Economy
Oando Declares N330b Turnover In 9 Months
By Modupe Gbdayanka
Nigeria’s leading indigenous energy group listed on both the Nigerian and Johannesburg Stock Exchange, Oando Plc, has announced its unaudited results for the six months period ended on September 30, 2016.
In the financial analysis, the company recorded a turnover increase by 26 percent, moving from N262 billion in the same period last year to N330 billion this year.
However, its Gross Profit decreased by 52 percent, N28.7 billion compared to N60 billion in the first half of 2015. Also, it Loss-After-Tax decreased by 25 percent, N35.9 billion compared to N47.6 billion in H1 2015.
Looking at its operational highlights, Oando Energy Resources (OER), during the nine months ended September 30, 2016, recorded a production of 12.0 MMboe (average 43,617 boe/day) in the upstream, while in the midstream, the company signed a definite agreement to divest 49 percent voting rights in Oando Gas & Power (OGP) to Helios Investment Partners for $115.8 million.
During the period under review, OGP Achieved 59 percent completion in Central Horizon Gas Company (CHGC) Pipeline Expansion Project, while it achieved 93 percent completion in Greater Lagos 4 Project.
Oando said in a press statement announcing its financial results that the “Nigerian economic environment continues to impact our business as we witnessed a further devaluation of the Naira during Q3, 2016, from an average exchange rate of N280.00:$1.00 in Q2 to an average of N316.00:$1.00 in Q3 2016.”
This, it explained, has resulted in further foreign exchange losses due to an impairment of our dollar denominated receivables.
“For the major part of the year, we have faced operational challenges due to the unrest in the Niger
Delta, however we find comfort in The Nigerian Government’s discussions and engagement in the region, indicating a possible resolution and as thus we expect our production levels to stabilise and gradually incline in the coming months. Despite these economic challenges, we must highlight our achievements in the 3rd quarter as witnessed by the improvement in our top line revenue as a result of our new business model of a diversified business with higher weighted dollar earnings in both the Upstream and International Trading businesses,” Oando said.
It said the above drove revenues up by 96 percent and led to significant foreign exchange gains between the second and third quarters.
Commenting on the results, Mr Wale Tinubu, Group Chief Executive, Oando PLC said: “The third quarter witnessed the FGN establish a seize fire with the militants responsible for production disruptions in the Niger Delta, leading to stabilised daily productions from our assets and expectations of imminent increases to our 2015 production highs of 56kbbls/day.
“We have also been proactive in our cost management initiative to ensure maximised value extraction for every barrel of oil produced as the global oil price still lingers below $50/bbl. We are pleased to have executed a SPA with Helios Investment partners for ~$116 million, representing 49 percent legal voting rights in the company’s midstream business, of which the proceeds of the divestment will be utilised towards the company’s debt restructuring initiative.
“The trading business has grown significantly this quarter having exported over 14 cargoes of crude with volumes exceeding 14mmbbls and an additional 8 cargoes of other oil based products. Our business model of dollar denominated earnings is taking shape as evidenced from the increased revenue line and future increases from the Upstream business through production and export trading businesses through increased lifting’s, whilst focusing on reduced costs to ensure profitability through these streams.”
Operational Update
Oando PLC successfully concluded the recapitalization and partial divestment of Oando Downstream for $210 million.
Oando Energy Resources (OER) had an average production of 41,094 boe/day compared to 53,169 boe/day in the third quarter of 2015, this reduction was mainly due to the disruptions in the Niger Delta. Notwithstanding, the corporation continues to shrink its debt burden as witnessed by a reduction in debt from $900 million post acquisition in 2014 to $407 million today, signifying a total pay down of over 50% in 2 years.
Our trading business, Oando Trading Dubai (OTD) posted revenues of N64.9bn in Q3 from lifting volumes exceeding 14mmbbls from 14 cargoes of crude and an additional 8 cargoes of other petroleum products.
In September 2016, Oando PLC signed a definitive agreement with Helios Investment Partners to divest 70% economic rights in Oando Gas and Power. The agreed transaction consideration of US$ 115.8 million is conditional upon the receipt of regulatory approvals and subject to customary purchase price adjustments. Upon completion, 49% of the voting rights in OGP would be retained by Oando, while Helios Investment Partners will hold 49% and the residual 2% will be held by a local entity.
