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Operators Want FG to Float JVs Equity on NSE

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Nigerian stock market
  • Operators Want FG to Float JVs Equity on NSE

Capital market operators have called on the Federal Government to dilute its equity holdings in the Joint Venture (JV) oil and gas operations in Nigeria and list some percentage of its shares on the Nigerian Stock Exchange (NSE), which lists companies’ equities for daily trading.

This, they said, will relieve government of the burden of JV cash calls, estimated at $6-9billion annually, in addition to about $6.8billion in arrears for five years, which it is struggling to exit through a new funding arrangement.

Cash calls refer to the counterpart funding which the Federal Government, represented by the Nigerian National Petroleum Corporation, (NNPC), pays yearly as its 60 percent equity shareholding in various oil and gas fields operated by international oil companies (IOCs) and indigenous oil firms.

By mid-November last year, the Minister of Petroleum Resources, Dr. Ibe Kachikwu, announced the cancellation of the JV cash calls, following approval from the Federal Executive Council (FEC).

Prior to the announcement, the NNPC Group Managing Director, Maikanti Baru, had claimed the JV cash call debt burden had been reduced to $2.5billion in 2016, and also disclosed that the exit model government is pursuing becomes effective from January 1st.

According to him, the exit model, “guarantees government most of the revenue that normally accrues to it from the joint venture operations by lifting the royalty and tax oil upfront.”

But NNPC spokesman, Ndu Ughamadu, could not confirm the development when contacted by The Guardian to find out if the exit model had taken off as envisaged.

Indeed, stakeholders who spoke in a telephone interview argued that if some percentage of government’s equity in “the IOCs JVs is floated on the Exchange, the market would strategise for economic growth and facilitate capital raising and mobilise savings for huge projects and investment.”

They argued that the listing of the JV shares on the stock market will become a platform for capital formation and distribution of wealth as well as offer many Nigerian investors the opportunity to share from the profits of these companies.

Already, stakeholders had lamented that the oil and gas sectors, particularly the upstream exploration and production, are narrowly represented in the market, stressing that the stock market is currently in dire need of a broader variety of stock options.

They added that the listing of some percentage of government holdings in the IOCs would deepen the stock market and boost retail investors’ confidence and participation in the market.

For instance, the President, Institute of Capital Market Registrars (ICMR), Bayo Olugbemi, explained that listing a percentage of the equity in nation’s stock market would improve the depth of the nation’s capital market and turn around the fortunes of the market.

“Selling of government assets will definitely bring money into the National Treasury provided such income will be spent on capital project, which will bring about multiplier effect on the economy.

“As for the capital market, divestment such as this will improve the depth of our capital market and the benefits will be phenomenal and of course has the potential to turn around the fortune of the market and make it more active.”

Corroborating his assertions, the former President, Independent Shareholders Association of Nigeria (ISAN), Sonny Nwosu, said: “Government do not have shares in the stock exchange. What we are asking is for the demutualisation of the exchange, so that all of us will be owners of the institution. For others, we have asked for the floating of the portion of capital of these corporations bearing in mind of existence of JVC; it the right thing to do.”

The new President of ISAN, Adeniyi Adebisi, noted that across the board, shareholders have been clamoring for the deepening of the capital market.

According to him, if government can dilute its equity holdings in international oil companies and float some portions (of the equities) on the exchange, it will be providing a direct answer to the clamour.

“It has been said often that government has no business in business. If the government is holding equity for the purpose of generating revenue that will be wrong in the sense that it will be holding up itself in competition against the private sector.

“Moreover, government does not need to hold majority interest before it can control any foreign corporation as appropriate clause can be inserted to give required control. From what we know, government retains direct interest in companies not necessarily for the consideration of instilling good governance or anything of the sort, but usually to create more avenues that can provide further areas for patronage for political party supporters and cronies.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Tony Elumelu Acquires Shell, Total, ENI Stakes in OML 17

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Tony Elumelu Acquires Shell, Total, ENI Stakes in OML 17

Tony Elumelu owned Heir Holdings Limited and its related company Transnational Corporation of Nigeria Plc on Friday announced it has completed the purchase of 45 percent stake in Oil Mining Lease (OML 17) through TNOG Oil and Gas Limited.

The acquisition includes all assets of Shell Petroleum Development Company of Nigeria Limited (30 Percent), Total E&P Nigeria Ltd (10 percent) and ENI (five percent) — in the lease.

It was further stated that TNOG Oil and Gas Limited will also have the sole right to operate OML 17.

The field presently has a production capacity of 27,000 barrels per day. Also, there are estimated 2P reserves (proven and probable) of 1.2 billion barrels and an additional one billion barrels in possible reserves — all of oil equivalent.

A consortium of global and regional banks and investors provided a financing component of $1.1 billion for the largest oil and gas financing in Africa in over a decade.

