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Economy

Nigeria Consolidates $500m Eurobond with $1bn Issue

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Federation Account Allocation Committee
  • Nigeria Consolidates $500m Eurobond with $1bn Issue

Nigeria disclosed on Wednesday that its $500 million notes under the $1.5 billion Global Medium Term Note programme will be consolidated to form a single series with the existing $1 billion notes, which the country issued in February and will mature by 2032.

The federal government therefore announced that it has priced its offering of the $500 million aggregate principal amount of notes at a yield of 7.5 per cent under the $1.5 billion (increased from US$1 billion) Global Medium Term Note Programme.

This, according to a statement by the Ministry of Finance, will be consolidated and form a single series with the existing $1 billion 7.875 per cent notes due in 2032.

The N1 billion notes (Original Notes) were issued on February 16. The terms and conditions of the $500 million notes, said the statement, will be identical to those of the Original Notes, paying a coupon of 7.875 per cent per annum and maturing on February 16, 2032.

They will be repayable by way of bullet repayment of the principal together with the Original Notes, the statement added.

“As with the Original Notes, the government intends to use the proceeds of the ($500 million) notes to fund capital expenditures in the 2016 budget.

“The successful pricing, which is priced 37.5bps inside the original coupon rate, demonstrates continued strong market appetite for Nigerian securities.

“This is despite continued volatility in emerging and frontier markets and shows confidence by the international investment community in Nigeria’s economic reform agenda,” the statement issued by the Director, Information, Ministry of Finance, Mr. Salisu Na’Inna Dambatta, said.

When issued, the notes will be admitted alongside the Original Notes to the official list of the UK Listing Authority and will trade on the London Stock Exchange’s regulated market.

Nigeria may apply for the notes to be eligible for trading or listed on the Nigerian Stock Exchange and Financial Markets Dealers Quotations Over-the-Counter Securities Exchange.

Pricing of the notes, the statement added, comes shortly after the country unveiled its National Economic Recovery and Growth Plan (NERGP) 2017-2020 on March 7.

The plan focuses on policy objectives in five core areas: macroeconomic policy, economic diversification and growth drivers, competitiveness, social inclusion and jobs, and governance and other enablers.

Key targets under the NERGP include reaching single-digit inflation, further growth in the agricultural sector, reducing unemployment, increasing operational energy capacity and domestic refining capacity, improving transportation infrastructure, and stabilising the exchange rate, with an emphasis on implementation, monitoring and evaluation of these economic goals.

Commenting after the successful pricing, the Minister of Finance, Mrs. Kemi Adeosun, said: “The proceeds from this additional note issuance will go towards funding capital projects in the 2016 budget.

“Infrastructure spending is at the heart of our National Economic Recovery and Growth Plan, which was released earlier this month and guides how we will deliver the urgent reform our economy needs between now and 2020.
“Resetting the Nigerian economy is essential in order for us to deliver sustainable long term growth.”

The Director General, Debt Management Office (DMO), Dr. Abraham Nwankwo, said: “Following the success of our $1 billion note issuance in February, Nigeria is delighted to have increased our 2017 Eurobond programme to $1.5 billion and to have secured the additional $500 million.

“Nigeria was keen to take advantage of favourable market conditions and investors’ appetite for Nigerian debt to complete our foreign borrowing programme for the 2016 budget and deliver further funds for vital capital projects.”

Citi and Standard Chartered acted as Joint Lead Managers and Stanbic IBTC as Financial Advisers on this issue.

Also, the finance ministry announced that the Central Bank of Nigeria (CBN) has approved a licence for a wholesale Development Finance Institution (DFI) with national authorisation to the Development Bank of Nigeria (DBN) Plc.
Adeosun confirmed the issuance of the licence, a statement from the ministry said on Wednesday.

According to the statement, the approval was conveyed in a letter addressed to the Managing Director/Chief Executive of Officer of DBN dated March 28, 2017.

The letter was signed by the Deputy Governor of the CBN in charge of Financial System Stability.

The approval was subject to meeting the minimum capital requirement of N100 billion, the reconstitution of the board of the bank and a review of its organogram.

The DBN was conceived in 2014, however its take off has been fraught with delays.

The Muhammadu Buhari administration inherited the project, but was determined to resolve all outstanding issues and set a target of 2017 for its take-off.

The finance minister had said previously that the DBN would have access to $1.3 billion which will be jointly provided by the World Bank (WB), KfW (German Development Bank), the African Development Bank (AfDB) and the Agence Française de Development (French Development Agency).

The bank is also expected to finalise agreements with the European Investment Bank (EIB).

She also stated that the DBN would provide loans to all sectors of the economy including manufacturing, services and other industries not currently served by existing development banks, thereby filling an important gap in the provision of finance to micro, small and medium enterprises (MSMEs).

As a wholesale bank, the DBN will lend wholesale to microfinance banks, which will on-lend to medium to long-term loans to MSMEs.

MSMEs contribute about 48.47 per cent to Nigeria’s Gross Domestic Products (GDP), but have access to only about 5 per cent of lending from Deposit Money Banks (DMBs).

The federal government expects that the influx of additional capital from the DBN will lower borrowing rates while the longer tenure of the loans will provide the required flexibility in the management of cash flows, giving businesses the opportunity to make capital improvements and acquire equipment and supplies.

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.

Economy

Electricity Consumers, Hoteliers, Others Kick Against Petrol Price, Power Tariff Hikes

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power

Groups Kick Against Increase in Petrol Price, Power Tariff

The Network for Electricity Consumers Advocacy of Nigeria, the Nigerian Hotels Association, the Federation of Tourism Associations of Nigeria, Hotel Owners Forum, Abuja, and Power Up Nigeria have all kicked against the recent increases in power tariff and petrol price.

