The Nation Newspaper

Category: Business

  • NIA seeks Presidency’s assistance

    The Nigerian Insurers Association (NIA) is planning a meeting with the Presidency to discuss issues affecting the sectors; its Chairman, Remi Olowude, has said.

    Olowude, who stated this in Lagos, said in line with the association’s determination to achieve its objectives, it has become imperative to take deliberate steps towards closer interaction and strategic partnership with all stakeholders, particularly the major arms of the government.

    He said the Governing Council of the association would table issues, such as the key roles of insurance to the socio-economic growth and development of the nation.

    He said how the industry and the government could collaborate in poverty alleviation, would also be considered, adding that the need to give the industry the opportunity to contribute to the formulation of certain government policies; the industry representation in appropriate government committees is important.

    He noted that efforts would also be made to ensure the restructuring and strengthening of the association’s secretariat for effective public sector liaison and monitoring of the political and legal environment as it affects insurance, adding that this has become necessary as recent events in the financial sector had shown, no insurance company was too big to fail or too small not to matter.

    He said: “Insurance companies are institutional investors which invest in equities and securities. When these entities fail, insurance companies are faced with the challenges of honouring their obligations to their customers. But, unfortunately, there is nothing in place on the part of the government to bail out the insurers in times of trouble. This is food for thought.

    “Similarly, we intend to initiate interactive sessions with the appropriate committees or organs of the two chambers of the National Assembly to discuss issues, such as restrictive laws on insurance practice, multiple taxation, insurance awareness and penetration, development of oil and gas industry.

    “The NIA will also strengthen relationships with the different organs of the Judiciary by organising annual or bi-annual Insurance seminars for judges and the leadership of the Nigerian Bar Association.

    “The seminars will focus on developments in insurance law in Nigeria, and ensure that the judiciary, legal profession, the regulators, and practitioners in the insurance industry as well as the media have a mutual understanding of insurance law and practice. The more people understand the law, the less the courts are inundated with avoidable suits.”

  • Insurers urged to look beyond govt’s assets

    INSURERS have been urged to look beyond government’s premiums and focus on the retail end of the market.

    The Managing Director, Riskguard-Africa Nigeria Limited, Mr Yemi Soladoye, stated this in Lagos.

    This is the only way insurance industry can grow and unhealthy competition reduced.

    He said the concentration of operators on government‘s assets has created problems in the industry. He listed some of the problems to include rate cutting, undermining the industry operating rules and guidelines thereby creating friction among operators.

    He said the operators were engaging in unhealthy competition because they boxed themselves into a narrow distribution outlet, which is the brokerage market, stressing that in any situation; price becomes the only competitive strategy, when people are not adding value to their business.

    He said: “That the clients are asking for reduced price every year, and the brokers are doing the same, it is a manifestation of the fact that they are saying that they have not seen any competitive strategy. The insurance companies concentrate on premium growth, as against market expansion. The future and the solidity of the operators can only come from market expansion, he said.

    The Riskguard chief also said: “All the operators want is to ensure that their premium for this year is higher than what it was last year, and they are ready to do anything to achieve that. If their market position last year was number six and they move to number five this year, their board would laud their effort, not minding what they did to get there.”

    Soladoye said companies’ cost of doing business is indeed very high while the claims ratio is quite low.

    “These are pointers to the fact that insurance companies need something new and better. The issue of unhealthy competition will be getting worse, until they look for better, cost effective and non volatile distribution channels”, he said.

    He said by retail operations he means companies adopting strategies such as Bankassurance which is having collaboration with banks is a retail channel. It also means engaging in strategic alliances with organisations, like Shoprite, Megaplaza and others. Collaborating with cooperative societies and more. It is so wide but until they adopt it, the market cannot expand, he said.

    Soladoye said the adoption of retail marketing should be made compulsory, stressing that operators are already feeling the bite of the narrow distribution outlet they are using at the moment.

    He said most of the problems operators face – high cost of doing business, premium reduction, unhealthy competition, are all manifestations of the fact that they are using narrow distribution method. He added that if they have an alternative, they would do business on their own terms, but when they do not have, they have to achieve whatever anybody tells them.

    He noted that the operators are not creating alternative distribution outlets to expand their operations, adding that the industry can never grow when the operators scramble for the few businesses available.

    “I think what they need to do is to go back to the drawing board to re-examine their operational strategies. Each company needs to sit and draw strategy on how to develop their business and adopt retail marketing strategy. When this is done, issues of unhealthy competition, premium reduction and others will stop,” he added.

  • IHS Nigeria loses N2b in six months

    IHS Nigeria Plc lost about N1.71 billion in the first six months of this business year, according to the latest operational report made available by the directors of the company.

