BusinessDay 13 April 2018

Friday 13 April 2018
C002D5556
BUSINESS DAY
33
NEWS
Base effect moderates inflation pressure to...
Continued from page 4
base effect with stable currency
backdrop and sliding gasoline
prices,” Wale Okunrinboye, a
Lagos-based Fixed Income and
Research Analyst told Business-
Day on phone.
The steady supply of Premium
Motor Spirit (PMS),
normally referred to as petrol,
was said to have been a
catalyst to the moderation in
inflation rate.
“The relative stability in
crude supply due to the tackled
challenges of fuel importation
and distribution experienced
few month ago, led to reduction
in petrol prices in March.
This reflected in the prices of
transportation and cost of moving
goods around the country. It
however then led to decline in
inflation rate,” Ayo Akinwumi,
Head of Research FSDH Merchant
Bank said.
“It is a major positive surprise,
although the base effect
also played a role, considering
the high rate recorded last year,”
Oando shares appreciate...
Continued from page 1
Tajudeen Ibrahim, Head of Research
at Chapel Hill Denham
Securities said.
According to a previous NBS
report on Wednesday 11 2018,
there was -5.3 percent decline
in the price of petrol on monthon-month
comparison.
Nigerian consumers paid
an average of N163.4 per litre
for the product in March, N9.1
less than the N172.5 in February
2018. This is however,
against the official government
pump price of N145 per litre. Although,
there was a 9.4 percent
increase, year-on-year, as seen
in NBS figures.
The Consumer Price Index
(CPI) measures the average
change over time in prices of
goods and services consumed
by people for day- to- day living
and as such, the CPI measures
inflation.
Inflation on the other hand
is the rate at which the prices of
goods and services are rising.
Expectations of two analysts
polled in a BusinessDay survey
L-R: Ike Ekweremmadu, deputy Senate president; George Obiazor, chairman of the occasion, and Ken Imasuangbon,
discussant, at the inaugural annual distinguished lecture of Prof. J. Isawa Elaigwu Foundation in Abuja, yesterday. NAN
commenced trading on the
capital market on the morning of
Thursday April 12, 2018 following
a directive by the Securities
and Exchange Commission
(SEC).
The 176 days technical suspension
was hitherto lifted on
the morning of April 11, 2018
following an April 9, 2018 directive
by the SEC.
However, three hours into
trading, the NSE reinstated the
technical suspension.
In a statement released by
the NSE, on the evening of
April 11, 2018 the Exchange explained
that they reinstated the
technical suspension based on
a new directive from the SEC,
throwing the financial market
into chaos.
The share price rose to
N6.30, a 5.8 percent increase
from N5.99 within three hours
of trading on Wednesday morning,
April 11.
The regulator briefly reimposed
the suspension on
the same day, citing SEC directives
but then lifted it again by
Thursday, April 12.
The NSE’s statement went
further to say: “In the overall
interest of investors in Nigeria’s
capital markets, and following
consultation with the Commission
please be advised that
at the start of trading, 12 April,
2018, trading in Oando’s shares
will resume without any impediment
in price movement
consistent with the NSE’s market
structure.”
On its first full day of trading,
Oando’s shares were highly
sought after with 178 million
Oando shares on bid with only
5.5 million available for sale.
According to the Chief Compliance
Officer and Company
Secretary, Ayotola Jagun;
“On day one, the Company’s
share price hit the NSE daily
price ceiling of 10 percent by
10.45am; further evidence that
there is a lot of interest in Oando
shares and that the general
mood around the market and
our shares is positive.”
The technical suspension
which lasted 176 days reflected
negatively on the credibility
and competence of the country’s
capital market regulators.
It has also hit hard Oando’s
over 270,000 shareholders,
investors, partners, management,
staff and everyone who
owes their livelihood directly
or indirectly to the company.
Analysts say the true beneficiaries
of the technical suspension
were large investors
with substantial shareholdings
who have the deep pockets and
were able to take advantage of
the state of affairs to buy-out
the minority shareholders at a
expect the rate to hit a single
digit in the Full Year of 2018 on
the benchmark of declining fuel
prices.
“Petrol prices do not seem to
be a thing to worry about again,
therefore, the inflation rate is
likely going to be at a single digit
in Full year of 2018,” Okunrinboye
said.
“Inflation will come to a single
digit in full year of 2018,”
Tajudeen added.
The Monetary Policy Committee
(MPC), in its first meeting
of the year held in April 3-4 2018,
left its key interest rate at a record
high of 14 percent to fight inflation
as its awaits confirmation
from data of deceleration in the
headline CPI in Africa’s largest
economy.
The CBN governor Godwin
Emefiele said the decision to
retain the policy rates was geared
at fighting inflation.
Meanwhile, inflation rate at
13.34 percent is now lower than
the benchmark rate of 14 percent.
