BusinessDay 24 Aug 2018

34 BUSINESS DAY
C002D5556
Friday 24 August 2018
NEWS
Nigerian oil exports to hit four-month high...
Continued from page 1
will comprised 57 cargoes which is
seven cargoes lower compared with
48 cargoes in September’s loading
schedule as Agbami, Bonga, Escravos,
Forcados Okono and Qua Iboe
will load the highest in October with
a combined 33 cargoes while several
smaller streams like Amenam, Pennington,
Okwori, okwuibome and
Antan which had no export cargo in
September will add at least one cargo
in October while Brass River will add
at least 5 cargoes.
“This is a natural consequence of
three factors, I will say. There is relative
peace in the Niger-Delta, that is, militancy
has abated. A corollary of this is
that there has been no major pipeline
damage or declaration of force majeure.
The third factor is pure market
dynamics. Oil prices hover around
$70 per barrel and this is driving supply”
Ayodele Oni, Energy Partner at
Lagos-based Bloomfield Law Practice
said on a phone interview.
Over the past few years, Nigeria
L-R: Wale Olaoye, group managing director, Halogen Security Company; Salisu Daura, director, engineering services,
FAAN; Francis Emepueaku, Halogen Security Hero Award recipient; Daniel Achie, Halogen Security Hero Award recipient;
Wale Odufalu, deputy managing director, Alpha Mead Group, and Francis Ikenga, managing director/chief executive
officer, Seymour Aviation, at the official reception and award ceremony for Halogen Hero Guards.
Continued from page 1
phone.
He sees the financial sector still
carrying much of the credit risk and
suggests that the CBN or other arms
of the government provide some risk
sharing with the banks.
The facilities are to be administered
at an all-in Interest rate/charge
of nine per cent per annum and the
tenor for the Differentiated CRR
would be a minimum of seven years
with a two-year moratorium.
The CBN Monetary Policy Committee
(MPC), at its 119th meeting held
on July 23 and 24, 2018, introduced
its revised guidelines for Accessing
Real Sector Support Facility (RSSDF)
through Cash Reserves Requirement
(CRR)/Corporate Bonds (CBs).
Uche Joe Uwaleke, professor of
finance and capital markets/chair,
banking and finance department,
Nasarawa State University, Keffi,
said, “Judging from the experiences
of countries like China and Lebanon,
the differentiated CRR promises to
impact positively on the real sector
of the economy. According to him,
N10 billion per project financing in
Agric and manufacturing sectors at
single digit interest rates should help
lower production costs and free up
resources for research and development
purposes leading to improved
competitiveness. It will also lower
inflation rate in the medium term
and open up job opportunities. But
all these depend on how the policy
has been hit by swarm of problems,
predominantly decreased crude
production and exports, oil theft and
pipeline attacks, stalled economic
reforms and recovery, and the threat
of oil price volatility as the sector
remain cautiously optimistic about
overcoming these upheavals in 2018.
In May 2018, the Nigerian petroleum
industry underwent production
difficulties as outages at key
pipelines supplying Forcados and
Bonny light grade crudes were out of
commission. In particular, the shutdown
of the Nembe Creek Pipeline in
mid-May, which transports 150,000
bpd of Bonny Light to the Forcados
terminal, caused Shell Petroleum
Development Company of Nigeria
to declare a force majeure on Bonny
light crude exports. Although Shell
declined to comment, there was
speculation this shutdown was due
to sabotage as Shell lifted the force
majeure on July 13th, when repairs
were completed.
The shutdown, in conjunction
with the closure of the leaking Trans-
CBN earmarks N10bn per project in Agric...
is implemented.
“The CBN should put in place
measures to check possible abuses
such as diversion of funds to ineligible
sectors. This is usually the major
challenge with implementing a price
discrimination strategy especially if
it is difficult to clearly separate markets/sectors,”
Uwaleke added.
Giving further clarifications on the
guidelines on Thursday, August 23,
2018, Isaac Okorafor, the CBN’s acting
director of corporate communications,
said that the Bank hoped to achieve
the flow of credit to the real sector
of the economy as deposit money
banks (DMBs) would henceforth be
incentivized to direct affordable, longterm
bank credit to the manufacturing,
agriculture, as well as other sectors
considered by the Bank as employment
and growth stimulating.