In a statement released on Friday, Shell said the completion was after all the necessary approvals have were received from authorities.

“A total of $453m was paid at completion with the balance to be paid over an agreed period. SPDC will retain its interest in the Port Harcourt Industrial and Residential Areas, which fall within the lease area,” the SPDC said.

Speaking after the completion of the deal, Elumelu said “We have a very clear vision: creating Africa’s first integrated energy multinational, a global quality business, uniquely focused on Africa and Africa’s energy needs. The acquisition of such a high-quality asset, with significant potential for further growth, is a strong statement of our confidence in Nigeria, the Nigerian oil and gas sector and a tribute to the extremely high-quality management team that we have assembled.

“As a Nigerian, and more particularly an indigene of the Niger Delta region, I understand well our responsibilities that come with stewardship of the asset, our engagement with communities and the strategic importance of the oil and gas sector in Nigeria. We see significant benefits from integrating our production, with our ability to power Nigeria, through Transcorp, and deliver value across the energy value chain.

“I would like to thank Shell, Total and ENI, for the professionalism of the process, the Federal Government of Nigeria, the Ministry of Petroleum Resources, and the NNPC for the confidence they have placed in us.”

Tony Elumelu is the Chairman of Heirs Holdings Limited, Transcorp and United Bank for Africa Plc.

Also, read Transcorp Plc Acquires FGN’s 100% Equity in Afam Power for N105 Billion

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Exporters Say CBN Pre-export Requirements is Frustrating Export of Goods

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Institute of Chartered Shipbrokers

Exporters Say CBN Pre-export Requirements is Frustrating Export of Goods

Exporters have said the recently introduced pre-export requirements by the Central Bank of Nigeria is creating unnecessary bottlenecks for exporters and the movement of goods out of the country.

Exporters, who spoke under the aegis of the Network of Practicing Non-oil Exporters of Nigeria (NPNEN), said the electronic Nigeria Export Proceed Form now required by financial institutions from exporters had come with so many challenges.

Ahmed Rabiu, the President, NPNEN, explained that the new policy had several requirements that often led to delays and loss of income on the part of exporters.

He said, “We acknowledge the CBN’s desire to ensure that all exports out of Nigeria are documented in order to ensure that the proceeds of such exports are repatriated.

“However, the reality on the field shows that the process is causing undue delays and consequently, encouraging corruption.

According to them, in the new pre-export requirements, the Central Bank of Nigeria wants an export transaction to be initiated through eNXP processing on the trade monitoring system.

After which exporters are expected to have a pre-shipment inspection agent, the Nigeria Customs Service and other designated government agencies carry out their pre-export inspections.

The exporters said the pre-shipment inspection agent was expected to issue a clean Certificate of Inspection while Customs would issue the Single Good Declaration. All these they said takes time and delay goods from leaving the country on time.

Pointing to a recent report, they said about N868 billion worth of goods bound for export were stuck at the ports due to the new policy.

Speaking further Rabiu said, “For example, for the PIA to issue the CCI, the exporter is required to upload a certificate of origin as one of the supporting documents for the eNXP.

“The PIA is also required to upload the CCI to the TRMS(M) and until this is done, the Customs service will not issue the Single Good Declaration.”

He added, “After issuing the SGD, the customs is further required to upload it into the TRMS before the goods are allowed to be gated into the port and loaded on the vessel by the shipping line.

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Ardova Plc in Talks to Acquire Enyo Retail and Supply Limited

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Ardova Plc in Talks to Acquire Enyo Retail and Supply Limited

Ardova Plc, Nigeria’s leading integrated energy company, has commenced discussions to acquire Enyo Retail and Supply Limited.

According to the statement issued and signed by Oladehinde Nelson-Cole, Ag. Company Secretary/General Counsel, Ardova Plc, Enyo is one of the newest and fastest-growing retail and supply companies in the downstream sector.

It stated, “This announcement is pursuant to the acceptance in principle of AP’s offer and acquisition framework by the shareholders of Enyo, it is subject to the successful completion of a due diligence exercise and the receipt of all required regulatory approvals.”

“This announcement is pursuant to the acceptance in principle of AP’s offer and acquisition framework by the shareholders of Enyo, it is subject to the successful completion of a due diligence exercise and the receipt of all required regulatory approvals.

Speaking on the yet to be completed deal, Mr. Olumide Adeosun, CEO, Ardova Plc, said upon completion, Ardova will retain the Enyo branded stations which will operate side by side with the Ardova brand while simultaneously leveraging on the strengths of Ardova and its group companies.

He added that the two companies are determined to conclude the deal by the end of Q1 2021.

Enyo presently operates over 90 stations across the nation and attends to over 100,000 retail customers on a daily basis.

Ardova Plc and Enyo Retail & Supply Limited promised to furnish stakeholders with more information on the progress of the deal.

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