The Nation Newspaper

Category: Business

  • Customers get N1b claims

    CrystaLife Assurance Plc paid over N1 billion as claims to its customers at the end of the third quarter of the year.

    This is contained in a statement made available to The Nation by the Head, Corporate Development and Strategies, Titilope Oguntuga, after a presentation of the company’s financial statements for the third quarter of the year.

    The company’s management also declared that it has taken steps to reposition its operations in line with international best practices. The company’s Chief Finance Officer, Mr Wale Oketola, stated that the company had within the period paid a dividend of N0.02kobo for each N0.50kobo ordinary share held in the company.

    As part of its welfare-based objective, the company, also paid performance bonus to her staff, the statement, added.

    The company in the statement also said:” As an organisation that is committed to excellence and global best practices, we have successfully concluded the transition of our financial reporting from the Generally Accepted Accounting Principles (GAAP) portals to the International Financial Reporting Standards (IFRS), the financial reports for the third quarter will be presented in the IFRS format”.

  • Experts hail CBN on banks’ foreign subsidiaries financing

    Some financial experts have praised the Central Bank of Nigeria (CBN) for stopping banks from using their funds to finance foreign subsidiaries.

    The step, they said, would checkmate fraudulent practices and enhance sanity in the financial system.

    According to them, the banking sector is overheated and it needs effective measure to restore investors’ confidence in it.

    Former President, Finance Houses Association of Nigeria, Eddie Osarenkhoe, said the initiative was welcome because it would make credit facilities available in the economy. He said it was regrettable that banks mobilised money from the public and diverted it to run subsidiaries at the expense of giving loans to customers.

    According to him, the funding of bank subsidiaries with public fund has made the financial sector incapable of discharging its financial obligations to the customers.

    Osarenkhoe said many banks had been hiding under the universal banking system to siphon money for personal use and negatively affected the industry. He said that corruption in the banking sector led to the financial crises in the banks.

    “The CBN’s ability to implement and enforce the directive will bring sanity and reduce capital flight out of the country,” he said.

    Also, the President, Association of National Accountants of Nigeria (ANAN), Dr Samuel Nzekwesaid the move by CBN would curb money laundering. “The collapse of the capital market was due to actions of the bank executives to divert money and buy shares in the same bank to finance their subsidiaries,” Nzekwe said.

    He said many bank managers borrowed money from the banks and used them to buy stocks of their subsidiaries and converted them to personal use.

    Nzekwe said many banks in the country failed to become mega banks because of the lack of capacity to give long term loans to customers and failure to finance their foreign subsidiaries effectively.

  • Milliman: Pension plans up $45billion

    Milliman, a premier global consulting and actuarial firm, has released the results of its latest Pension Funding Index, which consists of 100 of the nation’s largest defined benefit pension plans.

    In September, these pensions experienced a $45 billion increase in funded status based on a $30 billion reduction in the pension benefit obligation (PBO) and a $15 billion asset improvement.

    The $45 billion increase in funded status means these pensions have reduced their cumulative funding deficit by $80 billion in the last two months, following a four-month slide of $304 billion.

    “It may be too late in the year to call it a comeback—the funding deficit for these 100 pensions has grown by more than $100 billion in 2012,” said John Ehrhardt, co-author of the Milliman Pension Funding Study. “But two months in a row of funded status improvement is still welcome news. Not surprisingly, the recent deficit reduction was driven in large part by cooperative interest rate movement.”

    In September, the discount rate used to calculate pension liabilities increased from 3.99per cent to 4.08 per cent, reducing the PBO to $1.778 trillion at the end of the month. The overall asset value for these 100 pensions increased from $1.309 trillion to $1.324 trillion.

    Looking forward, if these 100 pensions were to achieve their expected 7.8 per cent median asset return and if the current discount rate of 4.08 per cent were to be maintained throughout 2012 and 2013, these pensions would improve the pension funded ratio from 74.5 per cent to 75.4 per cent by the end of 2012 and to 79.9 per cent by the end of 2013.

  • Firm’s profit grows by 17%

    Prestige Assurance Plc has recorded a 17 per cent rise in its underwriting business for 2011.

    . The Chairman, Dr. Charles S. Sankey, stated this in his statement to the shareholders during the Company’s 42nd Annual General Meeting (AGM), which took place in Lagos last week.

