The new Director- General, Securities and Exchange Commission (SEC), Dr Lamido Yuguda, at the weekend vowed to implement strict enforcement regime and a zero tolerance regime on infractions as the new management at Nigeria’s apex capital market regulatory body seeks to improve investors’ confidence and experience in the market.

The Commission will also develop and implement  strategies to make transaction process at the market simpler and flexible without compromising the integrity of the process.

Addressing his first media briefing after presiding over the first virtual meeting of the Capital Market Committee (CMC), Yuguda said the Commission would work with stakeholders to address the recurring problem of unclaimed dividend, assuring that the Commission will soon release a statement soon on unclaimed dividend.

He said his administration would emplace zero tolerance for infractions as cornerstone of its investors’ protection, noting that increased investors’ confidence and experience will lead to greater inflow of domestic funds into the capital market.

“We need to restore investor confidence and attract the retail and young investor into the market. Thus, we will ensure strict enforcement of our rules and regulations, strengthen our enforcement regime and clamp down on illegal operators luring unsuspecting investors with various Ponzi schemes,” Yuguda said.

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According to him, to increase the visibility and attractiveness of the capital market, the Commission shall work towards maintaining an environment that is enabled by the appropriate regulatory framework, timely and affordable access to the market, zero tolerance for infractions, heightened investor confidence and awareness, innovative product development and good governance practices.

He assured that the new management will continue to implement the ongoing initiatives of the Nigerian Capital Market Master Plan and other related initiatives targeted at developing the capital market, noting that the new management will continuously seek ways of improving existing initiatives while introducing new ones, all to the benefit of market stakeholders.

He said the Commission would also lead discussions on the most appropriate ways to increase pension funds’ investments in the  capital market.

He commended the resilience of the market and operators, pointing out that the continuous operation of the capital market during this challenging period of COVID-19 pandemic was largely due to the existence of business continuity plans of SEC, the Exchanges, Central Securities Clearing System (CSCS) as well as other operators in the market.

“One thing that was also emphasised at the meeting is the need for collaboration among market stakeholders to have a capital market of our dreams.

‘’The Commission is open to engagements with stakeholders that will foster new partnerships and strengthen our commitments towards the development and transformation of the capital market,” Yuguda said.

He outlined that his administration would remove  complications and loopholes that tend to make the process of buying and selling as well as raising funds through the market cumbersome and sometimes frustrating.

He said the Commission would work with the government to create an enabling environment that allows the capital market to play its roles as the fulcrum of economic development.

 

From John Ofikhenua, Abuja

 

The Nigerian Electricity Regulatory Commission (NERC) said the 11 Distribution Companies (DisCos) collected N442.6 billion in 2018.

It was learnt at the weekend from a  document which The Nation obtained in Abuja: “The total billing to electricity consumers by the 11 DisCos was N680.6billion in 2018, but only N442.6billion (representing 65 per cent  collection efficiency) was collected from customers as at when due.’’

The commission said though the collection efficiency increased by about five percentage points relative to 2017, it indicated that about N3.50 out of every N10 worth of energy sold in 2018 remained uncollected.

The document entitled: ‘’2018 Annual Report & Accounts, 31 December 2018’’, said the severity of the liquidity challenge in NESI was further reflected in the settlement rate of energy invoices issued by NBET and MO to DisCos.

In the period under review, the DisCos were issued a total invoice of N671billion for energy received from NBET and for administrative services from MO, but only N206.7billion (31 per cent) was settled by DisCos, creating a deficit of N464.3billion in the market.

NERC said to sustain the improvement recorded in grid stability in subsequent years, in collaboration with Transmission Company of Nigeria (TCN), it shall continue to intensify its monitoring and supervision to ensure strict compliance with the system operator’s directives to generators on free governor an frequency control mode in line with the provisions of the operating codes in the industry.

The report said the Commission shall continue to work with TCN on the efficient and competitive procurement of adequate ancillary services to ensure effective management of the national grid.

According to the document,  the financial liquidity of the electricity supply industry continues to be the most significant challenge threatening the sustainability of the industry.

It said: “As reported in the preceding annual report, the liquidity challenge is partly due to the non-implementation of cost-reflective tariffs, the incidence of high technical and commercial losses exacerbated by energy theft, and consumers’ apathy to paying for services under the widely prevailing practise of estimated billing.”

Read Also: DisCos lose N14b to capped estimated billing monthly

 

On operational performance, the report said the Commission continued with its regulatory function of monitoring the operational and commercial performance of the Nigerian Electricity Supply Industry (NESI) in line with its mandates derived from the EPSR Act.

It explained that during the year 2018, the total electric energy generated was 33,820,503MWh representing a 6.7 per cent increase from the generation level in 2017.

The industry, said NERC, recorded a highest daily peak generation of 5,191MW in the fourth quarter, on the 20th day of November 2018.

It noted that the utilisation of the total available generation capacity remained at 52 per cent during the period under review.

NERC said: “48 per cent of the average available capacity (2,839Mw) was still constrained by a combination of factors comprising gas supply shortage, water management at the hydropower stations, limited transmission capacity, limitations on distribution networks and commercially induced load limitation by DisCos.