Oando Gas & Power (OGP) as at H1 2016, achieved 59% completion of the Central Horizon Gas Company 8.5 km pipeline expansion project, the pipeline, which is set to be completed in the fourth quarter of 2016, and will increase the throughput capacity by 400%, thereby providing increased supply of gas in the South-East region of Nigeria.
During the 3rd Quarter 2016, Oando Gas and Power connected 7 new customers to the pipeline network of GNL. These customers are expected to increase GNL’s gas volume sales in 2016. The business also connected 3 new major customers in GNSL, with significant increase in monthly volume sales performance.
By Aduragbemi Omiyale
A former deputy Governor of the Central Bank of Nigeria (CBN), Mr Kingsley Moghalu, has attributed the failure of the Naira redesign policy of the apex bank to the lack of effective risk management, its use as a political tool and others.
Last October, the central bank Governor, Mr Godwin Emefiele, announced that the designs of the N200, N500, and N1,000 denominations would be changed.
In a special press briefing, he disclosed that the new notes would be introduced into the banking system by December 15, while the old currency notes would cease to be legal tender from January 31, 2023.
However, the deadline was moved forward to February 10, and on March 3, the supreme court extended the deadline to December 31, 2023, meaning the old notes will remain valid by the end of the year.
From February 10 till now, Nigerians have been unable to have access to cash as commercial banks limit what customers can withdraw via their channels. In some cases, customers are limited to N1,000, N2,000, and N5,000 cash withdrawals, forcing them through an untold hardship and making a mess of the Naira redesign and cashless policies of the CBN.
While speaking on the issue, Mr Moghalu blamed his former employers for the failure of the policy, noting that they did not put the system under thorough scrutiny.
“The terrible suffering and economic loss Nigerians have experienced as a result of the faulty IMPLEMENTATION of the Central Bank of Nigeria’s Naira redesign policy, the entry of the judiciary into central banking functions, all show clearly how our institutions— and Nigeria — fail when institutions that are meant to be operationally independent become politicized.
“Currency functions are a core part of any central bank’s mandate. To that extent, I had no problem with the policy, except for two vital issues. First, the 90-deadline, which I warned, was too short to be effectively executed. Second, the timing is so close to the elections.
“But, as later became clear, there was a haphazard and incoherent communication of the PURPOSES of the policy. In one breath, it was said to be to reduce the money supply and help tame inflation (after the bank had created and lent N23 trillion to the federal government illegally because that was way beyond approved limits under the CBN Act of 2007). Next, it was promoted as a national security measure to halt kidnapping, Naira hoarding and sundry crimes. Then, next, it became about free and fair elections to stop vote-buying.
“This last reason became the most important — and controversial — reason as the tempo of the 2023 presidential contest rose to boil point. Expectedly, politicians who felt the policy targeted them complained loudly and wanted the deadline extended, while those who believed it helped their own political agendas hailed the tight and impractical deadline and did not want it moved.
“Nigerians were trapped between the devil and the deep blue sea of a desire to curb the menace of vote-buying and the effective confiscation of their own money by the implementation failure of the policy.
“While increasing digital payments, another purported goal of the policy, was a good one, that thinking failed to consider the reality that the payment infrastructure was still not robust in many rural areas of our country, that cash remains king, and, as I said on an interview with @LadiAAle of @channelstv, we were carrying on as if it has now become a crime to use cash in Nigeria. Most important, as I raised the question in that same interview, what exactly is the mandate of the CBN? Had it now become to end vote buying in elections? Surely, we have anti-corruption institutions vested with such mandates, and to use the CBN for that primary purpose was to politicize the institution.
“But many Nigerians, as usual, did not think deeply about the implications of this line of thinking and action because of their political passions against presumably corrupt politicians.
“Today, whatever may have been the benefits of the Naira redesign policy have been cancelled out by the economic and social gridlock it has created. We are still suffering from it after the almighty presidential election has come and gone.
“There are several lessons here. One such lesson is the importance of effective risk management, which was evidently absent in the conception and execution of the policy.
“I had highlighted this in a previous intervention. But there is the fundamental lesson of whether our institutions in Nigeria have been hijacked and subverted from serving the Nigerian people and our economy to serving personal and political agendas, including a dishonest use of a war against corruption as an attractive shiny object.
“One day, we will count the losses to the Nigerian economy, the legitimacy and effectiveness of a once-prestigious institution, and to the legitimacy of the Nigerian state itself, of the partisan politicization and de-professionalization of the leadership of the CBN.