    Sankey said: “Despite the challenging environment, I am happy to report another year of good performance by our company. Underwriting profit grew by 17 per cent from 2010, with the company earning N1.07 billion against the preceding year’s N912.3 million”.

    He also told the shareholders that the net operating income which stood at N1.7 billion for the reviewed year was also six per cent higher than the 2010 position which was N1.6 billion.

    Further analysis of the firm’s accounts shows that the company recorded a total of N4.273 billion as gross premium for in 2011 as against N3.874 billion recorded in 1010, giving an increase of N398.933 million or 10 per cent growth.

    However, the firm recorded decrease in profit before and after tax, divided, shareholders fund, earnings per share as well as net assets per share within the year under review.

    The profit before tax decreased from N830.869 million recorded in 2010 to N419.868 million in 2011, a decrease of N411.001 million or 49.47 per cent. Profit after tax stood at N255.990 million, down from N487.698 million in 2010, giving a decrease of 47.51 per cent or N231.708 million. Amount set aside for payment of dividend decreased from N128.999 million in 2010 to N50.166 million in the reviewed year, a decreased of 61.11 per cent or N78.833 million.

  • Jonathan presents 2013 budget today

    Jonathan presents 2013 budget today

    PRESIDENT Goodluck Jonathan is to present the 2013 budget to the joint session of the National Assembly today. This is coming six days after the initial scheduled date of October 4.

    The shift in date was agreed upon to allow the House of Representatives analyse the 2013-2015 Medium Term Expenditure Framework (MTEF) and the Fiscal Strategy Paper (FSP) in order to take a proper position on the projections and assumptions on which the 2013 budget was based.

    The presentation, which is slated for 10am, is coming on the heels of the simmering friction between the House and the Executive over the slow implementation of the 2012 budget.

    Also, the proposed $75 benchmark per barrel of crude in the 2013 budget, it is argued, would create a further ground for disagreement, as the House has underlined its resolve to jerk the figure by $5, raising the new benchmark for the 2013 appropriation to $80.

    The House agreed to admit the President into the Green Chamber via a joint sitting with the Senate, sequel to a motion by the House Leader, Mulikat Akande-Adeola, yesterday.

    On the eve of the budget presentation, the House yesterday admitted, debated and adopted the report of the Hon. Jubrin Abdulmumin Joint Committee on Finance, Legislative Budget & Research, National Planning & Economic Development, and Aids, Loans and Debt Management on the 2013-2015 MTEF and FSP.

    The Committee of Whole House adopted the recommendations of the report of the joint committee, wholesale.

    In the report, the lawmakers accused the Executive of overstating its expenditure profile and understating its revenue projection in an attempt to hoodwink the National Assembly.

    “It is observed that Non- debt recurrent expenditure of N2,411.486 trillion for 2013 is overstated by N166.695 billion in 2013 and N146.696 billion in each of 2014 and 2015. The projected capital spending of the Ministries, Departments and Agencies (MDAs) is also overstated by N20.0 billion in 2013, 2014 and 2015,” the adopted document alleged.

    The joint committee’s report covered most of the assumptions on which the President’s 2013-2015 MTEF and FSP is based, signalling that a re-enactment of the imbroglio that characterised the implementation of the 2012 budget may snowball into the 2013 budget as well.

    The lawmakers took on the Executive in the areas of debt profile/debt sustainability, budget deficit financing, projected revenue/aggregate expenditure (especially non-oil revenue projections) benchmark, daily production of crude oil and the Excess Crude Account

    The report observed that “Nigeria total external debt stock rose from an average of $3.639 billion in 2006-2008 to $6.0 billion in June 2012. Of this, the federal government’s share was $3.8 billion (68.3 percent) while the 36 states and FCT accounted for the balance of $2.2 billion (36.7 percent). Similarly, domestic debt for the same period stood at N6.15 trillion bringing the total debt to N7.11 trillion, which is 17 percent of GDP.

    “The increasing trend in total debt is increasingly becoming worrisome as it imposes a heavy burden on the government. This is against government’s position that the debt burden is sustainable, being below the international threshold of 40percent of GDP.”

