Economy

GCR Assigns BBB(NG), A2(NG) Ratings to Eterna

Published

7 years ago

04/08/2018

By Dipo Olowookere

The long term and short term national scale Issuer ratings of BBB(NG) and A2(NG) respectively have been assigned to Eterna by Global Credit Ratings (GCR).

Eterna Plc is an integrated energy company with operations focussed on the downstream sector of the oil and gas industry.

Although, Eterna has a relatively small market share for petroleum products, its significant assets across the value chain (including storage facilities and a lubes plant) positions it well to take advantage of opportunities in the industry.

Eterna also leverages upon extensive technical expertise, linkages with well-established international partners, and off-take arrangements with big corporates and oil exploration companies.

Notwithstanding the potential for profit enhancement, GCR said it considers crude trading operation to be highly risky. The volumes and debt funding required to facilitate the business are very large, while the thin margin does not provide any headroom for unexpected delays or oil price volatility.

The rating firm said although, revenue from the retail and lubricant segments are lower, earning streams are more predictable, helping to reduce risk, with the higher margins serving to bolster sustainable earnings.

Furthermore, the network of fuel retail outlets (about 19), combined with the blending capacity in the Lubricant and Chemical segment present less risky opportunities for sustainable growth.

According to GCR, while margins in fuel retail are also thin, due to government regulations, there are opportunities to increase profitability through an improved service offering and economies of scale.

It noted that given the higher margin potential, Eterna plans to expand the retail and distributor network to increase accessibility to lubricants across the country.

Despite the volatility caused by trading activities and crude prices, as evidenced by the spike in the operating margin in FY16 and the decline in FY17, Eterna has steadily increased its scale, with operating profit having doubled between FY13 and FY17.

In this regard, the company has maintained sufficient funding facilities to cover trading and inventory requirements even under stressed scenarios. In this regard, trade credit facilities totalling $500 million have been secured from some leading banks. Up to N10 billion (around $25 million) has been drawn at a given time to import inventories, only a small portion of the available lines.

Nevertheless, having multiple lines with the different banks is important to ensure that Eterna is able to obtain the most competitive rates, while some of the credit facilities also serve as enhancements to secured contracts.

GCR said the retention of earnings has facilitated strong cash accumulation, with cash holdings increasing to a high N7.1 billion at FY16. Accordingly the company has been able to fund a portion of working capital requirements internally, thus maintaining gearing metrics at moderate levels.

Thus, net gearing registered at 27 percent at FY17, from an ungeared position previously. In addition, net interest coverage has been strong over the review period.

The rating agency said positive rating action is likely on attainment of targeted volume growth in all product segments (especially in the retail, chemical and lubricant segment), combined with effective cost management, resulting in improved earnings margins and stronger credit protection metrics.

Conversely, excessive gearing, even to fund profitable transactions, could result in a downgrade. This is particularly true in light of the vagaries of oil market environment and general operating environment, which could materially impact earnings and lead to liquidity strain and debt service challenges.

Economy

NBA Demands Suspension of Controversial Tax Laws

Published

3 hours ago

24/12/2025

Modupe Gbadeyanka

By Modupe Gbadeyanka

The federal government has been asked by the Nigerian Bar Association (NBA) to suspend the implementation of the controversial tax laws.

In a reaction to the tax reform acts, the president of the group, Mr Afam Osigwe (SAN), the suspension of the laws would allow for a proper investigation into allegations of alterations in the gazetted and harmonised copies.

A member of the House of Representatives, Mr Abdussamad Dasuki, alleged that some parts of the laws passed by the parliament were different from the gazetted copy.

To address the issues raised, the NBA said it is “imperative that a comprehensive, open, and transparent investigation be conducted to clarify the circumstances surrounding the enactment of the laws and to restore public confidence in the legislative process.”

“Until these issues are fully examined and resolved, all plans for the implementation of the Tax Reform Acts should be immediately suspended,” the association declared.

It noted that the controversies “raise grave concerns about the integrity, transparency, and credibility of Nigeria’s legislative process.”

“These developments strike at the very heart of constitutional governance and call into question the procedural sanctity that must attend lawmaking in a democratic society,” it noted.

“Legal and policy uncertainty of this magnitude has far-reaching consequences. It unsettles the business environment, erodes investor confidence, and creates unpredictability for individuals, businesses, and institutions required to comply with the law. Such uncertainty is inimical to economic stability and should have no place in a system governed by the rule of law.

