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Shareholders Worried About Future of Oando

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  • Shareholders Worried About Future of Oando

As the Oando Plc insists on retaining Wale Tinubu as its Group Chief Executive (GCE), aggrieved shareholders are worried about the future of the oil company, in view of the unresolved corporate governance issues relating to the group’s financials.

The shareholders, who stormed the venue of the Group’s Annual General Meeting in Calabar, Cross River State, in a letter read out by the leader, Clement Ebitimi, had accused the Oando management of mismanagement, thereby plunging the company into crisis.

The letter included many demands, in which the shareholders also called on Tinubu “to step down and allow competent hands to manage the company,” to save billions in assets of the company. They equally called on the Nigerian Stock Exchange (NSE), and the Securities and Exchange Commission (SEC), “to commence an immediate investigation to determine the true state of the company’s financials and corporate governance practice,” especially as regards the remuneration of the CEO and other directors.

They carried placards with various inscriptions, some of which read: Oando is in crisis; investors are being fooled; Enough of the deceit, and a host of many others.

The shareholders further rejected the 2016 financial report presented by the Board, saying: “We have read several newspaper reports on allegations of gross mismanagement by the present Management of Oando Plc. “As it stands, Oando is in a very bad shape, although the company’s report points to the contrary. Despite these official denials, shareholders have lost a fortune with the shares of the company plummeting to the bottom.

“We have lost enormous sums of money with our relatives as a result. The value of our shares today stands at less than ten percent of what it used to be. It has plunged from a high of N95 less than ten years ago to as low as a little above N6 per share,” he said.

The protesting shareholders, who held down the proceedings of the meeting for over two hours were particularly concerned about the future of Oando, based on the Report of the Independent Auditors, for the year ended 31 December, 2016, in which they drew attention to the Material Uncertainty Related to Going Concern.

The report read in part: “We draw attention to Note 45 in the financial statements, which indicates that the Company reported a comprehensive loss for the year of N33.9billion (2015: loss N56.6billion) and as at date, its current asset exceeded current liabilities by N14.6billion (2015: N32.8billion net current liability). The Group reported a comprehensive income of N112.4billion for the year ended 31 December 2016 (2015: loss N37billion) and as at that date, its current liability exceeded current assets by N263.8billion (2015: N260.4billion).

“As stated in the note, these conditions, along with other matters, indicate that a material uncertainty exists that may cast significant doubt on the company (and Group’s) ability to continue as a going concern.”

But, Oando in a statement in Lagos, said the disturbances delayed the proceedings of the meeting for only about 15 minutes, while claiming that the aggrieved parties were not shareholders, as all shareholders were allowed access to the venue to raise their legitimate concerns to management and the Board.

The company added that shareholders subsequently voted unanimously to all resolutions, expressing confidence in the management team, led by the Group Chief Executive Officer, Wale Tinubu, and retaining the company’s Board of Directors.

“There was a protest outside the venue carried out by non-shareholders as all shareholders were allowed access to the venue to raise their legitimate concerns to management and the Board.”

Notwithstanding the fact that all the motions presented at the meeting were approved by the shareholders, some of their representatives had requested a quick resolution to the issues raised by the petitioners to enable Oando management focus on building the brand.

They also urged the shareholders to resolve their disputes with the company in private to avoid unnecessary sensationalism.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Oil Prices Surge in Asian Trading on OPEC+ Meeting Expectations

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Oil prices surged during Asian trading hours on Wednesday amid mounting expectations that major oil-producing nations will uphold output cuts at an impending meeting of the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+.

Brent crude oil, against which Nigerian oil is priced, gained 18 cents, or 0.2% to $84.40 per barrel while the U.S. West Texas Intermediate (WTI) rose by 28 cents, or 0.3%, to $80.11.

The anticipation gripping traders and analysts alike centers on OPEC+ sustaining voluntary production cuts, which currently total about 2.2 million barrels per day.

Sugandha Sachdeva, founder of Delhi-based research firm SS WealthStreet, underscored the significance of this move, asserting that it would be perceived as a concerted effort to stabilize prices and rebalance the global oil market.

Sachdeva further elaborated on the factors bolstering oil prices, noting, “The onset of the summer driving season in the U.S. spurs a seasonal uptick in consumption and typically aids a positive momentum in crude oil prices.”

As the Memorial Day holiday heralds the commencement of the peak demand season in the United States, the world’s foremost oil consumer, the decision to maintain production cuts is poised to lend support to prices as consumption surges.

Daniel Hynes, senior commodity strategist at ANZ Bank, remarked on the robust holiday travel activity witnessed in the U.S., both on roads and in the air.

However, amidst the optimism surrounding the OPEC+ meeting, concerns over heightened tensions in the Gaza Strip added a geopolitical dimension to market dynamics.

Israeli tank advancements into the heart of the Rafah section fueled apprehensions about a potential escalation of conflict in the broader Middle East, a region critical to global oil supply.

Market participants also awaited the release of U.S. crude inventory data from the American Petroleum Institute later in the day, with preliminary expectations suggesting a decline of approximately 1.9 million barrels for the previous week.

Additionally, investor attention was drawn to forthcoming U.S. inflation data, set to influence expectations regarding Federal Reserve interest rate decisions and, consequently, impact oil prices.

