased regulatory pressure.

Sterling Bank’s Chief Finance Officer, Abubakar Suleiman, told Reuters that these factors are forcing banks to recapitalise. He said his bank expected a further 20 per cent devaluation in the naira, eroding capital ratios for several of its rivals exposed to foreign currency assets and potentially triggering mergers.
 

Sterling Bank CEO, Yemi Adeola, disclosed late last year that six commercial banks are likely to seek mergers and acquisitions this year. The mergers, he said, are triggered by the shock created in their assets and balance sheet sizes in the face of declining oil prices.

Crude oil prices have fallen to as low as $32.11 per barrel from over $110 per barrel a year ago. This has adversely affected banks’ oil assets. Besides, the level of non-performing loans in the sector has risen.
Adeola said he envisaged possible shrinking in the number of local banks this year. There are already moves suggesting that trend, he said, but did not name any bank.

The bank chief said two international banks were discussing with local lenders on possible acquisition. He said last year was a challenging one for the economy and the banking sector, adding that banks are now finding ways to wriggle out of these challenges, including a tough regulatory environment.

He said oil price could also drop further, and called for a more efficient tax system, blocking of revenue leakages and focus on areas neglected in the past – “from agric to solid minerals and other commodities we have in abundance. We also need to support Small and Medium Enterprises to create opportunities that will create jobs,” he said.

Adeola said the Nigerian banking industry was the most regulated sector in the country thereby affecting banks’ performance.  “To say that everything will be rosy in 2016 will be deceiving ourselves. I think if the opportunities arise for banks to pursue further consolidation, we could see two or three. I also know that one or two international banks are interested in pursuing acquisitions in Nigeria and they are indeed having discussions already.

“So, you could see a combination of one or two international banks taking over one or two Nigerian banks or merging with them. And nothing also stops two or three Nigerian banks having merger discussions in 2016”, he said.

Adeola said Sterling Bank is ready for either a merger or an acquisition, provided it will add value to stakeholders. “For us at Sterling Bank, we are always open to mergers or acquisitions. We are open to anything that can give us scale. Whether it is a merger or acquisition, we are open, but the synergy must be there. We must see the benefits clearly. Any merger must be one that ensures stakeholders will benefit more; otherwise it will not be worthwhile, he added.

Adeola added: “We have every cause to remain optimistic in 2016, despite the fact that it is going to be a challenging year for the banking sector. We are determined to keep the momentum going. We first started a merger of five banks, and all the consultants predicted that all the entities will struggle for the next 10 years. It was challenging but we got out of it.  Experience has shown globally, that mergers don’t work, especially when you are merging five institutions.”

Nigerian naira hits record low of 345 vs dollar

Nigeria's naira weakened to a record 345 to the dollar on the parallel market on Monday, increasing pressure on the government to devalue the official exchange rate to narrow the gap and spare Nigerians from huge bills for imported goods.

The local currency eased 1.47 percent from Friday's close of 340 to the dollar, while the official rate remained at 197.50 to the dollar at the close of trading on Monday.

Traders said the black market rate had slipped as Nigerians with school and medical bills to pay abroad anticipated the central bank would stop allocating currency for such payments. The bank has not denied or confirmed any such plans.

Tumbling global oil prices have battered Africa's top crude exporter, with foreign exchange reserves down to an 11-year low at $27.85 billion by Feb. 11.

Nigeria's government is concerned that further depreciation will hurt poor Nigerians, but the bank's refusal to revise the pegged exchange rate has widened a chasm between official rates and the parallel market.

"In my own view, the central bank should address the supply side of the market by allowing oil companies and banks to sell dollar to bureau de change operators as an immediate measure to reduce pressure on the naira," said Aminu Gwadabe, head of the Association of Bureau de Change Operators of Nigeria.

Last month, Nigeria's central bank halted dollar sales to non-bank foreign exchange operators and allowed commercial banks to accept dollar deposits, in a failed effort to shore up dwindling foreign reserves.

Nigeria earns around 90 percent of its foreign exchange earnings from crude oil exports, but mismanagement of its refineries means it must also import expensive refined fuel, eating deep into its reserves.

Inflation Rate Remains Unchanged At 9.6%

Nigeria’s inflation rate remained unchanged at 9.6% in the month of January, maintaining the same figure recorded in December, 2015.

According to data released by the National Bureau of Statistics on Sunday, the headline index was weighed down by slower increases in major divisions such as housing, water, electricity, gas, fuel, furnishing and household equipment.