    Interim report and accounts for the six-month period ended October 31, 2012 showed marginal increase in sales just as loss also spiraled to new high.

    Loss before tax closed October 2012 at N1.705 billion as against N1.52 billion recorded in comparable period of 2011. Net loss after tax jumped to N1.54 billion in 2012 as against N680.39 million in 2011. Total comprehensive loss attributable to shareholders tripled to N1.8 billion in 2012 compared with N796.98 million in corresponding period of 2011. With this, loss per share stood at 34 kobo as against 18 kobo in 2011.

    The company’s turnover had increased slightly from N7.59 billion in 2011 to N7.93 billion in 2012. While operating loss dropped to N513.44 million in 2012 from N824.71 million in 2011, significant cost further undermined the midline performance, rising from N627.29 million in 2011 to N1.22 billion in 2012.

    The latest report compounded the performance outlook of the company. Audited report of the company for the year ended April 30, 2012 showed turnover of N15.2 billion in 2012 as against N14.9 billion in 2011. With cost of sales at N12.41 billion and administration expenses at N1.28 billion, the company posted operating loss of N1.08 billion in 2012 as against operating profit of N913.7 million in 2011. Significant increase in finance cost from N1.2 billion to N2 billion, pushed pre-tax loss to N2.89 billion in 2012 compared with N1.84 billion in 2011. Net loss after tax rose from N1.65 billion to N2.04 billion, leaving shareholders with net loss per share of 46 kobo in 2012 as against 38 kobo in 2011.

    The six-month loss came on the heels of announcement by IHS that it has attracted a $125 million equity investment from Wendel in exchange for 25 per cent equity stake in IHS Plc. The deal worth about N20 billion is Wendel’s first direct investment in Africa.

    Wendel made the acquisition, which makes it a major shareholder of IHS, through its subsidiary, Oranje-Nassau Development.

    IHS stated that the $125 million investment was part of its capital raising for its pan-African growth with solid participation from current and new shareholders. Other key shareholders in IHS include International Finance Corporation, South Africa’s Investec Asset Management, Emerging Capital Partners, Dutch Development Bank, local Nigerian banks and private investors such as Skye Bank.

    According to the company, the equity investment will be augmented by debts from various international banks operating on the African continent.

    IHS would use the funds to finance ongoing investment programme to support further tower purchases, infrastructure improvements and the continued development of innovative technology such as solar power throughout Africa and the Middle East.

    Founded in 2001, IHS provides services across the full tower value chain including managed services, deployment and site ownership. It has operations in Ghana, Sudan, South-Sudan, Cameroon and Cote d’Ivoire.

  • Oil subsidy for 2012 may hit N1.23t, says PPPRA

    Oil subsidy for 2012 may hit N1.23t, says PPPRA

    The Petroleum Products Pricing Regulatory Agency (PPPRA) has said the Federal Government total subsidy bill may reach N1.23trillion by the end of the year.

    The agency’s Executive Secretary, Mr Reginald Stanley, stated this at the Joint House Committee on Finance, Appropriation, Petroleum (Upstream) and Petroleum (Downstream) of the National Assembly yesterday.

    According to him, the N161,617,364,911 supplementary budget brought before the National Assembly by President Goodluck Jonathan was in order.

    Stanley said the N888billion formerly estimated for fuel subsidy had N232billion voted for payment 2011 subsidy arrears, while N650billion was for this year’s claims.

    According to the PPPRA boss, subsidy arrears for 2011 jumped to N451billion and only N437billion was left for the payment subsidy payments,addingthat N605billion subsidy claims were to be paid as soon as the claims have been processed.

    Stanley corroborated President Johanthan’s statement that the subsidy projections were underestimated, noting that funds budgeted for subsidy for the remaining part of the year were grossly inadequate and that this was what led to request for more subsidy cash.

    His words: “The total projection of about N1.23trillion should not scare anybody because we are an oil producing nation and we are reaping at the upper part of the deal in terms of higher prices for crude oil. In the same vein, we should not also forget that about 95 per cent of the products are imported.”

    Director-General, Budget Office, Mr Bright Okogwu, supported the presentation of Stanley, adding that there was an urgent need for the supplementary budget. He pleaded with the lawmakers to give the supplementary bill accelerated passage to make petroleum products available for the remaining part of the year.

    The House of Representatives had queried the forensic audit claimed by President Jonathan as the basis for computing an extra N161,617,364,911 billion cash as supplementary for the payment of subsidy barely two weeks to the end of the fiscal year.

  • Govt to save N474b from oil metering system

    Govt to save N474b from oil metering system

    The Federal Government would save about N474billion ($3billion) through the implementation of the new policy on Weights and Measures, the Minister of Trade and Investment, Mr. Olusegun Aganga, has said.

