FG Plans 10 New Rail Lines

railways-tracksThe Federal Government is currently carrying out feasibility studies on the construction of 10 new standard gauge rail lines across the country.

According to the Nigerian Railway Corporation, the standard gauge rail lines will cover a travelling distance of over 3,421 kilometres when completed.

It further stated that the various rail lines would pass through Lagos, Oyo, Osun, Ogun, Benin, Abuja, Kogi, Onitsha and Sokoto, among other states.

The corporation disclosed this in its latest Rail Development Plan report that was obtained by our correspondent from the Federal Ministry of Transportation in Abuja on Sunday.

The NRC outlined the 10 new standard gauge rail routes where feasibility studies were being carried out as the 300km Lagos-Sagamu-Ijebu Ode-Ore-Benin City East-West rail line; Lagos-Ibadan-Osogbo-Baro-Abuja high speed 615km line; Ajaokuta (Eganyin)-Obajana-Jakura-Baro-Siraj-Abuja rail, with additional line from Ajaokuta to Otukpo (533km); and the 520km Zaria-Kaura Namoda-Sokoto-Ileila-Birnin Koni in Niger Republic.

Others are the Benin-Agbor-Onitsha-Nnewi-Owerri-Aba rail, with additional line from Onitsha-Enugu-Abakaliki, 500km; Eganyin (near Ajaokuta)-Lokoja-Abaji-Abuja, 280km; Benin-Sapele-Warri-Yenagoa-Port Harcourt-Aba-Uyo-Calabar-Akampa-Ikom-Obudu Cattle Ranch coastal rail line, 673km; Port Harcourt-Aba-Umuahia-Enugu-Makurdi-Lafia-Kuru-Bauchi-Gombe-Biu-Maiduguri line; Ikom-Obudu-Ogoja-Katsina Ala-Wukari-Jalingo-Yola-Maiduguri line; and the Kano-Nguru-Gusau-Damaturu-Maiduguri-Gamborugala rail line.

In its report, the NRC stated that the construction and rehabilitation of the Itakpe-Ajaokuta-Warri standard gauge line project was nearing completion.

It recalled the construction of the Abuja (Idu)-Kaduna standard gauge rail had earlier been completed and train operations commenced.

The corporation noted that the groundbreaking for the construction of Lagos-Ibadan standard gauge (double track) 2 x 180km rail line project, awarded to the CCECC, was done earlier this year, adding that work had commenced on the site following the conclusion of its funding arrangement.

It, however, stated that paucity of funds was a key challenge to the projects, adding that the government required more funds to complete the rehabilitation of the Western and Eastern lines, carry out addendum for sidings and loop lines on the Western line, procure and rehabilitate locomotives and rolling stock, as well as for the procurement of maintenance equipment.

It said more funds were needed for complete modernisation projects, as well as for the rehabilitation and construction of links to the sea, rivers and airports.



Naira Rebounds, Closes At 365/Dollar

Naira-Dollarnira The naira closed at 365 per United States dollar on Friday, up from 367/dollar as dollar supply continued to improve.

The local currency has been trading between 367 and 369/dollar in recent weeks.

Analysts said the local unit would continue to trade between 360/dollar and 370/dollar in coming months.

They, however, said that the Central Bank of Nigeria’s policies on naira would determine the ultimate fate of the currency.

The CBN is seeking to achieve exchange rate convergence as it continues to step up its weekly interventions in the foreign exchange market.

Meanwhile, the Federal Government is planning to sell N130.37bn worth of treasury bills at an auction on October 4.

The CBN will offer N28.69bn in three-month paper, N33.49bn in six-month bill and N68.18bn in one-year note. Results of the auction will be announced on the same day.

The CBN issues treasury bills twice a month to help the government to finance its budget deficit, curb money supply growth and provide an avenue for lenders to manage liquidity.

The Federal Government had raised N243.7bn at a bond auction last Wednesday, almost double the amount it offered, as local funds and foreign investors piled into longer tenors to lock in yields.

The Debt Management Office put N135bn worth of bonds maturing in 2021, 2027 and 2037, on offer.

However, total investor demand stood at N394.8bn, prompting the debt office to increase the size of the offer, Reuters reported.

Buhari Okays CBN’s Agric Initiative, Lists Achievements

FarmingCBN’s $504m forex offer steadies market ahead of holiday
President Muhammadu Buhari yesterday, in his Independence Day broadcast, commended the premium initiative of the Central Bank of Nigeria (CBN)- Anchor Borrowers programme (ABP).