Okorafor disclosed that Corporate/Triple-A
rated companies would
be encouraged to issue long-term
Corporate Bonds (CBs), adding
that Corporate Bonds (CB) Funding
Programme had been put in place.
The programme, according to him,
involves investment by the CBN and
the general public in CBs issued by
corporates subject to the intensified
transparency requirements for participating
corporates. He also noted that
such requirements would include
publishing through printing of an Information
Memorandum spelling out
the details of the projects for which
the funds are required together with
terms and conditions showing that
Forcados pipeline, which transports
200,000 to 240,000 bpd, led to further
delays and an accumulation of unsold
crude. According to S&P Global
Platts, these factors caused Nigeria’s
oil production to drop by 150,000
bpd from 1.88 mbpd in April, dropping
it to 1.73 mbpd in May and 1.72
mbpd in June.
But analysts are already raising
concerns over the sustainability of
the current rise in production as the
incidents of piracy spike on Nigerian
water ways. It emerged yesterday
that a tanker vessel with 19 crew
members on board, most of them
Georgians, has gone missing in
pirate-plagued waters off Gabon in
West Africa and no word has been
heard from it for a week, the ship’s
managers and the crew agency told
the media on Wednesday.
Communication was lost with the
Panama-registered Pantelena at about
2 a.m. local time on August 14, at which
time it was about 17 miles from the port
of Libreville, in Gabon, Athens-based
Lotus Shipping said in a statement.
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these are long term projects that are
employment and growth stimulating.
Furthermore, he disclosed that
the Bank had put in place a programme
under the Differentiated
Cash Reserves Requirement (DCRR)
Regime whereby DMBs interested
in providing Credit Financing to
greenfield (new) and brownfield
(expansion) projects in the real sector
(Agriculture and Manufacturing)
could request for the release of
funds from their CRR to finance the
projects; subject to DMBs providing
verifiable evidence that the funds
shall be directed at the approved
projects by the CBN.
Making further clarifications,
he said that the tenor for the Differentiated
CRR would be a minimum
of seven years with a two-year
moratorium. For the Corporate
Bonds (CBs) Programme, he said
the tenor and the moratorium would
be specified in the prospectus by the
issuing corporate. He added that the
maximum facility shall be N10 billion
per project and facilities are to
be administered at an all-in Interest
rate/charge of 9 per cent per annum.
Okorafor therefore advocated
for a total compliance with the
guidelines by stakeholders and
also highlighted the eligibility
criteria for participation in the
facility/CP programme, as well as
the responsibilities of the stakeholders;
just as he reiterated the
CBN’s determination towards the
encouragement of projects that
will further enhance Nigeria’s import
substitution strategies.
Businesses puzzled by CPC’s move to control...
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that ‘In any inquiry under the CPCA,
the question must be whether any
entity or individual has engaged
in conduct that constitutes an “obnoxious
practice”, or “unscrupulous
exploitation”.
‘The Council in addressing the entire
scope of complaints and House of
Representatives resolution, proceeded
in the investigation. Multichoice
initially adopted a sensible industry
approach to regulatory oversight,
which was to preserve regulatory
and company resources by making
admissions of its own in certain areas
and welcoming additional regulatory
initiatives to improve services and
customer experience over a period
of time, and supervision.’
According to the Council,”Over a
period of time, during which mutual
concerns and reservations were addressed,
the Council and MultiChoice
agreed and adopted a Proposed Mutual
Joint Consent Order.”
“The terms and obligations included
an unopposed and undisputed
requirement and understanding
that Multichoice will not change,
revise or modify any material term or
conditions of service(s) for a period
of 24 months. Multichoice never expressed
any concerns or dissatisfaction
with this clause of the Consent
Order that required Multichoice to
maintain status quo on its Terms
and Conditions (which naturally
includes pricing) for the 24-month
period during which the company
would have been under the Council’s
supervision, to ensure that all
necessary corrective measures were
adequately implemented, and that
consumers eventually get expected
value for their money.”
Some consumers BusinessDay
spoke to seemed to echo the CPC
position.
A customer by the name Ola said
“why does DSTv keep increasing
prices every year, they should be
able to explain to their customers the
reason why.”