The U.S. core Personal Consumption Expenditures Price Index report for April, scheduled for release on Friday, is projected to hold steady on a monthly basis.

Against this backdrop of anticipation and geopolitical tensions, the oil market navigates a landscape shaped by supply dynamics, demand prospects, and macroeconomic indicators, all of which converge to define the trajectory of oil prices in the coming days.

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Oil Revenue Decline Spurs South Sudan to Seek $250 Million IMF Assistance

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South Sudan is seeking $250 million in financing from the International Monetary Fund (IMF) to address its ongoing balance of payment challenges and stimulate economic growth.

The request comes in response to a significant decline in oil revenue, a crucial source of the nation’s income, following damage to a key pipeline.

The pipeline, which transports two-thirds of South Sudan’s crude oil, sustained damage in February.

Repairs have been delayed due to conflicts in neighboring Sudan, where the conduit passes through areas controlled by the army and the paramilitary Rapid Support Forces.

Also, a blockade on the Red Sea has further hampered oil exports, exacerbating the economic strain.

Bank of South Sudan Governor James Alic Garang, speaking at the African Development Bank’s annual meetings in Nairobi, emphasized the urgency of securing alternative financial support.

“We are facing severe challenges with our oil exports, which constitute about 90% of our revenue,” Garang said. “The impact on our economy is profound, reducing the volume of oil available for international markets and decreasing the hard currency inflow essential for meeting our obligations.”

Since 2020, South Sudan has received three rapid credit facilities from the IMF. These measures led to the initiation of a program monitoring with board involvement last year.

The first two reviews of this program were completed this month, with a third scheduled for November. After this, the government will seek the full quota of approximately $250 million.

Governor Garang highlighted that meeting the IMF’s policy requirements is crucial for securing the funds.

“We have already delivered an audit of the central bank’s financial statements for 2021,” he noted. “However, there are still areas where we need to intensify our efforts. With the IMF, there is no free lunch. We’re working very hard to meet those policy requirements.”

Efforts to increase non-oil revenue have been made, but they fall short of the country’s needs. The decline in oil production has significantly affected foreign exchange reserves, which can now only cover about two months of imports, compared to the IMF’s threshold of 3.5 months.

In addition to seeking IMF assistance, South Sudan is in discussions with Qatar for a resolution following a $1 billion court award to the Qatar National Bank over a defaulted loan. “We are negotiating to pay part of it, but we’ll still need to settle this debt,” Garang stated.

The $250 million from the IMF is expected to address several critical areas, including economic growth, inflation control, and the distribution of resources across the country.

It will also support essential sectors such as education and health, providing much-needed relief as South Sudan navigates through these economic challenges.

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Oil Prices Steady Ahead of Crucial OPEC+ Meeting on Output Cuts

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Oil prices stabilized in Asian trading on Monday as markets turned their attention to an upcoming OPEC+ meeting, where producers are expected to discuss maintaining voluntary output cuts for the remainder of the year.

This critical meeting, scheduled for June 2, will be held online following a brief postponement, OPEC announced last Friday.

The Brent crude oil, against which Nigerian crude oil is priced, stood at $82.36 a barrel, while the U.S. West Texas Intermediate (WTI) crude oil rose by 28 cents to $78 per barrel.

The stabilization in prices comes after a week of declines with Brent ending last week about 2% lower and WTI losing nearly 3%.

This downturn was influenced by minutes from the Federal Reserve’s recent meeting, revealing that some officials are open to further tightening interest rates if deemed necessary to control persistent inflation.

Market activity is expected to be relatively subdued on Monday due to public holidays in the United States and the United Kingdom.

However, anticipation is building around the OPEC+ meeting, where producers will deliberate on extending the current voluntary output cuts of 2.2 million barrels per day into the second half of the year. Sources within OPEC+ suggest that an extension is likely.

Sugandha Sachdeva, founder of Delhi-based research firm SS WealthStreet, expressed confidence in the potential extension, stating, “Oil futures are expected to maintain today’s gains due to expectations of the cuts being extended.”

She also highlighted the influence of upcoming U.S. Producer Price Index (PPI) data on market movements, which will shape the Federal Reserve’s approach to potential rate adjustments.

Combined with an additional 3.66 million barrels per day of production cuts valid through the end of the year, these measures account for nearly 6% of global oil demand.

OPEC remains optimistic about continued growth in oil demand, forecasting an increase of 2.25 million barrels per day for the year, while the International Energy Agency (IEA) anticipates slower growth of 1.2 million barrels per day.

Analysts at ANZ noted that they will be closely monitoring gasoline usage as the Northern Hemisphere enters summer, a peak season for driving holidays.

They commented, “While U.S. holiday trips are expected to hit a post-COVID high, improved fuel efficiency and EVs could see oil demand remain soft,” but added that this could be offset by rising air travel.

This week’s market dynamics will also be influenced by the U.S. personal consumption expenditures (PCE) index, due to be released on May 31.

The PCE index is regarded as the Federal Reserve’s preferred measure of inflation, and its findings could provide further indications of the central bank’s interest rate policies.

In a related development, Goldman Sachs has revised its forecast for 2030 oil demand upwards to 108.5 million barrels per day from the previous 106 million barrels per day.

The investment bank also projects peak oil demand to occur by 2034 at 110 million barrels per day, followed by a prolonged plateau until 2040.

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