He also took time to enumerate the programme’s successes, which he included in his administration’s achievement.

Furthermore, the President said a new presidential initiative would soon start with each state of the federation creating a minimum of 10,000 jobs for unemployed youths, riding on the back of CBN’s development finance initiatives.

According to him, his government has remained pro-active in its diversification policy, noting that the agricultural programme, which he launched in November 2015, has been an outstanding success.

He said: “N43.92 billion was released through the CBN and 13 participating institutions; 200,000 small holder farmers from 29 states of the federation benefitting; and 233,000 hectares of farmland cultivating eight commodities, namely rice, wheat, maize, cotton, soya-beans, Poultry, Cassava and Groundnuts, in addition to fish farming.

“These initiatives have been undertaken in close collaboration with the states. I wish to commend the efforts of the Governors of Kebbi, Lagos, Ebonyi and Jigawa States for their support to the rice and fertilizer revolutions.

“Equally commendable are contributions of the Governors of Ondo, Edo, Delta, Imo, Cross River, Benue, Ogun, Kaduna and Plateau States for their support for the Presidential initiative for palm oil, rubber, cashew, cassava, potatoes and other crops,” he said.

Recounting achievements of the programme, he noted that since December last year, this Administration has produced over 7 million 50Kg bags of fertilizer.

He also said 11 blending plants with a capacity of 2.1 million metric tonnes have been reactivated and has consequently saved $150 million in foreign exchange and N60 billion in subsidy, while fertilizer prices have dropped from N13,000 per 50Kg bag to N5,500.

Meanwhile, CBN ended its weekly foreign exchange (forex) intervention on Friday with $308.5 million sales, making it $503.5 million for the whole week.

The dollar sales, which were in continuation of efforts to sustain liquidity in the foreign exchange market consequently, strengthened the local currency to N363 per dollar at parallel market.

Meanwhile at the Investors and Exporters window, the local strengthened further as it was priced N359.45 in earlier deals, before closing at N360.40, with the official exchange rate closing at N305.75 per dollar.

In a data from the FMDQ OTC Securities Exchange, transactions at the investors and exporters window in the week showed a record of $304.1 million daily, an indication of a return of confidence in the forex market.

CBN had earlier in the week, boosted dollar liquidity in the foreign exchange (forex) market by offering a total of $195m to the three segments of the market.

This is coming after the apex bank steadied the country’s reserves’ profile at above $32 billion in more than one week, despite intervening to the tune of $545 million last week.

The Acting Director, Corporate Communications Department, CBN, Isaac Okorafor, who affirmed the development, said the latest intervention in the retail segment was part of the regular auctions of the apex bank, in line with its commitment to sustain liquidity to meet genuine requests in the market.

While warning against speculations in the market, Okorafor said the CBN had put necessary checks in place to guard against the activities of speculators.

He stressed the determination of the bank to continue its forex intervention and encouraged genuine users of foreign exchange to approach their banks, as there are enough forex to meet their demand.



Four Banks Trading Below Minimum Liquidity Ratio – MPC Members

cbnFour commercial banks in the country are operating with too many non-performing loans on their books and with liquidity ratios below the minimum requirement, two members of the Central Bank of Nigeria’s Monetary Policy Committee have said in statements on the bank’s website.

The two MPC members, Dr. Doyin Salami and Prof. Balami Dahiru Hassan, did not name the lenders, but said the four banks together were equivalent to at least one Systemically Important Bank.

Their statements were part of those of eight members of the MPC published late on Tuesday.

According to Hassan, financial sector stress tests showed that the Capital Adequacy Ratios for the nation’s banking industry worsened to 11.51 per cent in June, from 12.81 per cent in April, as against a regulatory minimum of 15 per cent for banks with international licences.

He said, “The financial performance indicators showed that when the four outlier banks were removed, the CAR, NPLs ratio and the Liquidity Ratio are all above the prudential requirement.

“The banking sector liquidity ratio showed that all DMBs registered above the minimum of 30 per cent Liquidity Ratio with the exception of four outlier banks. The stress test, therefore, shows that the Deposit Money Banks are less resilient to shocks.”

Hassan stated that the NPLs stood at 15.07 per cent in June compared with the five per cent regulatory limit.