Food inflation remained steady at 10.6% in January compared with the previous month.

During the month, all major food groups which contribute to the food sub-index increased at a faster pace during the month, with the exception of the fruit vegetables.

The NBS also stated in its petrol price watch that Nigerians paid an average sum of 109 Naira 59 kobo per litre for the product in January.

Oil extends rally on prospects OPEC could act to counter low prices

Oil prices rose on Monday, extending a rally triggered last week by speculation that OPEC might agree to cut production to reduce a supply glut that has pushed prices to the lowest in over a decade.

Brent crude futures, the global benchmark, were up 46 cents at $33.82 a barrel at 1232 GMT. U.S. futures traded at $30.02 a barrel, up 58 cents on Friday's close. Trade is likely to be thinner than usual on Monday due to the U.S. Presidents Day holiday.

"Some traders still think about the chances of an OPEC plus Russia (production) cut and close their short positions," said Frank Klumpp, oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg.

The United Arab Emirates' energy minister said the Organization of the Petroleum Exporting Countries was willing to cooperate on an output cut, the Wall Street Journal reported last week.

And Nigeria's oil minister told Reuters the mood inside OPEC was shifting to a growing consensus that a decision must be reached on how to prop up prices. 

AMCON offers Keystone Bank for sale

Nigeria’s state-backed “bad bank” AMCON said on Monday it was seeking prospective investors to buy Keystone Bank, the last of the nationalised banks yet to be sold.

The Asset Management Corporation of Nigeria (AMCON) said in a public notice it had decided to divest its 100 percent interest in the bank and ask prospective buyers to submit their bids by March 4.

AMCON appointed Citibank’s local unit and FBN Capital as financial advisers to manage the process, asking prospective investors to submit bids, showing evidence of credibility and eligibility for the transaction.
Nigeria nationalised three lenders, Afribank, Spring Bank and Bank PHB in 2011, while AMCON then recapitalised them and changed their names to Mainstreet Bank, Enterprise Bank and Keystone Bank. Two of the banks have since been sold.

Based on audited account as of June last year, Keystone bank has a total assets of about 317.6 billion naira ($1.60 billion), equity of 18.9 billion naira and a loan portfolio of about 98.2 billion naira.

By Dec. 31, the Bank had 156 branches across the country with four subsidiaries, of which two are international, AMCON said in the notice.

Nigeria’s Sterling Bank told Reuters on Friday it was aiming to buy one or two mid-sized commercial lenders as sharp falls in the value of the naira and increased regulatory pressure are forcing banks to recapitalise.

AMCON was set up in 2010 to absorb non-performing loans in exchange for government bonds, after the central bank injected $4 billion to rescue nine lenders from collapse seven years ago.

Buhari fires DGs of NAFDAC, BPE, BPP, SON, PPPRA, BoI

The federal government has sacked the heads of 26 agencies and parastatals, according to a statement by Babachir Lawal, the secretary to the government of the federations.

The full list: (i) Nigerian Television Authority (NTA)

 (ii) Federal Radio Corporation of Nigeria (FRCN)
(iii) Voice of Nigeria (VON)
(iv) News Agency of Nigeria (NAN)
(v) National Broadcasting Commission (NBC)
(vi) Petroleum Technology Development Fund (PTDF)
(vii) New Partnership for Africa’s Development (NEPAD)
(viii) Nigeria Social Insurance Trust Fund (NSITF)
(ix) Nigerian Content Development and Monitoring Board(NCDMB)
(x) Federal Mortgage Bank of Nigeria (FMBN)
(xi) Tertiary Education Trust Fund (TETFund)
(xii) National Information Technology Development Agency (NITDA)
(xiii) Petroleum Equalization Fund
(xiv) Nigeria Railways Corporation (NRC)
(xv) Bureau of Public Procurements (BPP)
(xvi) Bureau of Public Enterprises (BPE)
(xvii) Petroleum Products Pricing Regulatory Agency (PPPRA)
(xviii) Standard Organization of Nigeria (SON)
(xix) National Agency for Food and Drugs Administration and Control (NAFDAC, pictured)
(xx) Nigeria Investment Promotion Council (NIPC)
(xxi) Bank of Industry (BoI) (xxii) National Centre for Women Development (NCWD)
(xxiii) National Orientation Agency (NOA)
(xxiv) Industrial Training Fund (ITF)
(xxv) Nigerian Export-Import Bank
(xxvi) National Agency for Prohibition of Traffic In Persons and Other Related Matters (NAPTIP).