19092022

20 — Vanguard, MONDAY, SEPTEMBER 19, 2022
FINANCIAL VANGUARD
Electricity: Azura pays FG 40%
of $30m monthly invoice —MD
•Blames poor distribution network for
low power supply
By Obas Esiedesa
ABUJA- THE Managing
Director of Azura-Edo Power
Plant, Mr. Edu Okeke, has
disclosed that 40 percent of the
company’s monthly invoice of
about $30 million to the
Nigerian Bulk Electricity
Trading Plc, NBET, goes back
to the Federal Government as
payment for gas supply and
repayment of loans taken for
the construction of the plant.
Okeke told journalists at the
plant that the company pays
$10 million monthly to gas
suppliers including Seplat
Petroleum, Nigerian
Petroleum Development
Company, NPDC, and the
Nigerian Gas Company,
subsidiaries of NNPC Limited.
He said the company also
pays the Bank of Industry, BoI,
for the loan collected from the
Central Bank of Nigeria, CBN,
to build the plant.
He explained: “Every power
plant invoice is made up of two
By Peter Egwuatu
N igerian
Group Plc (NGX) Exchange
has
released its dividend policy in
ensuring that shareholders
received returns on their
investment.
The policy document
which was approved by the
Group’s Board of Directors
and published on the
company’s website was,
according to the group,
formulated in accordance
with the laws of the Federal
Republic of Nigeria,
investment and tax
legislations, Codes of
Corporate Governance, as
well as internationally
recognized best practices and
principles.
The document stated:
“NGX Group, through its
Dividend Policy, seeks to
guarantee shareholder
rights especially as it relates
to return on investment. The
policy is developed to address
issues relating to the
determination and payment
of dividend. The Group shall
apply the policy, accordingly
to determine any claim by
any shareholder, individual
or institution, regarding the
dividends payouts by NGX
Group subject to provisions
in the Articles of Association
of the Company”.
In terms of the
administration of dividends
by the Group, the Policy
document added, “NGX
Group will apply the policy
on an annual basis to develop
a transparent and
methodological dividend
consideration and payouts.
“This approach will
ensure that NGX Group has
sufficient distributable profits
and/or general reserves, as
determined by a review of the
Company’s audited financial
statements as well as
consideration of other
financial factors, prior to any
declaration and/or payment
of dividend.
“To this end, the policy will
guide the NGX Group in its
approach to distributing
parts, capacity and energy
produced. Capacity is what
you can put on the grid but
only those companies with
effective PPAs (power
purchase agreement) get paid
for capacity. We have five of
these in the country: Azura,
Omotosho, Olorunsogo, Okpai
and Afam.
“Then the second part
which is about 50 percent of
the invoice is what you put on
the grid. So if TCN is not
evacuating us fully we will lose
money on energy supplied.
The thing is that they pay us
our invoice fully because we
have a mechanism to ask
them to pay us but they owe
the others. For the other power
plants without effective PPAs
what happens is that if you
generate 20MW for instance
they are paid capacity of
20MW and energy of 20MW.
“For Azura we have a
capacity of 452.7MW, so
charge NBET for 452.7MW
and on the energy side, I will
charge them what is
actually produced.
“For the $30 million
invoice, the day it is paid,
40 percent goes back to the
government. About $10
million is used to pay for
gas which goes the next
day to Seplat/NPDC. NPDC
owns about 60 percent of
that and about $4 million
also goes to NGC, again the
government. Of all the
lending groups to Azura
which is the biggest
lender? There are about 16
lenders, the CBN through
the Bank of Industry.
“The challenge Azura has
is that we need that money
to be paid so that we can
pay others but there are
people who want to be part
of paying that money to
our suppliers, and we have
said no. For gas and loan
repayment, we pay $10
million.
NGX Group unfolds dividend policy
surplus funds from its
distributable profits and/or
general reserves to
shareholders, as may be
determined by the profit and
availability of cash for
distribution; operating and
investment needs of the
Company; anticipated future
growth and earnings of the
Company; and provisions of
the Company’s Articles of
Association among others”.
The NGX Group Policy
document provided guidance
on the dividend payable in
cash in a year.
According to the document,
“the range of dividend payable
in cash will range between a
pay-out ratio 25 per cent and
75 per cent of the distributable
profit of same year to which
the dividend is applicable. In
addition, the policy indicated
that the Group’s Board of
Directors may recommend a
scrip (bonus) issue in any year
and in any ratio as it deems
fit for any year through the
capitalization of any
undistributed retained
earnings, wherein the Board,
in recommending a bonus
issue, shall maintain a
balance between the paid-up
capital and the undistributed
retained earnings.”
In keeping with best
practice in corporate
governance, the policy
delegated the responsibility
for the decision to pay
dividends to the Board of
Directors and the Annual
General Meeting (AGM).
The policy document
stated, “The decision to
declare and pay dividend,
including the procedure for
making dividend payments,
shall be approved at the
Annual General Meeting
(AGM) of shareholders, upon
the recommendation of the
Board of Directors.
Fitch upgrades First Bank
to ‘B’, outlook stable
By Babajide
Komolafe,
Economy Editor
Fitch Ratings has upgraded the
Long-Term Issuer Default
Ratings (IDRs) of FirstBank
Limited and that of its parent
company, First Bank Holdings
Plc to ‘B’ from ‘B-’, citing key
performance indices
including improved
capitalization, asset quality
and healthy profitability.
In a statement announcing
the new ratings, Fitch said:
Fitch Ratings has upgraded
FBN Holdings Plc’s (FBNH)
and First Bank of Nigeria Ltd’s
(FBN) Long-Term Issuer
Default Ratings (IDRs) to ‘B’
from ‘B-’. The Outlooks are
Stable. Fitch has also upgraded
their Viability Ratings (VR) to
‘b’ from ‘b-’.
“The upgrade of the Long-
Term IDRs follows that of the
VRs, reflecting that corporate
governance irregularities
publicly raised by the Central
Bank of Nigeria (CBN) in April
2021, including two
longstanding related-party
exposures, have largely been
addressed and therefore risks
to capitalisation have receded,
helped by strong internal
capital generation since the
irregularities were raised.
“Fitch has withdrawn FBNH’s
and FBN’s Support Ratings
and Support Rating Floors as
they are no longer relevant to
the agency’s coverage
following the publication of its
updated Bank Rating Criteria
on 12 November 2021. In line
with the updated criteria, we
have assigned Government
Support Ratings (GSR) of ‘no
support’ (ns) to both issuers.”
Explaining further, Fitch said:
“FBN is the third-largest bank
in Nigeria, representing 11%
of domestic banking-system
assets at end-2021. A strong
franchise supports a stable
funding profile and a low cost
of funding. Revenue
diversification is strong, with
noninterest income
representing 48% of
operating income in 2021..