Salami, on his part, said the ratio stood at 8.17 per cent when excluding the four lenders in question.

He stated, “The Financial System Stability Report by the CBN staff highlights one of the biggest challenges with, which the central bank must grapple.

“At slightly over 15.0 per cent, the portfolio of the NPLs as a proportion of the total loan book of banks remains above the regulatory maximum and continues to rise. Whilst the CBN staff continue to note that once the figure is discounted for the impact of ‘four outlier banks’, the NPL ratio drops to 8.17 per cent.”

The International Monetary Fund had urged Nigerian policymakers to quickly increase the capital of undercapitalised banks and put a time limit on regulatory forbearance after it said last month that four banks were under-capitalised.

Union Bank of Nigeria Plc on Wednesday started a N50bn share sale to existing shareholders to enhance its regulatory and working capital.

A number of mid-size banks are seeking to raise fresh capital but the economic challenges facing the country may have delayed their plans.

Salami told our correspondent in a telephone chat that his MPC statements were things he stood by and believed in.

Asked if he had additional explanation, he said, “I don’t believe in stating half-truths. If you have read my statement in the past two years or more, you would have seen that.”

Reacting to the development, the Managing Director of Afrinvest Securities, Mr. Ayodeji Ebo, said 2016 was a very tough year for the banking sector and this led to increased NPLs in the banks’ books.

He said the economic challenges led to default in loan obligations by many companies.

These, he added, impacted the liquid assets of many banks, leading to low liquidity ratio and high NPLs.

In its latest report titled, ‘Nigerian banks: Survival of the fittest’, Renaissance Capital, an investment bank, said, “We believe that the focus for the banks that have struggled in this environment is to clean up their loan books and strengthen their capital positions.

“In our view, the biggest risk to both the NPL clean-up process and capital is the currency, as most of the banks continue to use the official rate (N305/$) to market their foreign currency exposures.

“We acknowledge that current market valuations remain depressed for the tier-2 banks, although the year-to-date share price increases and the improved macro outlook should make these banks more willing to engage in discussions around a capital raise. This, in our view, will drag out the prospect of an RoE recovery.

“For the entire banking sector, we believe that there is a risk to NIMs in FY18 given the scope for monetary policy easing. We expect that general business activity will also start to slow down in 2H18, ahead of the 2019 general elections. All of these factors could contribute to a delayed recovery for some of the banks.”

Ebo also expressed optimism that following the exit from recession, many banks would record improvement in their loan books before the end of the financial year.

Some economic analysts said low liquidity ratios in the four banks at the end of the second quarter might be corrected by the end of the third quarter.



Low Oil Price Will Help Nigeria, Others – Dangote

aliko dangoteThe President/Chief Executive, Dangote Industries Limited, Aliko Dangote, has said low oil prices will help Nigeria to reduce its reliance on crude oil revenues.

Dangote stated this at the UN General Assembly in New York on Tuesday, according to a statement from the African Press Organisation.

Global oil benchmark, which fell from a high of $115 per barrel in mid-2014, has continued to hover around $53 per barrel in recent months.

At the headquarters of global law firm, Shearman and Sterling LLC, high level business leaders and international diplomats invited by the Corporate Council for Africa to hear Africa’s richest man, Dangote, and the Rwandan President, Paul Kagame, openly conversed on Africa’s opportunities and challenges, a statement by the Dangote Industries stated.

Both leaders, it said, underscored the ongoing movement to diversify African economies.

In the case of Nigeria, Africa’s largest economy, Dangote said, “We should pray that oil prices remain low. This helps wean us off the dependency on revenues from petroleum. We must take oil to be the icing on the cake. We already have the cake.”

Dangote told investors, “(With) agriculture, agriculture, agriculture, Africa will become the food basket of the world.”

In addition to agriculture, he cited Nigeria’s vast mineral resources and natural gas as sources of economic prosperity and stressed the need to manufacture more goods locally for domestic consumption.

Dangote, who cited the continued need for heavy investments in education, specifically said that “five of the 12 million jobs needed in Africa soon must be created in Nigeria.”

He has expanded his business from cement, sugar, and other household commodities to fertiliser and other processed high-value goods.

“Technology, of course, helps us a lot and our factories are state of the art with the use of robotics but we shouldn’t be overly tech-oriented to create wealth,” he told investors.