    The Chairman of the joint committee Jubrin Abdulmumin while briefing the House at the committee of whole accused the Executive of lack of transparency in the preparation of the document, adding that the intent of those that prepared the document was meant to deceive the National Assembly.

    He said the argument of the Executive that an increase in benchmark is detrimental to the economy of the country and will cause inflation as well as put pressure on the exchange rate does not hold water.

    According to the committee’s report “many submissions from various government agencies were at variance with estimates in the 2013-2015 MTEF and FSP implying that the process of,preparation may not have been all inclusive as it ought to be in line with Section 13 (2 b) of the FRA 2007.’

    Abdulmumin said: “The MTEF is not a document of all inclusive consultation, a few people in the Ministry of Finance, the office of the DG Budget and a few personalities sat down and wrote the MTEF.”

    He further stated: “One of the biggest issues in the daily production of oil. For all the decades that we’ve been producing oil, no one knows the amount of our daily production. We asked the Governor of the Central Bank of Nigeria, he said he doesn’t know, the Mininstrymof a finance does not know and the NNPC does not know.

    “In this era of technological development, we don’t know the volume of oil we produce, what kind of country are we running?’

    The lawmaker told his colleagues that contrary to the usual impression given by the executive that oil accounts for 90 per cent of the nation’s income, “oil accounts for 68 per cent and non oil accounts for 32 per cent of our income. By 2015, non oil will be accounting for 50 per cent.”

    He said it was unacceptable that people will be using arguments of Foreign analyst who have no idea of the realities in the country to project the nation’s budget.

    “It is when some people claim a monopoly of of knowledge that we will have problems. If we take the assumptions in the MTEF presented by the President the way it is, we will continue to have problems. But if we want a different result from what obtained in 2011 and this year, we need to do things differently.

    “Why are they against an increase in the benchmark. They painted a gloomy picture in the MTEF. The MTEF took it to the extreme. But they will not tell you there is volatility in the Middle East and Sudan and that the American economy is improving and this drive up oil prices. It does not hold water for them to say there is crisis in the Euro zone”, he said.

     

    Some of the key recommendations

    • The revenue target of the Nigeria Customs Service should be increased to N1, 018 trillion, N1,155.700 trillion and N1,388.345 trillion in 2013, 2014 and 2015.

    • Accruals for the sharing of the Stabilisation Fund Account (ECA) should be estimated, as the Fiscal Strategy Paper (FSP) did not project the medium Term accruals.

    • The sustenance of peace in the Niger Delta should be given priority, attention and prominence, in order to guarantee uninterrupted production of crude oil

    • Government should demonstrate fiscal discipline by limiting spending to the level of its resources. The proposed deficit of N1, 037.19 trillion should be further reduced to N663.328 billion by using the earnings resulting from the increase in the crude oil benchmark, privatisation proceeds and Nigeria Customs Service. This should reduce domestic borrowing from the proposed N727.19 billion to N243.33 billion.

     

  • PMIs in merger bids to beat recapitalisation deadline

    Primary Mortgage Institutions (PMIs) are considering mergers and acquisitions to beat the April 2013 deadline to recapitalise their operations, The Nation has learnt.

    Other plans include approaching the capital market for funds to execute capital projects and for reca-pitalisation. The development is necessary to enable PMIs that wish to operate at the national level raise their capital base from N100 million to N5 billion; those seeking to play at the states’ level must have N2.5 billion before the deadline expires.

    According to operators, the step will enable the banks consolidate their businesses, compete favourably, and avoid being axed by CBN.

    Managing Director, Skyfield Savings & Loans Limited Mr Kola Abdul said mergers and acquisitions have become necessary to enable the PMIs get fresh capital for their operations. Abdul said mortgage banks can only work efficiently when they have enough capital at their disposal, adding that negotiations are on-going among the banks to merge their operations and get the needed capital before 2013.

    Mortgage banks, he said, are not looking at their sizes with regards to mergers and acquisitions, arguing that the ultimate is meeting the deadline.

    He said: “The smaller mortgage banks need to merge with the bigger ones, in view of the recapitalisation deadline. The CBN has provided a flexible recapitalisation regime by directing the firms to either play at the state or national level. Therefore, the issue of merger is a welcome development that would foster the growth of the sub-sector. There is no way mergers and acquisitions would not take place under the present dispensation.”