    Aganga spoke during the Second Annual Seminar for Trade and Investment Correspondents and Group Business Editors, in Abuja, on Monday.

    He said with the granting of the Presidential approval to the Weights and Measures Department, an agency under the Ministry of Trade and Investment, adequate measures would be put in place to ensure that Nigerians get value for products for local consumption and export.

    He said, “The Ministry of Trade and Investment has made significant achievements within the last one year. In terms of investment inflow, at least 30 per cent of the investments coming into Africa comes to Nigeria, which makes the country number one investment destination in Africa. But what makes this very important is that it does not include oil and gas investment, it is in the real sector of the economy.

    “All over the world, there is legal meteorology which ensures that what you buy is accurate and legal. If you look at the Nigerian Extractive Industry Transparency Initiative Report, there is a lot of leakage in the oil and gas industry, either because the meters are not working or they are not installed at the right places. But for the first time, the President has given us approval to commence that operation across all sectors of the economy.

    We are starting with the oil and gas, telecoms and power sector. When the process is completed, we expect to save the country about $3billion and also generate revenue of about N17.4bn for the government in 2013”.The minister also said that the value and volume of the country’s export had increased significantly within the last one year.

    He said, “In terms of export, the volume has gone up by 17.23 per cent while the value has gone up by 23.5 per cent. We are restructuring the Abuja Securities and Exchange Commission and when that is completed, that will increase the price the farmers get for their goods from 35 per cent to about close to over 50 per cent as it is done in Ethiopia. This process will help to create more jobs in terms of the warehouse receipt system that we are trying to introduce.

    “Every Nigeria has the ability to establish and run their own businesses. All they need is a good investment climate, funding and the business support. We are working with them to make sure that we have both the right investment climate, funding to create about 3.6 million jobs within the next four years. For the first time, we have completed the database of all MSMEs in the country which we never had. This database revealed that there are 17.28 million MSMEs in the country employing close to 33 million people.”

    He, however, said that most of these businesses were micro-businesses.

    “In terms of overall GDP contribution, MSMEs contribute about 45 per cent of the country’s GDP .This shows that this is the sector that we need to support due to their capacity for employment generation,” he added.

    He said that the capacity utilisation of industrial sector had improved, driven largely by the textile, apparel and footwear sub-sectors of the Nigerian economy. He, however, added that the Nigeria Industrial Revolution Plan would help in moving the country from that of exporting raw materials to a net exporter of finished products.

  • NNPC denies stalling projects

    • Insists on following due process

    The Management of the Nigerian National Petroleum Corporation (NNPC) yesterday denied delaying the execution of some multi-billion dollar projects in the oil and gas sector.

    The Acting Group General Manager, Group Public Affairs Division, Mr Fidel Pepple, said the report was credited to some international oil companies (IOCs) which accused the corporation of impeding the project execution.

    He said the NNPC would not be stampeded or browbeaten into abandoning its firmly established process of awarding contracts by what it termed calculated media blackmail by IOCs and other interested parties.

    The spokesman noted that while the industry concern is expected in the process leading to the awards of major oil and gas projects, “NNPC has an established procedure of contract and project approval which includes conduct of economic analysis to establish project viability and Federal Government’s take from investments in the upstream’’.

    NNPC explained that this procedure must be followed and IOCs cannot stampede the corporation into taking decisions that may be inimical to the nation because of their pecuniary interests.

    On the claim that the NNPC has not held its periodic Group Executive Committee meetings to discuss some major projects like the TOTAL Egina deep offshore project and endorse same to NNPC Board for approval, Pepple said: “This claim is untrue as GEC meetings are being held weekly or fortnightly.However, Erha North Phase Two and Egina Project contracts have not been discussed yet at these meetings because NNPC Management is critically reviewing the overall economics of the project in view of their high cost estimates in order to establish their validity, maximise Federal Government’s take and ensure comparative price competitiveness vis-a-vis benchmarks.’’

    On the allegation that the Group Executive Director, Exploration and Production of the NNPC,Abiye Membere, was behind a phantom contract splitting attempt of the Egina Project just as he allegedly did with the previous Bonga Southwest project, the Corporation spokesman said this was untrue.

    The NNPC said the alleged contract splitting was never in the cards as there was no time that SNEPCO proposed three Floating Production Storage Production offloading facility (FPSOs) for Bonga Field Development.

    “Membere also did not scuttle Bonga Southwest/Aparo Project six years ago. He was the GM, PSC Division of NAPIMS in 2006 and helped to move forward the strategy for a leased FPSO project for Bonga Southwest /Aparo project. He was deployed from this position to another position in NNPC’s Engineering & Technical Directorate in 2007during a routine Management re-organisation exercise’’.