“Our apex bank, along with the judiciary, is one of the key institutional prisms through which foreign countries and investors abroad and at home assess the functioning or otherwise of the Nigerian state. Turning it into a political football was and is a big mistake, and a strong indicator of state failure,” he wrote via his verified Twitter page.
By Adedapo Adesanya
Central Securities Clearing System (CSCS) Plc and 11 Plc suffered losses on Thursday, causing the NASD Over-the-Counter (OTC) Securities Exchange to deflate by 0.22 per cent.
The duo overturned the gains recorded by FrieslandCampina WAMCO Nigeria Plc and Geo-Fluids Plc.
Data obtained by Business Post showed that CSCS Plc lost 5 Kobo to quote at N14.00 per unit versus the previous day’s N14.05 per unit, while 11 Plc lost N10 to close at N140.00 per unit compared with Wednesday’s value of N150.00 per unit.
On the flip side, FrieslandCampina appreciated by 59 Kobo to finish at N76.00 per share versus the previous closing price of N75.41 per share, as Geo-Fluids Plc gained 14 Kobo to close at N1.64 per share as against the previous day’s N1.50 per share.
At the close of transactions, investors lost N2.11 billion as the value of the OTC stock market closed at N959.06 billion, in contrast to the midweek’s N961.17 billion.
Following the same trend, the NASD Unlisted Securities Index (NSI) decreased at the close of trades by 1.61 points to 729.87 points from 731.48 points.
It was observed that the volume of securities traded in the session went down by 77.2 per cent to 5.2 million from 23.1 million units, the value of stocks expanded by 139.5 per cent to N24.3 million from N10.1 million, while the number of deals increased by 7.7 per cent to 14 deals from 13 deals.
Geo-Fluids Plc remained the most traded stock by volume on a year-to-date basis with 460.3 million units valued at N501.9 million, UBN Property Plc transacted 365.8 units worth N309.5 million, while IGI Plc was in third place with 71.1 million units valued at N5.1 million.
Conversely, VFD Group Plc was the most traded stock by value on a year-to-date basis with 7.3 million units worth N1.7 billion, Geo-Fluids Plc has transacted 460.3 million units valued at N501.9 million to retained second place, while UBN Property Plc was in third place with 365.8 million units worth N309.5 million.
By Adedapo Adesanya
The Nigerian Naira depreciated on the American Dollar at the Peer-2-Peer (P2P), the Investors and Exporters (I&E), and the black market segments of the foreign exchange (FX) market on Thursday, March 24.
In the P2P market, the value of the local currency fell by N2 to sell at N755/$1 compared to the previous trading session’s exchange rate of N753/$1.
Also, in the official FX window, the domestic currency lost 17 Kobo or 0.04 per cent to quote at N461.67/$1 during the session, in contrast to the preceding day’s value of N461.50/$1.
The Naira weakened against the greenback yesterday amid a moderation in the value of forex trades achieved. The turnover stood at $80.03 million, 81.5 per cent or $351.74 million lower than the $431.77 million reported a day earlier.
In the parallel market, the depreciated against the US Dollar on Thursday by N1 to quote at N742/$1 compared with Wednesday’s N741/$1.
In the same vein, in the interbank segment, the Nigerian currency depreciated against the British Pound Sterling by N1.42 to close at N566.08/£1 versus the midweek session’s N564.66/£1.
Similarly, the Naira lost 73 Kobo against the Euro during the trading session to sell at N497.72/€1 compared with the previous day’s rate of N496.99/€1.
Meanwhile, yesterday, the cryptocurrency market shrugged off the US Federal Reserve’s 25-basis point rate hike and ongoing concerns about the banking sector and future monetary policy decisions.
Bitcoin (BTC), the largest cryptocurrency by market capitalization, jumped 2.4 per cent to sell at $28,295.37, as its rival, Ethereum (ETH), went up by 3.6 per cent to quote at $1,812.05.
Litecoin (LTC) grew by 9.0 per cent to $95.58, Dogecoin (DOGE) went up by 2.9 per cent to $0.0768, Solana (SOL) improved by 2.5 per cent to $22.04, Ripple (XRP) recorded a 2.3 per cent appreciation to trade at $0.435, Cardano (ADA) gained 1.5 per cent to settle at $0.3667, and Binance Coin (BNB) added 1.3 per cent to its value to finish at $326.77, while the United States Tether (USDT) and Binance USD (BUSD) remained unchanged at $1.00 each.