    According to him, the issue of continuous devaluation of the naira has watered down the local currency and the operational capital of the mortgage institutions.

    “The required capital to set up a mortgage firm has become low due to the instability of the foreign exchange market. What a mortgage firm is holding in its vault to meet operational demands is nothing now. N200 million is nothing when the sub-sector is expected to finance big-ticket transactions for the growth of the economy. Often times, when you finance mortgages, you get locked to bad foreign exchange regime. To finance another one becomes a problem.“

    He said mortgage banks are contributing less than one per cent to the Gross Domestic Product (GDP), adding that its contributions would increase after the banks have pooled their capital base in the name of mergers and acquisitions.

    Abdul said PMIs would become functional at the secondary market in line with the CBN’s recapitalisation order.

    The Executive Secretary of Mortgage Banking Association of Nigeria (MBAN), Mr Kayode Omotoso, said mortgage institutions would approach the capital market to source for funds. Omotoso said apart from raising funds from the capital market, there would be mergers and acquisitions as well as takeovers in the mortgage banking sector in the coming months.

    “There would be mergers, there would be acquisitions, there would be takeovers, there would be strategic investments and there would be efforts to go to the capital market for the mortgage banks to meet up with the recapitalisation deadline. More mortgage banks will approach the capital market to raise equity while the sector itself will approach the capital market to raise equity, hybrid and long term debt instrument to finance home ownership,” he added.

  • ‘Why aviation sector is in crisis’

    ‘Why aviation sector is in crisis’

    FIFTY-TWO years after Nigeris’s Independence, its aviation sector is still in a sorry state, according to President, Aviation Round Table (ART) Captain Dele Ore.

    Speaking with reporters in his office in Ikeja, Lagos, Ore said some policies executed by the government in the sector could not stand the test of time. He said instead of the government to allow the managers in the industry to do their jobs, it appointed non-experts, adding that, as a result of this, the industry has been in a traumatic state.

    The former pilot with the defunct Nigerian Airways said: “I think in the last 52 year,s as far as aviation is concerned, I can say that it has been very turbulent to the extent that there are several areas where you can ask questions, such as: have we really learnt anything? And the answer is in the negative. We are not learning. I am going to start simply by recalling that in the last 52 years, we have had 34 ministers in the aviation industry and if we want to do a little bit of mathematics, it is merely one minister for every 18 months.

    “What kind of policy can you put in place that could be enduring? It cannot endure and that is the bane of the industry.The industry would have been doing much more better if we allowed managers to do their jobs; instead we send ‘damagers’ to take over from them. So, invariably, we are working with ‘damagers’ instead of working with managers in the industry and it is such a pity”.

    Ore, however, said the first disservice the government did to aviation was the liquidation of Nigerian Airways, pointing out that, since then, it has been motion without movement. He said stakeholders and the government were just dancing in a circle in the industry.

    According to him, since the liquidation of Nigerian Airways, airlines in the private sector had been coming and going. He said at a time Nigeria had about 28 airlines, but now the viable ones are about five.

    “The first and most disastrous disservice that we did to aviation was the liquidation of Nigerian Airways.Aviation has not been the same since then; so that was the beginning of the problem for aviation because by the time you killed Nigerian Airways or we assassinated it or we murdered it, so many things died with it. That was when training also stopped, developing manpower stopped and if you don’t have a continuous stream of manpower to replace ageing ones; that is a source of problem,” he said.

  • NERC blames lack of cost-effective tariff on PHCN

    NERC blames lack of cost-effective tariff on PHCN

    The Nigerian Electricity Regulatory Commission (NERC), yesterday blamed the absence of cost-reflective tariff in the Nigeria’s Electricity Supply Industry (NESI) on poor consumer service delivery practices amongst distribution companies of the Power Holding Company of Nigeria (PHCN) .

    The Chairman, Dr. Sam Amadi, who made this disclosure in Abuja during the flag-off week-long twinning programme between the Commission and United States National Association of Regulatory Commissioners (NARUC), said utilities service provided in the sector are characterised by poor customer service delivery practices that have resulted in poor customer service delivery practices.

    Utilities in the sector contributed to existing harmful issues militating against the growth in the power sector of the country.