“Complete resolutions of the technical and operational constraints in the industry remain as a top priority of the Commission.

The Commission is working on addressing the DisCos-TCN interface challenges with the aim of freeing up the generation capacity constraint by addressing the bottlenecks inhibiting the flow of energy.

“In line with the 2017-2020 Strategic Plan, the Commission is committed to utilising a more robust process for the thorough technical assessment of DisCos’ utilisation of capital expenditure allowances for relevance and cost efficiency to ensure that utilities invest on projects critical to tackling their technical and operational challenges. This process is in line with the regulatory imperative of ensuring that consumers do not pay for inefficiencies of the utilities.”

• Unilever UK attains 75% strategic intent in Unilever Nigeria
• Heineken tightens hold on Nigerian Breweries
• Forex makes Nigerian stocks soft targets

 

By Taofik Salako, Deputy Group Business Editor

 

Major multinationals are acquiring more equity stakes to shore up their majority controlling equities in their Nigerian subsidiaries.

Most analysts regarded the acquisition of additional stakes as key strategies to reinforce their control over their Nigerian businesses as a major hub for African businesses under the African Continental Free Trade Area (AfCFTA).

Trading reports on insider transactions at the stock market obtained at the weekend indicated that Unilever United Kingdom increased its majority shareholding in Unilever Nigeria to 75.49 per cent while Netherlands-based Heineken N.V. increased its controlling equity stake in Nigerian Breweries to 55.9543 per cent.

The reports indicated that the acquisitions were consummated through direct dealings on the secondary market, taking advantage of the attractive valuation of the Nigerian companies.

Unilever UK, which had earlier indicated interest in increasing its majority equity stake in Unilever Nigeria up to 75 per cent, acquired additional 1.46 per cent equity stake in the Nigerian company. The deals were consummated through its holding company, Unilever Overseas Holdings B.V.

Heineken acquired about 0.0043 per cent additional equity stake through Heineken Brouwerijen BV. The reports indicated that Heineken struck several deals to acquire a total of 347,042 ordinary shares of 50 kobo each, equivalent to 0.0043 per cent additional equity stake in Nigerian Breweries. The transactions were consummated at price range of between N33.92 and N37.

Unilever Overseas Holdings acquired 84.117 million ordinary shares of 50 kobo each at between N12 and N12.5 per share in a deal valued at N1.04 billion.

Prior to the latest acquisitions, Unilever held 74.03 per cent majority equity stake in Unilever Nigeria while Heineken, through three subsidiaries, held 55.95 per cent majority stake. Heineken’s holdings were held by Heineken Brouwerijen B.V., 37.76 per cent; Distilled Trading International BV, 15.47 per cent and Heineken International B.V., which held 2.72 per cent. Heineken Brouwerijen BV’s holding now stands at 37.7643 per cent.

The latest acquisitions are significant for the two multinationals. Every additional share increases Heineken’s control on the Nigerian subsidiary. The single largest domestic stake in the widely dispersed Nigerian Breweries’ shareholding is 0.44 per cent held by Odutola Holdings Limited.

The latest acquisition placed Unilever Nigeria ahead of its five-year quest to attain 75 per cent controlling shareholding in the Nigerian company. Unilever has over a five-year period increased its shareholding in Unilever Nigeria by 25 per cent. Nigerian shareholders had in 2015 rejected a £144.5 million tender offer from Unilever, which sought to acquire shares from Nigerian minority shareholders to increase the foreign controlling equity to 75 per cent. Unilever held 50 per cent majority equity stake by 2015.

Over the five-year period, Unilever combined primary and second market acquisitions to acquire its long-term strategic intent in Nigeria. Unilever had cited “long-term strategic importance of Unilever Nigeria to its global business” as the major reason for the quest for increased equity stake.

Market analysts at the weekend said the foreign majority shareholders might be taking advantage of the foreign exchange (forex) lockup and the resultant devaluation of naira, which had trapped many foreign portfolio investors to undertake indirect buyouts that would, ultimately, reduce domestic institutional and individual retail shareholdings in the multinational companies.

Analysts, who spoke under anonymity because of confidentiality clause, said attractive valuation of Nigerian equities and the devaluation of naira have made Nigerian stocks soft targets for foreign investors.

Analysts said the new acquisitions were futuristic, citing the declining performance of the two multinationals in recent period. The AfCFTA seeks to create a single continental market for goods and services of African origin with free movements across the member countries. Nigeria has already signed the AfCFTA agreement.

Unilever Nigeria had recorded net loss of N519 million in first half of the year as the conglomerate saw steep declines in sales across product categories. Interim report and accounts of Unilever Nigeria for the six-month period ended June 30, 2020 had shown that turnover dropped by 35.9 per cent from N42.7 billion in first half 2019 to N27.3 billion in first half 2020. Gross profit dropped by 45.7 per cent from N11.346 billion to N6.156 billion.

As against profit before tax of N4.698 billion recorded in first half 2019, the company posted pre-tax loss of N567 million in first half 2020. After taxes, net loss stood at N519 million 2020 compared with net profit of N3.515 million posted in first half 2019. Loss per share stood at 9 kobo in first half 2020 as against earnings per share of 60 kobo recorded in comparable period of 2019.