Dangote, who is often cited as one of the most inspiring business leaders in the world today and a model for young entrepreneurs, offered advice to Americans who tend to rely on outdated news and wrong perceptions of Africa, saying, “Don’t be lazy. Go there and find the real story for yourself. Things have changed.”

He described Rwanda, where he has business interests, as an example of positive change, good governance and leadership, and where corruption had been cured.

He cited a personal experience of offering a $100 tip for services at the Kigali Airport to a worker who refused to take money for work they were paid to do.



Manufacturers Reject Monthly Review Of Electricity Tariff

electricity-POWERThe Kwara Branch of the Manufacturers Association of Nigeria has kicked against the monthly review of electricity tariff by distributing companies.

The Executive Secretary of the association, Mr. Gbenga Johnson, told the News Agency of Nigeria in Ilorin on Thursday that many consumers are not getting value for money.

“We have been experiencing epileptic power supply and Ibadan Electricity Distribution Company has continued to charge us on a monthly basis without consideration for the volume of watts being consumed by individual companies.

“All stakeholders must come together and speak against this excessive exploitation of manufacturers and other industries by the discos because this is crippling our businesses.

“The issue of constant power supply should be given optimum priority among other factors such as multiple taxation,” he said.

He also called on government at all levels to take necessary steps in stabilising the economy through tax waiver policies to industries. (NAN)



Govt To Reduce N6b Forex Spending On Tomato Imports

LOCAL manufacturers have embarked on projects that will reduce the cost of tomato import, Manufacturers Association of Nigeria (MAN) president,  Dr. Frank Udemba Jacobs, has said.

In an interview with The Nation, he said Nigeria currently spends N6bilion on importation of tomato, adding that the country is currently not producing up to its capacity of 1.8million metric tons.  “The spending cut of N6bn spent on the importation of tomato will come about from reduced importation of concentrates and consequent utilisation of local tomato seeds to produce concentrates. You are aware that some manufacturers have commenced backward integration projects which are aimed at producing their own raw materials. The current local installed capacity of tomato is estimated at about 1.8 million metric tons per annum but the actual production capacity is less,” he said.

Explaining reasons behind the preference of imported tomato to the local ones by Nigerians, he said: “Nigeria does not have the species of tomato seedlings that are suitable for the production of high quality concentrates. The type available locally reportedly contains 70 percent water. It is also reported that the crop yield of the local species is around 7 MT/hectares as against 80 MT/hectares and 110 MT/hectares in China and California respectively. The present volume of local demand is between 750,000 MT and 1.2 Million MT

Jacobs further said the last tomato disease saga, which affected the availability of tomato in the country, resulted into ‘lull in the tomato market.’

”The value of the tomato market is $170million, which today at N365 per dollar exchange rate is about N62.05 billion. There was a lull in the tomato market. However, production was not so much affected because local species of tomato seedlings were not so much in use. What hampered production more was scarcity of forex. Some manufacturers had started experimenting with the use of local species when the disease broke out and that thwarted that experimentation,” the MAN chief said.

NNPC Loses N48bn As Refineries’ Performance Drops By 45%

nnpc-tower Nigerian refineries are still performing poorly as an analysis of the latest monthly oil and gas sector report has shown that their combined performance, with respect to capacity utilisation, has dropped by 44.87 per cent.

This came just as the Nigerian National Petroleum Corporation continued to record losses on monthly basis since the beginning of this year.

Figures from the June 2017 financial and operations report, which was released on Friday, showed that the corporation lost N5.2bn in June, while its year-to-date loss increased to N48.02bn.

On their consolidated operational performance, the refineries’ capacity utilisation dropped from 23.09 per cent in May 2017, to 12.73 per cent in June.

The country’s refineries are: the Warri Refining and Petrochemical Company, Port Harcourt Refining Company, and Kaduna Refining and Petrochemical Company.

The report indicated that the three refineries processed 434,419.2 metric tonnes of crude in May, but this reduced to 231,836 MT in June, despite receiving 753,548 MT of crude in the month under review.

Their consolidated percentage loss also increased to 2.44 per cent in June, as against the 2.05 per cent that was recorded in the previous month.

Plant consumption for the three facilities was 10.92 per cent in June, down from the 11.98 per cent recorded in May 2017.

On individual performances, further analysis of the report showed that both the WRPC and the KRPC processed no single drop of crude oil in June this year.

