Thursday, 2 August 2012

The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) Wednesday frowned at the closure of the bid process for the sale of companies created from the  unbundling of Power Holding Company of Nigeria (PHCN), saying it is an attempt to deprive genuine Nigerian investors and their companies the opportunity to invest in the designated companies. The union argued that the hurried closure of the sale of the PHCN companies by the Bureau of Public Enterprises (BPE) is not in the best interest of the power sector reforms in which a lot of funds had already been committed.
The union, in a statement issued by its Acting Secretary, Mr. Isaac Aberare, called on the Federal Government to prevail on the BPE and the power ministry to extend the date in order to allow other interested parties and Nigeria investors participate in the bidding. This, the union said will allow the transformational agenda of President Goodluck Jonathans administration on power to be more transparent and workable.
NUPENG protests the untimely closure of the bidding process for the companies in the power Holding Company of Nigeria (PHCN). The union believes that the closure of the bids is to allow the cronies and fronts of the powers-that-be to buy up the PHCN companies at ridiculous prices.
NUPENG calls on the Federal Government to intervene quickly in the closure of the bidding by prevailing on the BPE and the Federal Ministry of Power for an extension of time to allow other interested parties and Nigeria investors to participate in the bidding.
The Central Bank of Nigeria (CBN) has barred Deposit Money Banks (DMB) and Discount Houses from accessing the Wholesale Dutch Auction System (WDAS) window throughout the term of a repurchase or Standing Lending Facility (SLF) transaction with the CBN. This is a follow-up on the early prohibition of these authorized dealers from accessing the WDAS and the SLF on the same day.
According to a circular signed by E. U. Ukeje, director, financial market department, CBN, authorized dealers that have entered into repurchase or SLF with the CBN prior to the issuance of the circular, which takes immediate effect, will not be affected as the transaction would be allowed to run its full course.
Part of the circular on Review of the Revised Guideline for Accessing CBN Lending Window and Repo Transactions reads: Further to the prohibition of authorized dealers from accessing the WDAS and the Standing Lending Facility (SLF) on the same day, authorized dealers are henceforth not allowed to access the WDAS window throughout the term of a repurchase or SLF transaction with the CBN. Last week, the CBN prohibited DMBs enjoying facilities from the CBN from interbank transactions. The circular, which also affected Discount Houses, also bars actively financial institutions engaged in interbank transactions from accessing funds from the CBN window.
The circular signed by A. O. Idris for director of banking supervision, according to the CBN, is part of its process of unwinding stringent measures put in place in the wake of the global financial crisis. This, the apex bank believes, is to ensure effectiveness of its monetary policy. The circular to all banks and Discount Houses on Revised Guideline for Accessing CBN Lending Windows and Repo Transactions reads in part: Any institution that contravenes any provision of this circular will be suspended from CBNs money market window.
The Nigerian Electricity Regulatory Commission (NERC) has said it would no longer issue power generation licences without clear evidence that all necessary inputs are in place to guarantee project would actually deliver electricity. NERC has repeatedly come under fire for the many non-performing power licences issued by it. The licensees often blame their inactivity on inability to access gas or finances, among others.
Sam Amadi, chairman of NERC, made this declaration Wednesday during a press briefing in Abuja, where he also informed of the commissions final approval of the revised methodology of estimated billing and methodology for connection charges. He said, Many of the licensees have not been able to develop or produce power four to five years after receiving the licence. Many have their projects in places where they cant access gas supply or where there are no transmission facilities for evacuation.
Going forward, with the bulk trader now in place, the changes going on in the transmission component of the sector, we are now building a system that allows for systematic planning of power. This means that we are no longer going to be licensing people except where the gas, feedstock, transmission and everything is in place. And the system operator would have indicated that there is capacity to receive this amount of power or there is need to procure x amount of power and therefore there would be public option. So, the regulation which we are putting out, which we have advertised for public comment and we are going to have a public consultation with all industry stakeholders, is to streamline a bulk procurement guideline, and that guideline will now tell us how to procure power at the least cost in a competitive way.
NERC has so far issued over 40 licences to potential independent power producers for the supply of new electricity on-grid generation capacity of more than 10,000MW. All the proposals were unsolicited, an un-orderly approach which is said could significantly cost the Nigerian power system and consumer.
The NERC boss is confident this new regulation to streamline procurement of power would particularly solve two major problems, one of which is allowing for cheaper cost of power as licences would be granted only to the entity with the most efficient plan of procuring that power.
The Governor, Central Bank of Nigeria, Mr. Lamido Sanusi, on Wednesday dismissed the report by Fitch Ratings on Nigerian Deposit Money Banks that their assets quality was at risk. Sanusi said in an investment conference in London that he was not worried by the report, but, pointed out that the banks should be increasing their lending to small and medium-term enterprises. Reuters quoted Sanusi as saying, In my job, I have more information on the banks than Fitch has, and I dont have the concerns that Fitch has.
Fitch Ratings, an international financial rating agency, had said on Monday that the recent rapid credit growth or lending by Nigerian banks might lead to weakened assets. It said in a special report that the development could give rise to weakened asset quality and higher impairment charges if left unchecked. A director in Fitchs Financial Institutions team, Denzil De Bie, said, There was a marked improvement in banks asset quality during 2011, following the sale of problem loans to the Asset Management Corporation of Nigeria. However, rapid underlying credit growth of 30-66 per cent was evident in most of the Fitch-rated banks in 2011, which the agency considers will be a negative credit driver if it continues.
Fitch considers that many Nigerian banks have thin levels of Fitch Core Capital, which are lower than is appropriate for Nigerias difficult operating environment. Sustainable Fitch Core Capital ratios will be a key rating driver for any future positive action on the banks Viability Ratings. However, the CBN governor pointed out that falling oil prices and domestic energy output due to declining global demand were the concern for Nigerias economy. He added that the worsening situation in the euro zone and rising global food prices might also push inflation higher, noting that the countrys slower growth and tighter fiscal discipline could counterbalance those upward effects.
To help address the huge infrastructure deficit in Nigeria, the World Bank is poised to provide $200 million as a seed fund to set up a Financial Intermediary Loan (FIL) scheme under the Public Private Partnership (PPP) initiative. Head, Legal and Governance, Infrastructure Concession Regulatory Commission (ICRC), Mr. Joe Ohiani, disclosed this at the inaugural ESQ Project Finance Summit, held in Lagos, and stated that some other development finance organizations have also agreed to contribute to the scheme.
He added that eligible participating financial intermediaries, particularly commercial banks with Africa Finance Corporation (AFC) as the lead, will lend to qualifying private sector partners in a Public Private Partnership (PPP) project at the financial intermediaries risk. He however emphasized that the objective of the scheme is to provide long term funding for infrastructure development in the country.
He stressed that in selecting eligible projects, priority would be given to public investment programmes which are in accordance with the national policy on PPP and captured in the federal government Medium Term Sector Strategies and the National Infrastructure Plan of the Vision 20:2020.
Presenting a paper titled, Governmental Promotion of Infrastructure Development, Ohiani bemoaned the deplorable state of infrastructure in the continent as revealed by a recent report of the World Economic Forum. The report showed that though annual investment in infrastructure in Africa doubled from $17 billion to $35 billion between 2001 and 2009, the overall infrastructure spending needs for sub-Saharan Africa is estimated at $93 billion annually over the next decade. He noted that the annual infrastructure investment gap of $31 billion offers huge opportunities for private sector finance in infrastructure developments in Africa. Governments in Africa are taking active steps towards addressing the state of infrastructure in the region, he added.

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