Economy
LCCI Welcomes FG’s VAT Exemption, Seeks More Energy Incentives
By Adedapo Adesanya
The Lagos Chamber of Commerce and Industry (LCCI) has lauded the federal government’s decision to exempt cooking gas and diesel from Value Added Tax (VAT) and other incentives in the oil and gas sector.
The body said the steps would lower industries’ operational costs, reduce Nigerians’ overall cost of living, and increase access to clean energy.
Recently, the federal government announced the introduction of incentives, including VAT Modification Order 2024 and notice of tax incentives for deep offshore oil and gas production.
In its reaction, the LCCI said these measures will lower the operational costs for industries, reduce the overall cost of living for Nigerians, and increase access to clean energy.
In a statement signed by the Director General of LCCI, Mrs Chinyere Almona, it highlighted some quick impact fiscal interventions that could ease the harsh economic conditions.
The group also said the transition to Compressed Natural Gas (CNG) mobility would offer an opportunity to make energy more affordable, create jobs, and reduce emissions.
LCCI argued that businesses have been struggling to survive under the tight monetary stance of the government for the past 18 months.
“We acknowledge the significant step towards alleviating the burden on businesses and households by removing the Value-Added Tax (VAT) on diesel and cooking gas.
“This well-considered move will provide immediate relief, especially as these commodities are essential to daily life and economic activities.
“Implementing the VAT Modification Order 2024 and Notice of Tax Incentives for Deep Offshore Oil & Gas Production are significant fiscal incentives that can revitalise Nigeria’s oil and gas sector,” she said.
LCCI recalled that for too long, the high cost of diesel had weighed heavily on the manufacturing sector, logistics, and transportation while cooking gas, a cleaner and healthier alternative for households, had been made less affordable by VAT impositions.
“This policy shift will undoubtedly lower the operational costs for industries, reduce the overall cost of living for Nigerians, and increase home access to clean energy.”
The chamber argued that a successful transition to CNG mobility would require all the possible incentives that could speed up its deployment.
These interventions include tax reliefs for deep offshore oil and gas production that could boost oil and gas sector investments.
“The business community is upbeat about the government’s efforts towards transitioning to Compressed Natural Gas (CNG) as an alternative fuel for mobility.”
LCCI also offered some recommendations that would ensure that the shift to CNG mobility is smooth, efficient, and impactful in reducing costs for the Nigerian people.
The body said that it is critical to establish and expand the infrastructure for CNG refuelling stations across the country to achieve the desired widespread adoption of CNG.
“Currently, access to CNG refuelling points is limited, creating a barrier to adoption.
“The success of CNG mobility depends heavily on public acceptance and understanding of its benefits.
“A comprehensive awareness campaign should be launched to educate citizens and businesses on the cost advantages to individuals, cost savings for the government, and the positive environmental impact of CNG adoption.
“Transitioning to CNG requires vehicle modifications, which can be cost-prohibitive for individuals and small businesses. The government should consider creating incentives or subsidies for vehicle owners to convert their engines to run on CNG.
“The shift to CNG presents an opportunity for job creation in the energy and automotive sectors.
“We need programmes to equip existing mobility entrepreneurs like mechanics, road transport workers, and commercial bus drivers with the necessary skills for CNG-related jobs, from vehicle conversions to infrastructure maintenance and operation.”
LCCI also called for the full implementation of Naira payments for crude oil sales to the Dangote Refinery and other local refineries, which was scheduled to start on October 1, 2024.
“This move will herald a significant milestone in Nigeria’s economic transformation.
“We urge the government to sustain the political will to be consistent with the reforms in the oil and gas sector and implement the Petroleum Industry Act (PIA) fully.
“We see the long-term gains of these reforms if they are implemented under a conducive regulatory environment.
“Removing VAT on diesel and cooking gas is a bold step towards reducing the cost of living for Nigerians, but it is only the beginning.”
By Adedapo Adesanya
Dangote Petroleum Refinery is preparing to raise about $5 billion through an initial public offering (IPO) expected to conclude in October, in what could become the largest stock market listing in Africa’s history.
The company has already submitted an initial application to the Securities and Exchange Commission (SEC), with approval expected in the coming weeks. Once authorised, the refinery is expected to release its prospectus in September ahead of the public offer.
The primary listing will be on the Nigerian Exchange (NGX) Limited, although investors across Africa are expected to participate through structured investment instruments rather than a dual listing.
The proceeds will be used to expand the capacity of the 700,000-barrels-per-day refinery in Lagos and possibly support plans to replicate the project in Kenya as Dangote seeks to deepen Africa’s energy independence.
The proposed IPO comes after the refinery benefited from increased demand for refined products during the recent Iran conflict, supplying jet fuel across Africa and into Western Europe as global shortages disrupted markets.
As per Reuters, stock exchanges in South Africa, Kenya, Egypt, Ghana and Rwanda have held discussions with advisers to the transaction as interest in the offering continues to build across the continent.
Kenya alone could account for as much as $500 million of the targeted capital raise, driven largely by demand from institutional investors, including pension funds, the publication reported.