    Amadi said: “One of the real crisis of this sector is lack of customer-centric by utilities. We have received several reports, people are not happy with the tariff, not because it is high, but they are yet to enjoy good service delivery.

    They are complaining about bad billing system even though we have rolled out a methodology to sanitise estimated billing, but the billing is still going on and people are complaining.”

    While admitting that it is better to privatise the power sector, he said it is necessary to develop the capacity to regulate the level of customer service.

    His words: “For us, it is good to privatise and we are happy to be where we are now, but then, you have to prepare to develop capacity to regulate especially at the level of customer service

    “We have had this for a while now and it happens every year. But this year, we are focusing on thematic areas, we want to identify the areas where we have gaps as a regulator and close up on them through the wealth of experience that we can gain from the Michigan Public Service Commission, which is about 100 years old in operation.

    “We are trying to become a world-class regulator and we can only do that by learning from people that have been there for this long.”

    Amadi disclosed that the twinning programme is in its eight edition and it is designed as a vehicle for the exchange of regulatory experience and information between NERC and NARUC.

    He said the officials are expected to share experiences that would further NERC’s institutional and decision-making capacities as regards market-based regulation.

  • ‘Use budgetary allocation judiciously’

    ‘Use budgetary allocation judiciously’

    House of Representatives Communications Committee has called for appropriate use of budgetary allocations to government agencies, ministries and departments, stressing that such a step could address issues like unemployment.

    The Chairman of the committee, Oyetunde Ojo, who led other members to the Lagos Campus of Digital Bridge Institute (DBI), Oshodi, during the inspection of on-going projects of the Nigerian Commuincations Commission (NCC), yesterday, said as representatives of the people, it is appropriate that members see what the funds appropriated in the budget are used for.

    He said: “The National Assembly appropriates the funds. We must see what the appropriated funds are been used for, because at the end of the day, Nigerians will hold us accountable.

  • DPR commends Gulf Treasures for products delivery

    DPR commends Gulf Treasures for products delivery

    The Department of Petroleum Resources (DPR) has commended Gulf Treasures Limited, an indigenous oil and gas services company, for the delivery of quality products and services to consumers of petroleum products across the country including the Federal Capital Territory (FCT).

    The DPR made the commendations when the Managing Director of Gulf Treasures, Dekeri Anemero was conferred with the award of distinguished ambassador of the Faculty of Law of the Ambrose Ali University (AAU), Ekpoma in Edo State by the law students association.

    Speaking on the occasion, which held in Lagos, the Chief Technical Officer of the DPR, Enilama Victor, said the company as a player in the downstream sector of the oil gas industry, had maintained quality services to its consumers. “As a regulator, we don’t see people on the side, we see people on the quality and we see quality in the management services,” he added.

    Gulf Treasures, he said, was a registered oil and gas company in Nigeria, which specialises in oil and gas exploration, trading, shipping services, logistics and manufacturing. It also engages in the importation of petroleum products including dual purpose kerosene (DPK), automotive gas oil (AGO), premium motor spirit (PMS) and liquefied petroleum gas (LPG).

    He said the company has an average turnover of 60,000 metric tons with over 50 trucks for prompt delivery to numerous customers. It also has a loading terminal located at Ibafon, Apapa with a total capacity of 45,000 metric tons and its retail outlets nationwide is known as Danco Petroleum.

    Enilama said the company was one of the major independent petroleum marketers that had maintained quality of product that had served the interest of the people so well for many years

    He said the company had petrol stations spread across the country, especially in the western part of the country, which according him, helps to ensure prompt delivery of the product to consumers and urged other operators to maintain good industry practices.

    Anemero said the award had only challenged him to further impact positively on the lives of the people, including management and staff of the company. While expressing hope for the growth of the oil and gas industry, he appealed to Nigerians to be patient with the ongoing reforms in the industry, saying the benefits in the oil and gas were yet to be tapped.

    He has also urged the youths to shun any act of unrest and vandalism and reassured the management’s commitment to creating more job opportunities for the teaming youths

    The Director of Administration, Ibru Group, Henry Muogho, said Anemero was a silent achiever and committed to adding value to the society, adding that the award was a reward for hard work, determination, honesty and discipline of character.

    The President, Faculty of Law of the university, Monday Mawah, said Anemero had contributed immensely to the faculty and Edo State.