    The corporation media chief explained that the said Bonga South/Aparo was recycled for concept re-evaluation in 2009 when dearth of bidders were recorded on the major packages at the technical stage and with a potential of only one bidder emerging to the commercial stage of the FPSO tender.

  • Inflation rises by 0.6%

    THE Statistician-General of the Federation, Dr. Yemi Kale, yesterday said Nigeria ’s inflation rate rose to 12.3 per cent in November as against 11.7 per cent recorded in October.

    When analysed on monthly basis, the composite Consumer Price Index (CPI) was higher by 0.60 percent when compared with the preceding month’s index.

    In a report yesterday by the National Bureau of Statistics (NBS), it attributed the relative increase in the headline index during the month to general higher prices of food and core indices.

    The headline inflation is made up of Core Index and Farm Produce Items.

    The Bureau pointed out that unlike previous months, the core sub-index deviated from its trend, increasing to 13.1 per cent while food index continued to show lagged effects of the floods which impact was heavily felt in several farmlands in October as well as other demand and supply factors.

    A further decomposition of the CPI on urban and rural basis showed that the urban inflation rate was recorded at 15.8 per cent year-on-year, an increase of 0.5 percentage points from the 15.3 per cent increase recorded in October, increased by 0.7 percentage points to 9.8 per cent on yearly basis from October.

    Analysing the trend further, the agency reported that on a monthly basis, the ‘Urban All’ index increased by 0.6 per cent from October, while the ‘Rural All Items’ index increased by 0.63 when compared with the previous month.

  • ‘Why car importation thrives’

    Vehicles are still imported into the country because car manufacturers are unable to meet local demands, the National Automotive Council (NAC) has said.

    An official of the council, Mr Rashid Bello, ssaid this at the end of Automobile Trade fair, organised by FONTAC Resources Nigeria Limited in Port Harcourt, the Rivers State capital.

    Bello, however, said auto industries have achieved international standard in their productions.

    He urged Nigerians to patronise locally made vehicles to encourage expansion of the companies and job creation and phase out of imported vehicles, especially used vehicles.

    “We have acquired the technology for vehicle manufacturing in Nigeria and I make bold to say that each of the eight manufacturing plants produce vehicles that are of international standard and specifications.

    “The only difference between the local and foreign built vehicles is the local content value of the vehicles. In his explanation Bello said, “for every single foreign car that you are buying, you are taking money from our own economy to another economy, you are taking jobs away from your own people and you are empowering other foreign national, you are killing your own economy, and building the economy of other people.

  • Fed Govt, Lagos seal deal on Lekki Deep sea port

    Lagos State and the Federal Government have signed an agreement for the construction of a deep sea port in Lekki.

    The Managing Director, Nigeria Ports Authority (NPA), Mr Habib Abdullahi, who signed for the Federal Governmen yesterday, said the project was conceived to complement the Tin Can and Apapa Ports and for the development of the nation’s economy.

    Abdullahi , who noted that the two ports were overstretched, said the project would significantly help tackle the problem of ports congestion when completed.

    “The partnership is such that there is one foreign investor. Sixty per cent will go to the foreign investors, 20 per cent for the Federal Government through the NPA and 20 per cent equity for the state government. That is how it is going to work.

    “The driving force will be the foreign partners, who have already started work there. They have already invested some amount and we are expected also to put in our equities, ‘‘ he explained.

    He assured that the NPA would provide technical support for the project to ensure it complied with the required standards, adding that the NPA planned the construction of more ports for the state as well as other parts of the country.

  • AMCON yet to vacate Capital Oil’s premises

    A week after an Abuja High Court ordered the Assets Management Corporation of Nigeria (AMCON) to vacate the premises of Capital Oil and Gas Industries Limited, the agency is holding on to the facilities and has directed the police not to allow any of the company’s staff entry into the premises.

    Justice Abdul Kafarati of the Federal High Court, Abuja, had on December 13 vacated its ex-parte order of November 13, 2012, which gave AMCON power to take immediate possession of the properties and assets of Capital Oil and Gas Industries Limited and those of its Managing Director, Mr Ifeanyi Ubah over alleged N48.014 billion debt.

    Following the December 13 ruling, the management of Capital Oil proceeded to resume operation yesterday, but both the management and staff were refused entry by the police guarding the company on orders of AMCON.

    A management staff member of Capital Oil, Mr Ugochukwu Ehighibe, told reporters that “neither the company’s lawyers, nor the embattled Managing Director, Mr Ifeanyi Ubah nor any staff of the company for that matter, has been served with any court order staying the execution of the December 13, 2012 order or a notice of appeal on the court order.”

    Efforts to reach AMCON for comments proved abortive, as text messages and telephone calls to its officials were not replied to.