“Nigeria’s constitutional democracy demands that laws, especially those with profound economic and social implications, emerge from processes that are transparent, accountable, and beyond reproach. Anything short of this undermines public trust and weakens the foundation upon which lawful governance rests.

“We therefore call on all relevant authorities to act swiftly and responsibly in addressing this controversy, in the overriding interest of constitutional order, economic stability, and the preservation of the rule of law,” the organisation stated.

Economy

MRS Oil, Two Others Raise NASD Bourse Higher by 0.52%

Published

5 hours ago

24/12/2025

Adedapo Adesanya

By Adedapo Adesanya

Demand for hot stocks, including MRS Oil Plc, buoyed the NASD Over-the-Counter (OTC) Securities Exchange by 0.52 per cent on Tuesday, December 23.

The energy company was one of the three price gainers for the session as it chalked up N19.69 to sell at N216.59 per share versus the previous day’s value of N196.90 per share.

Further, FrieslandCampina Wamco Nigeria Plc gained N2.95 to close at N56.75 per unit versus N53.80 per unit and Golden Capital Plc appreciated by 84 Kobo to N9.29 per share from Monday’s N8.45 per share.

Consequently, the market capitalisation went up by N10.95 billion to N2.125 trillion from N2.125 trillion and the NASD Unlisted Security Index (NSI) rose by 18.31 points to 3,570.37 points from 3,552.06 points.

Yesterday, the NASD bourse recorded a price loser, the Central Securities Clearing System Plc (CSCS), which gave up 17 Kobo to close at N33.70 per unit against the previous trading value of N33.87 per unit.

The volume of securities traded at the session went down by 97.6 per cent to 297,902 units from the previous day’s 12.6 million units, the value of securities decreased by 98.5 per cent to N10.5 million from N713.6 million, and the number of deals remained flat at 32 deals.

By value, Infrastructure Credit Guarantee Company (InfraCredit) Plc ended as the most actively traded stock on a year-to-date basis with 5.8 billion units exchanged for N16.4 billion. This was followed by Okitipupa Plc, which traded 178.9 million units valued at N9.5 billion, and MRS Oil Plc with 36.1 million units worth N4.9 billion.

In terms of volume, also on a year-to-date basis, InfraCredit Plc led the chart with a turnover of 5.8 billion units traded for N16.4 billion. Industrial and General Insurance (IGI) Plc ranked second with 1.2 billion units sold for N420.7 million, while Impresit Bakolori Plc followed with the sale of 536.9 million units valued at N524.9 million.

Economy

NGX All-Share Index Soars to 153,354.13 points

Published

6 hours ago

24/12/2025

Dipo Olowookere

By Dipo Olowookere

It was another bullish trading session for the Nigerian Exchange (NGX) Limited as it closed higher by 0.59 per cent on Tuesday.

The market further rallied due to continued interest in large and mid-cap stocks on the exchange by investors rebalancing their portfolios for the year-end.

Yesterday, Aluminium Extrusion sustained its upward trajectory after it further appreciated by 9.96 per cent to N14.90, as Austin Laz gained 9.81 per cent to close at N2.91, Custodian Investment improved by 9.69 per cent to N38.50, and First Holdco soared by 9.35 per cent to N50.30.

Conversely, Royal Exchange declined by 7.22 per cent to N1.80, Champion Breweries shrank by 6.57 per cent to N15.65, NASCON lost 5.36 per cent to trade at N105.05, Sovereign Trust Insurance depreciated by 5.28 per cent to N3.77, and Japaul went down by 4.51 per cent to N2.33.

At the close of business, 29 shares ended on the gainers’ table and 27 shares finished on the losers’ log, representing a positive market breadth index and bullish investor sentiment.

This raised the All-Share Index (ASI) by 895.06 points to 153,354.13 points from 152,459.07 points and lifted the market capitalisation by N579 billion to N97.772 trillion from the previous day’s N97.193 trillion.

VFD Group finished the day as the busiest stock after it recorded a turnover of 192.0 million units worth N2.1 billion, GTCO exchanged 63.5 million units valued at N5.6 billion, Access Holdings traded 49.8 million units for N1.0 billion, First Holdco sold 45.8 million units valued at N2.3 billion, and Secure Electronic Technology transacted 38.3 million units worth N28.4 million.

In all, market participants bought and sold 677.4 million units valued at N20.8 billion in 27,589 deals compared with the 451.5 million units worth N13.0 billion traded in 33,327 deals on Monday, showing an improvement in the trading volume and value by 50.03 per cent and 60.00 per cent apiece, and a shortfall in the number of deals by 17.22 per cent.