While the company is targeting a $5 billion raise, the final amount will depend on the outcome of the SEC’s review. If achieved, the offering would represent more than four per cent of the Nigerian Exchange’s current market capitalisation.
The IPO follows a $2.5 billion private placement completed last month, in which a six per cent stake in the refinery was sold, implying a valuation of about $40 billion.
That valuation, however, would place the refinery well above several listed global refining companies. Turkey’s Tupras, which operates a similar combined refining capacity across four facilities, has a market value of roughly $12 billion, while US-listed HF Sinclair, with a comparable processing capacity, is valued at around $16 billion.
Although the NGX generally requires companies on its main board to maintain a minimum free float of 20 per cent, there have been exceptions. Dangote Cement, for instance, currently has a free float of just over 12 per cent.
The publication also reported that investors outside Nigeria are likely to gain exposure through instruments such as global depositary receipts or exchange-traded products linked to the Nigerian-listed shares, rather than through a cross-listing on other African exchanges.
The founder of the 700,000-barrels-per-day capacity plant, Mr Aliko Dangote, said in April that the refinery aims to increase production capacity to 1.4 million barrels per day.
Mr Dangote is also pursuing plans to build another refinery in Lamu along Kenya’s coast in partnership with other East African governments, although it remains unclear whether part of the IPO proceeds will be allocated to that project valued at an estimated $17 billion.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange rallied by 0.89 per cent on Tuesday, August 4 amid renewed buying interest in unlisted stocks.
During the session, the market capitalisation added N24.07 billion to end at N2.739 trillion compared with Tuesday’s N2.715 trillion, while the NASD Security Index (NSI) gained 40.11 points to quote at 4,563.96 points compared with the preceding day’s 4,523.85 points.
The NASD OTC Exchange ended the trading session with two price losers and three gainers, led by Central Securities Clearing System (CSCS) Plc, which chalked up N7.80 to close at N119.80 per unit versus the previous session’s N112.00 per unit. Afriland Properties Plc increased its value by N1.27 to N23.95 per share from N22.68 per share, and Nitrox Industrial Gases Plc expanded by N1.15 to N21.15 per unit from N20.00 per unit.
On the flip side, FrieslandCampina Wamco Nigeria Plc slid by N8.64 to sell at N144.00 per share compared with the previous day’s N152.64 per share, and 11 Plc dipped by 1 Kobo to end at N225.00 per unit, in contrast to Monday’s closing price of N225.01 per unit.
Tuesday’s trading data showed that the volume of securities rose by 9.0 per cent to 1.6 million units from 1.5 million units, and the number of deals climbed by 6.5 per cent to 33 deals from 31 deals, while the value of securities dropped by 26.9 per cent to N47.6 million from N65.2 million.
At the close of trades, Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date with 3.4 billion units worth N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units valued at N6.5 billion, and CSCS Plc with 76.9 million units exchanged for N5.5 billion.
GNI Plc also closed the session as the most traded stock by volume on a year-to-date with 3.4 billion units transacted for N8.4 billion, followed by Infracredit Plc with 2.3 billion units sold for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
By Dipo Olowookere
A 0.38 per cent loss was suffered by Nigerian stocks on Tuesday on the back of continued selling pressure from investors embarking on profit-taking.
Data from the Nigerian Exchange (NGX) Limited showed that the contraction was influenced by the 1.78 per cent decline recorded by the insurance sector, the 0.24 per cent slip printed by the consumer goods index, and the 0.09 per cent drop posted by the energy space, offsetting the 0.75 per cent growth achieved by the banking sector and the 0.21 per cent growth recorded by the industrial goods segment.
Investor sentiment was weak during the trading day, as the bourse ended with 13 price gainers and 40 price losers, representing a negative market breadth index.
LivingTrust Mortgage depreciated by 10.00 per cent to N3.42, Multiverse also shed 10.00 per cent to N22.95, McNichols dropped 9.92 per cent to N5.45, Thomas Wyatt dipped by 9.87 per cent to N3.56, and Eterna lost 8.57 per cent to trade at N33.00.
On the flip side, AVA Capital improved by 9.94 per cent to N9.95, Livestock Feeds expanded by 9.71 per cent to N8.65, Neimeth increased by 8.43 per cent to N9.00, AIICO gained 3.47 per cent to settle at N4.18, and Oando grew by 3.30 per cent to N36.00.
A total of 1.6 billion equities valued at N28.7 billion exchanged hands in 54,160 deals yesterday versus the 923.0 million equities worth N37.9 billion traded in 72,544 deals on Monday, indicating a 73.35 per cent surge in the trading volume, a 24.27 per cent decline in the trading value, and a 25.34 per cent slip in the number of deals.
The busiest stock was Japaul, which transacted 904.4 million units for N2.7 billion. Sterling Holdings sold 54.0 million units valued at N431.9 million, FCMB exchanged 49.5 million units worth N545.9 million, Chams traded 44.9 million units for N199.2 million, and Neimeth sold 42.4 million units worth N327.8 million.
Business Post reports that the All-Share Index (ASI) gave up 927.70 points to 244,802.83 points from 245,730.53 points, and the market capitalisation receded by N599 billion to N158.016 trillion from N158.615 trillion.