This means the real interest
rate has taken a positive trajectory
by 0.66 percentage points.
discount to the true value of the
shares, whilst also creating a
black market for the company’s
shares.
Shareholders were denied
the opportunity of benefitting
from Oando’s performance and
gains spurred by higher crude
prices over the last months six
months.
In Q3 2017, 9 days after
the technical suspension was
placed, Oando declared a profit
after tax of N7.1 billion in its
year-end September 30, 2017
results.
The company, prior to this
result declared three profits in a
row, FYE 2016, N3.5 billon PAT;
Q1 2017, N1.7 billion; and H1
2017, N4.6 billion PAT.
The company started 2018
on a positive note, by reaching
an agreement with Dahiru
Mangal after adequately addressing
the concerns he raised
in his petition to the SEC; this
was shortly after the price of
“This means that the CBN will
likely be able to cut interest rate
by say 100 to 200 basis points
over the second or third quarter
of 2018,” Okunrinboye said.
A further break down of the
inflation report released Thursday,
shows the Composite Food
Index rose by 16.08 percent (year
on year) in March 2018, down
from the rate recorded in February
(17.59 percent).
On a month-on-month basis,
the Food sub-index increased by
0.90 percent in March 2018, up
by 0.05 percent points from 0.85
percent recorded in February.
The average annual rate of
change of the Food sub-index for
the twelve-month period ending
March 2018 over the previous
twelve month average was 19.29
percent, 0.23 percent points
from the average annual rate of
change recorded in February
(19.52) percent.
The rise in the food index was
caused by increases in prices of
Bread and cereals, Fish, Oil and
fats, Vegetables, Fruits, Coffee,
tea and cocoa, Meat, milk,
cheese and eggs.
Brent Crude hit $71, its highest
since December 2014.
The company recently commissioned
its new office building,
the Wings Office Complex,
a two 12-story building which
also offers a world-class indoor
event space, a one-of-a-kind
space that can hold up to 300
people and an outdoor waterfront
area with a hosting capacity
of 200 people and overlooks
Lagos waterway.
The building will not only
act as the company’s new head
office but will also be an additional
revenue generator from
its 27,000m2 worth of lettable
office space.
Recently, the Nigerian National
Petroleum Corporation
(NNPC) announced that a consortium
consisting of Oando
PLC and OilServe Limited have
been awarded the Engineering,
Procurement, Construction
(EPC) mandate for the
construction of gas pipelines
The ‘’All Items less Farm Produce’’
or Core inflation, which
excludes the prices of volatile
agricultural produce, rose by
11.2 percent in March 2018,
down by 0.5 percent points from
the rate recorded in February
(11.7) percent.
On a month-on-month basis,
the Core sub-index increased
by 0.84 percent in March 2018,
higher by 0.09 percent when
compared with 0.75 percent
recorded in February.
The average 12-month annual
rate of change of the index
was 12.33 percent for the
twelve-month period ending
March 2018; this is 0.34 percent
points lower than 12.67 percent
recorded in February.
In March 2018, all items inflation
on a year on year basis was
highest in Bauchi, Kebbi and
Nassarawa states with 16.38 percent
16.36 percent and 16.33 percent
respectively, while Kwara
with 10.30 percent, Kogi with
10.87 percent and Delta with
11.17 percent recorded the slowest
rise in headline Year on Year
inflation.
stretching from Ajaokuta to
Abuja as part of the Ajaokuta-
Kaduna-Kano Pipeline.
The pipeline is a section of
the Trans-Nigerian Gas Pipeline
under the gas infrastructure
blueprint designed to
enable the industrialisation
of the Eastern and Northern
parts of Nigeria and also enable
connectivity between the
East, West and North, which is
currently non-existent.
Speaking on the lifting of
the technical suspension, Bismarck
Rewane the CEO of
economic consulting firm Financial
Derivatives said: “The
way we handle these matters
also sends a clear signal to
potential, existing and international
investors that this market
is transparent, accountable and
is there to protect all interests
and not to be used for punitive
purposes.”
Rewane advised market
regulators to learn from their
mistakes on the handling of
Oando’s issue and ensure it is
not repeated in the future.
A statement from Oando indicated
that the forensic audit
into the affairs of the company
is currently underway by Deloitte
Nigeria (Deloitte), the
SEC appointed forensic team
lead.
“To date, the Company has
been fully cooperative with both
the SEC and Deloitte. In the
spirit of goodwill, transparency
and full disclosure, we will continue
to cooperate with the SEC
and its nominated parties in the
discharge of their duties as the
Capital Markets regulator during
this exercise,” Oando said.
Rewane further advised that
the commission should commit
the resources needed to
conclude the forensic audit on
Oando as the market cannot
wait indefinitely.