The first half results worsened earnings outlook for Unilever Nigeria after it posted a pre-tax loss of N8.3 billion in 2019. Key extracts of the financial statement of the company for the year ended December 31, 2019 had shown that turnover dropped by 35 per cent from N92 billion in 2018 to N60.2 billion in 2019. Gross profit dropped from N27.4 billion in 2018 to N6.67 billion in 2019.

Notwithstanding cost control measures, the company relapsed from operating profit of N10.43 billion in 2018 to operating loss of N10.35 billion. Loss before tax stood at N8.3 billion in 2019 as against pre-tax profit of N13.6 billion in 2018. With a tax gain of N4.1 billion in 2019, net loss after tax stood at N4.2 billion as against profit after tax of N10.1 billion recorded in 2018.

“Unilever Nigeria remains focused on its short- and long-term growth ambitions with clear emphasis on cost and operational efficiencies, increasing market share across key categories, reinvesting behind our iconic brands and improved route-to-market,” Managing Director, Unilever Nigeria Plc, Yaw Nsarkoh said.

Nigerian Breweries’ turnover dropped by N18 billion to N152 billion in first half of 2020 as Nigeria’s largest brewer continued to struggle with macroeconomic headwinds, which were exacerbated by the COVID-19 pandemic.

Key extracts of the interim report and accounts of Nigerian Breweries for the six-month period ended June 30, 2020 showed that turnover declined to N152 billion in first half 2020 as against N170 billion recorded in comparable period of 2019. Net profit closed first half 22020 at N5.7 billion.

Directors of the company stated that the half-year results for the 2020 financial year showed a strong balance sheet despite several factors that negatively impacted on the company’s operations.

They listed macroeconomic headwinds against the company to include in Excise Duty, a rise in inflation, an increase in value added tax (VAT) from 5.0 per cent to 7.5 per cent in as well as the impact of the coronavirus pandemic on businesses worldwide.

“Despite these challenges, the company’s financial position shows stability and sustained profitability,” the board stated.

 

 

By Lucas Ajanaku

 

The Federal Government has approved a new oil and gas free zone for Akwa Ibom State.

The new free zone, promoted by the Akwa Ibom State government, the Nigerian National Petroleum Corporation (NNPC) and an American private equity investor, the Black Rhino Group, has already reported investment commitments worth more than $10 billion, with the potential to create more than 7,000 long-term jobs.

The free zone, named Liberty Oil and Gas Free Zone, which is the largest in West Africa, sits on a physical land space measuring more than 50,000 hectares spread across six local government areas of Ikot Abasi, Eastern Obolo, Oruk Anam, Mkpat Enin, Onna and Ibeno.

A statement on the presidential declaration of the area as a free zone, the Minister of Industry Trade and Investment, Otunba Adeniyi Adebayo, who is the supervising minister for the nation’s free zones, described the project as “a game changer.”

He said: “The Liberty Oil and Gas Free Zone is expected to generate industrial clusters that will deliver impetus to the Federal Government Industrial Revolution Plan by fast-tracking the development of related industries such as lubricant and plastics manufacturing, utilising abundant hydrocarbon feedstocks in the zone.”

The Managing Director, Oil and Gas Free Zones Authority (OGFZA), Mr Umana Okon Umana, said OGFZA was “excited about the project because of the prospects it holds out for the economic development of the country.” OGFZA is the statutory regulator of the new free zone.

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One of the promoters/developers operating out of the Ibeno axis of the free zone, Qua Iboe Export Hub Limited (QIEH), has a significant operation in place already, gearing up as the gas processing hub for West Africa.

A profile of QIEH’s planned investments and projects up to 2023 include a 567megawaat (Mw) gas-fired power plant, which is at advanced stages of development; 15 million standard cubic feet gas flare elimination investment valued at $120 million under the Federal Government gas flare commercialisation programme, by which gas being flared around the area will be gathered and converted to domestic use; a 3.5 million metric ton per annum (MTPA) petrochemicals platform, designed under the nation’s natural gas monetisation programme to produce methanol and ammonia; and a two million MTPA liquefied natural gas plant, LNG export terminal and LNG fleet network to be developed within the projected period.

Other key projects lined up for execution during the period include a gas field development and pipeline transport system to supply gas from Mobil-NNPC JV operations to meet the energy requirements of QIEH; a high-octane gasoline 20,000 bpd plant for the production of synthetic gasoline; and the development of a logistics base and a fabrication yard to support the operations of oil production and service companies in the zone.

When the entire free zone comes on stream, it will position the country as the destination for future downstream investments in the oil and gas industry, especially in logistics and manufacturing.The development design of the zone at full rollout will feature a Petroleum and Energy District, NNPC Logistics Centre, Business and Industrial District, Agro-allied Industrial District; and Heavy Industry District.

The Liberty Oil and Gas Free Zone inherited some important legacy projects, which include the 115 Mw Ibom Power Plant and the Aluminium Smelting Company of Nigeria, which are located in Ikot Abasi.