However, analysts disagree with
the position by CPC that Multichoice
agreed not to raise price for
24 months, noting that price is not
something that any company can
commit not to increase or reduce for
that long considering that different
variables go into the fixing of price.
“Inflation has remained at double
digits for more than two years. Which
company can guaranty fixed prices
for that period’ an analyst asked.
Analysts have also noted that
DSTV is not an essential commodity
for which price should be fixed.
“People have choices when it comes
to Cable TV. There is Kwese TV, and
TSTV just came back on stream. There
are also different online versions. So
why is CPC concerned about DSTV
when the company is playing in a
market that has competition. I thought
DSTV should be worried more about
the power sector where operators are
using estimated billing to kill many Nigerians
who genuinely have no options”
Analysts also note that the CPC
should have been more concerned
if DSTV was reducing prices as that
could have squeezed new entrants and
constrained competition in the sector.
“DSTV increasing prices is actually
good for competition in the cable
TV sector, as it means that the new
entrants like Kwese TV and TSTV
could become attractive for consumers
because they are cheaper.
Allowing them keep their low prices
is actually not in the interest of consumers”
said a player in the industry.
Bismarck Rewane, managing
director at Financial Derivatives
Limited also warns that “Any attempt
to control price will always end up in
a disaster because the regulator does
not know the cost structure involve in
providing these technical services.”
“The only way to bring down
price is to allow more competition
and create an enabling environment
for more operators to come in,” Rewane
told BusinessDay by phone.
Similarly, Rafiq Raji senior macroeconomist
at an Africa focused
macro research investment firm
Macroafricaintel Investment Limited
said although government can raise
concern about high price, it is a disservice
for government regulators to
attempt controlling prices for luxury
goods in Nigeria.
“It won’t speak well of the government
in the eyes of foreign private
investors,” Raji said by phone.
Johnson Chukwu managing
director of Crowy assets management
limited also believes that the
move by the CPC is ill-advised and
not a market oriented approach by
a government regulator.
“The government should have
encouraged a competitive market
space by allowing other operators to
compete with DSTV. This will make it
difficult for DSTV to charge economic
rent rather force them to reduce
price,” Chukwu told BusinessDay.
But BusinessDay investigations
actually show that DSTV and GoTV
subscription rate paid by Nigerians,
even after the rate hike, is the lowest
when compared to other countries
in which Multichoice has operations.
When BusinessDay analysed the
subscription rate charged by the television
and online content producing
company, the rate given to Nigerians
across its various packages on the
platform was the least compared to
what its African counterparts also
pay for the same products.
In July, MultiChoice raised the
subscription rate for the DSTV Premium
package from N14,700 to N15,800.
This is lower than South Africa’s R809
(N21,228) and Ghana’s GHC368
(N27,360) for the same package.
The Compact Plus package
was also increased in Nigeria from
N9,900 to N10,650. South Africa
and Ghana pays R509 (N13,670)
and GH245 (N18,365) for the same
product respectively.
The DSTv Compact package in
the period under review was increased
from N6,300 to N6,800, in
Nigeria as against R385 (N10,340),
GHc 149 (11,169) paid by both South
Africa and Ghana.
The Family packaged which was
increased from N3,800 to N4,000 in
Nigeria is also lower than what South
Africa and Ghana pays for the product
at R249 (N6,687) and GHC85
(N6,371) respectively.
The Access package subscription
rate in Nigeria which was up from
N1,900 to N2,000 is less than South
Africa’s R99 (N2,656)
Speaking on the recent DSTV rate
hike, Uche Eze, a Nigerian customer
said “cost of doing business in Nigeria
keeps increasing and you expect
DSTV to just absorb the cost. Are
they not in business to make profit?”
“DSTV is a business providing
service to customers, while operating
in a harsh environment, if their operating
expenses increase, they have to
raise prices. If as a customer you are
dissatisfied, cancel your subscription
and subscribe to Netflix or Startimes.”
Celestine Okeke,a Lead Partner, Micro,
Small and Medium Enterprise Advocacy
and Support Initiative(MSME-
ASI) believes that the CPC action is
capable of discouraging private sector
investment in the country.
“I do not think it is right thing
the CPC is doing. We are looking for
foreign investors and we are now
restraining them”
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