In a joint press conference held in Abuja on Friday, the groups rejected the increase and demanded an urgent reversal, saying the economic hardship imposed on Nigerians and businesses in the country by the COVID-19 pandemic would worsen if the increases in electricity tariff and petrol remains.

The speech jointly signed by presidents of NHA, FTAN, HOFA, Power Up Nigeria and read by the NECAN Secretary, Uket Obonga, the groups said it was sad that the Federal Government had chosen to compound the suffering of the Nigerian people at a time when the rest of the world are making efforts to ease the impacts of COVID-19 on their citizens.

They said, “It is sad to note that while other nations are enacting policies and taking measures to cushion the hardship imposed on their citizens by the COVID-19 pandemic, the Federal Government has chosen to place an unpardonable burden on Nigerians.

“This burden is not only the electricity tariff increase but also the hike in the pump price of petrol at a time that the people are suffocating under a distressed economy.”

They added, “It is very unfortunate that the Federal Government could allow itself to be misled into believing that tariff increase is the silver bullet that will shoot the sector revenues to Eldorado.”

The groups further stated that the cause of weak revenue in the power sector had not been addressed, neither is the nation’s low internally generated revenue addressed.

According to the groups, this was not the first time power distributors companies were pushing for a tariff increase, but the past Multi Year Tariff Order reviews that ended up increasing the price of electricity did not yield the desired result.

They said, “Recall that as soon as the MYTO 2015 order came into effect on February 1, 2016, the power distribution companies began another quest for further increase.

“They flagrantly disregarded the provisions of the MYTO path and energy charges contained therein, as the Discos went ahead to choose which tariff rate to use in determining bills given to the customers.

The groups argued that the incessant request for tariff increase had become a hypothetical exercise rather than the solution to the sector’s revenue problem.

We, therefore, wish to state categorically that we reject the September 1, 2020 tariff increase as ordered by the Nigerian Electricity Regulatory Commission,” they said.

They added, “We call on the Federal Government to rescind the increase because we note that there is nothing put on the ground to cushion the effect of the dual increase of the end user tariff and the pump price of petrol.”

Meanwhile, the Nigerian Electricity Regulatory Commission (NERC) has approved power distribution companies (DisCos) to start collecting 87.9 percent of the recently raised electricity tariff from consumers in the first half of 2021.

This was disclosed in the latest tariff review documents forwarded to the 11 power distribution companies in the country. Also, DisCos were approved to start collecting 100 percent of the new tariff from the second half of 2021.

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Economy

Nigeria’s Electricity Consumers to Start Paying Full Rates from H2 2020

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electricity

Electricity Consumers to Pay Full Rates from July 2021

The Nigerian Electricity Regulatory Commission has approved power distribution companies to collect an average of 87.9 percent of the recently raised electricity tariff from consumers in the first half of 2021.

In the latest tariff review documents issued to the 11 power distribution companies, power distribution companies had been approved to collect 100 percent of the new tariff from July to December 2021.

The approved new collection rates for the Discos means that Nigeria’s electricity consumers would be required to pay higher tariffs starting from the second half of 2021.

This is coming despite Nigerians kicking against the increase implemented on September 1, 2020. Nigerians have declared the numerous increases by President Muhammadu Buhari as anti-people policy, saying the administration continues to compound the people’s burden despite COVID-19 negative impacts on them.

A few numbers of Nigerians have staged protests to compel the administration to revise increases on Value Added Tax, pump price and electricity tariff because of the ongoing economic uncertainties and weak macroeconomic data after the National Bureau of Statistics (NBS) reported that the inflation rate rose above 13 percent, unemployment rate hits 27.1 percent and general plunged in economic activities and earnings of the Nigerian people.

However, the approval means DisCos will collect an average of 88 percent tariff in the first half of 2021 and up it to 100 percent in the second half of 2021 as contained in the NERC’s directive.

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Economy

Shipping Companies Lost 1,382 Containers to Bad Weather Yearly – Report

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NPA

World Shipping Council Says 1,382 Containers Lost Year

A recent report by the World Shipping Council has estimated that about 1,382 containers are lost at the sea yearly due to bad weather and other unforeseen circumstances.

In the report titled ‘Containers lost at sea – 2020 update’, the council attributed the disappearance of over 1,382 containers to severe weather, rough seas, ship groundings and structural failures as some of the problems which can result in containers being lost at sea.

The report said it used a survey-based system to calculate the losses made by shipping companies over a 12-year period.

It said, “Upon review of the results of the 12-year period (2008-2019) surveyed, the WSC estimates that there were on average a total of 1,382 containers lost at sea each year.

“With 12 years of data, it is particularly interesting to look at the trend of three-year averages, reported in each of the survey updates.

“In the first period (2008-2010), total losses averaged 675 per year and then quadrupled to an average of 2,683 per year in the next period (2011-2013).

“This was due in large part to the sinking of the MOL Comfort (2013) that resulted in a loss of 4,293 containers and further impacted by the grounding and loss of M/V Rena (2011) resulting in approximately 900 containers lost.

“Nevertheless, the next period (2014-2016) was marked by another vessel sinking with the tragic total loss of the SS El Faro (2015) with the loss of 33 crew members and 517 containers.

“Even with that, the three-year average annual loss for the period was 1,390, about half of the previous period. The downward trend continued into the most recent period (2017-2019) when the three-year average annual loss was almost halved again to 779.”

The WSC, therefore, encouraged governments and other stakeholders to improve container safety and reduce containers lost at sea.

This, it said could be achieved by making adjustments to the Safety of Life at Sea and revising the International Organisation for Standardisation standards for container lashing equipment and corner castings.

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