The WRPC also did not process any crude in May, but the KRPC processed 129,974 MT and recorded a capacity utilisation of 27.95 per cent in that month.

The PHRC processed 304,445 MT and 231,836 at MT of crude oil, at 34.29 per cent and 26.98 per cent capacity utilisation in May and June, respectively.

On the group financial performance of the national oil firm, the report stated that the NNPC’s monthly deficit increased to N5.19bn in June, up from the N3.55bn that was recorded in the preceding month.

The corporation said, “The report for the month of June, 2017 indicates a trading deficit of N5.19bn representing an increase in deficit compared to the previous month’s deficit of N3.55bn. This represents N1.64bn lower performance than what was reported in the previous month of May 2017.

“The low performance in the period relative to the previous month is attributed to reduction in surplus recorded in the upstream value chain. This is despite sustaining the success recorded by its enhanced crude oil evacuation and oil lifting in June, 2017 following the reopening of Forcados Oil Terminal on March 31, 2017.”

The report further stated that in May, 2017, crude oil production in Nigeria averaged 1.88 million barrels per day, which represents 4.75 per cent increase compared to April, 2017 production, and up by 11.61 per cent relative to May, 2016 performance.

“Thus, crude oil production is gradually inching up to a more stable period of 2015. Issues that still dragged production during the period include production shut-in at Qua Iboe, Bonga, Akpo and Yoho terminals,” it added.

It, however, stated that sustained efforts by the Federal Government with the various stakeholders continued to yield positive results on overall production.

“A line flush was carried out on May 20, while export activities have reopened at the Forcados Terminal at the last week of the month after many months of non-operation,” the oil firm said.



Naira Closes At N362 As CBN Injects $297m Into FX Market

Naira-DollarThe naira got another boost yesterday as the Central Bank of Nigeria (CBN) injected $297 million into the Retail Secondary Market Intervention Sales (SMIS) segment of the foreign exchange market, raising the total intervention for the week to the sum of $547 million. The intervention boosted its rate as it closed at N362 to the dollar as against N365 at which it opened yesterday.

Confirming the figures, the CBN spokesman, Mr. Isaac Okorafor, the Acting Director, Corporate Communications Department, disclosed that the bank was resolute in its determination to intervene in the forex market with the aim of uplifting the naira exchange rate, boosting liquidity in the forex market and ensuring timely execution and settlement for eligible transactions.

The CBN spokesman also expressed confidence that the interventions will continue to guarantee stability in the market and ensure availability to individuals and business concerns with genuine demand for forex transactions.

Recall that on Monday, August 28, 2017, the CBN intervened in the inter-bank foreign exchange market with $195 million in three segments of the market. In the wholesale segment of the inter-bank foreign exchange market, it sold $100 million and also uplifted the Small and Medium Enterprises (SMEs) and invisible segments, with the sum of $50 million and $45 million respectively.

Okorafor, while responding to media enquiries earlier in the week, had hinted that the apex bank would increase liquidity in the market in the coming days, noting that the move by the CBN is necessary to enhance stability in the FX market.

Kachikwu Predicts Petrol Price Crash In 6 Months

Ibe-KachikwuThe Minister of State, Petroleum Resources, Dr. Ibe Kachikwu, has given assurance that the pump price of Premium Motor Spirit (PMS), otherwise known as petroleum will crash from the current N145/litre within four to six months.

Kachikwu who made the prediction in a podcast message to mark his two years in office, did not give the likely price the vital product would be sold.

According to him, the forecast springs from what he described as the competition inherent in the PMS price modulation.

The minister said the price of diesel, which is now 40 per cent lower that what hitherto obtained, amid surplus supply, was enough evidence that petrol prices will also crash.

He said: “once Nigerians throw their trading skill in it, once competition thrives, the prices will continue to tumble.

“My guess is that you will see the prices tumble in the next four, five to six months. The market will be more stable and definitely the prices will be lower than what we see today.”

On the refining capacibility of the nation’s refineries, Kachikwu this was the first time the three refineries would be working simultaneously, although at 50 per cent of their capacity, in the last 10 years.

“We expect to put in investment to put them to 90 per cent capacity,” he said.

According to Kachikwu, this his tenure was also the first time the NNPC Group has recorded savings, which could be used to fix the refineries in collaboration with its Joint Venture partners.

The Minister further noted that this was the first time the government upgraded the nation’s depots, adding that out of 19, only three are grounded currently.


…The Sun