Economy
NNPC to Pay First Dividends in Decades in FY 2020—Kyari
By Adedapo Adesanya
The Nigerian National Petroleum Corporation (NNPC) has said it was working diligently to ensure that for the first time in decades, its shareholders would be paid dividends by the end of 2020.
This was disclosed by the Group Managing Director of NNPC, Mr Mele Kyari, at a media parley over the weekend, adding that the organisation was now more open to public scrutiny with its decision to publish its audited financial reports for the first time in 43 years.
He added that although the pandemic had prevented the corporation and its partners from attaining the three million barrels per day crude oil production target, NNPC was determined to cut its losses and become a profit-making entity.
Mr Kyari noted that other transparency initiatives taken by the corporation included its monthly financial reports and joining as a supporting organisation of the Extractive Industries Transparency Initiative (EITI).
The NNPC boss said the national oil corporation had been able to cut its losses by over N800 billion between 2018 and 2019, stressing that based on its projections, it would declare dividends in 2020.
The helmsman noted that the crisis brought about by the COVID-19 pandemic and the effect on its activities, commencing and continuing new oil and gas projects, have been seriously stalled by the liquidity challenges in the oil sector.
He stated that the crisis in the global oil market had forced companies, including NNPC, to further cut down losses, rework project costs, as well as review the production cost per unit of crude oil to remain competitive.
The GMD declared that in the recent past, only the current administration of President Muhammadu Buhari had not interfered in the operations of NNPC. He said this had given the corporation the free hand to take decisions based on facts and figures.
According to him, “There is no company in the country which has cut its losses within one financial year by N800 billion. We have improved efficiency by cutting 97 per cent of our losses.
“NNPC has never published its audited financial statement in 43 years. We came and started doing that and released the 2018 financial statement. We were not afraid of doing that and there were a lot of criticisms that we lost money in refinery operations and pipeline business.
“Our vision is that NNPC will become a company of excellence and declare dividends to Nigerians and shareholders. We are optimistic that at the end of 2020, NNPC should be able to declare dividends to Nigerians, in spite of the impact of the COVID-19 pandemic.”
Mr Kyari reiterated that the COVID-19 pandemic resulted in a net industry loss of about $1 trillion this year.
He said, “According to industry analysis carried out in quarter one, 2020, Exploration and Production (E&P) companies are at risk of losing about $1 trillion in revenue by the end of 2020.
“With new lockdown orders due to resurgence of COVID-19 in Europe and other industrial nations, the estimated revenue shrinkage may likely grow above Rystad Energy estimates by the close of 2020.
“This financial impact and the resultant poor liquidity position is making funding of both existing and new projects more difficult as companies cut spending and defer projects.”
On the issue of political meddling in the operations of NNPC, Mr Kyari explained that having worked for the corporation for almost three decades, it was under the Mr Buhari administration that all forms of interferences stopped.
He stated, “I can confirm that the privilege we have today in NNPC of having unfettered control without any distraction or interference to make decisions and be accountable and responsible for our decisions has never happened until this government.
“I can tell you this because I have been around for 29 years and have worked closely with the top management of the NNPC for about 15 years. This is the only president who has never asked NNPC to do something.
“The president only wants to know and be sure that what we are doing is in the best interest of the country.”
The GMD stated that Nigeria remained more of a gas country than oil, disclosing that the corporation’s new focus is on gas development, as it is the most resilient source of energy in the energy transition process.
He explained, “The only hydrocarbons that survived during the COVID-19 with minimal negative change was gas. Gas will help the country out of its major challenge of electricity. The biggest challenge we have here is to take electricity to homes and industries and to use the resources we have to create that energy this country needs.
“Today, the two reasons we are not getting electricity are because the production is low and we are not able to transmit it to those who need it. That means there is a bottleneck in transmission and distribution system.”
Mr Kyari said despite the difficult times in the industry, NNPC was able to maintain its obligations to the Federation Account for seven months without failure.
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.
