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Business and Economy (174)

The power brokers behind the delay in the take-off of the $530 million Aba power plant have demonstrated what industry sources describe as greed and short-shortsightedness capable of jeopardising ongoing reforms in the power sector.

They include Emeka Offor, major promoter of Interstate Electrics Limited, new owners of Enugu Electricity Distribution Company (Enugu Disco); Namadi Sambo, Nigeria’s vice president; Sam Amadi, executive chairman, Nigerian Electricity Regulatory Commission (NERC), and Benjamin Dikki, director-general, Bureau of Public Enterprises (BPE).

Informed sources say these individuals, through deliberate or inadvertent ‘administrative errors’, complicated the issue of the Aba ring-fenced areas.

Geometric has been licensed to deliver power supply to Aba and Ariaria business units, just two out of 18 business units in the Enugu Disco licence areas. Emeka Offor is a government contractor and leading donor to the ruling People’s Democratic Party (PDP). Offor’s Interstate Electrics controls the remaining 16 units, which include bigger units like Onitsha, Nnewi, Awka, Owerri and Umuahia.

“Legally, Interstate has no standing in wanting to lay claim to Aba and Ariaria. Economically, it has a bigger cake, as it manages 16 business units. It is just a show of greed and short-sightedness on the part of Interstate,” said a source who stated that Offor’s connection to the vice president was beclouding him.

It would be recalled that following the resignation of Bart Nnaji as minister of power, BusinessDay had in its August 29, 2012 edition reported that the vice president’s deputy chief of staff, Mohammed Kachalla, had been mounting pressure on senior staff of the BPE with a view to influencing the privatisation process of the power sector. It was believed that the scheming was meant to weaken the solid controls put in place by the BPE and the Technical Committee on Privatisation, to ensure that bids were evaluated fairly and transparently.

BusinessDay had last year reported attempts by the Vice President Sambo-led National Council on Privatisation (NCP) to bend the rules of the privatisation of the Power Holding Company of Nigeria (PHCN) successor companies, when Interstate Electrics failed to meet the August 21 deadline for the payment of the remaining 75 percent of the bid value.

The company was said to have lobbied the NCP and BPE to get them to grant it an extension to pay for the asset, for which industry analysts said there was no moral justification, when similarly some investors were shut out at the preliminary stages in the same circumstances.

According to knowledgeable sources, the vice president has vested interests in Interstate Electrics, and “that is why they have always wanted Interstate Electrics to end up buying Enugu Disco. Until it got to Interstate Electric’s inability to make any payment at the August 21, 2013 deadline, the NCP and the BPE did not allow any exception. Even when Dangote was few minutes late in submitting its bid for Geregu and Shiroro, it was disqualified.”

In November 2012, the vice president had, through a memo, directed the BPE headed by Bola Onagoruwa to disregard the 2014 Memorandum of Understanding with Geometric Power, and the 2005 and 2006 lease agreements which ring-fenced Aba and Ariaria business units in favour of Geometric, but because she insisted that the contract should be honoured, she was asked to quit ‘with immediate effect’ on November 27, 2013, a development analysts described as curious in terms of the timing and very disturbing from an investor perspective.

Stakeholders had expected the NCP and the BPE to call in immediately the reserve bidder to make its pitch on the Enugu Disco.

The BPE, in a statement, had noted that the deadline for payment remained Wednesday, August 21, 2013 as stipulated in the Request for Proposal (RFP), adding that in compliance with the tenets of transparency and accountability, the bureau would continue to strictly abide by the terms and conditions in the RFP.

The eventual extension given to Interstate was said to have pitched the chairman, Technical Committee, NCP, Atedo Peterside, against the director-general of the BPE, as the extension would not only undermine the integrity of the transaction and the NCP, but would also translate into a financial discount to the preferred bidder.

According to the peace committee of the NCP, the BPE indicated that Aba ring-fenced was encumbered, yet it included Aba in its bid for the privatisation of the PHCN successor companies. The BPE did not remove the bid value of the Aba ring-fenced area.

The committee also noted that NERC did not deduct the value of Aba ring-fenced from the valuation of Enugu Disco even though NERC was aware that Aba was ring-fenced and licensed to Aba Power Limited.

The Amadi-led NERC has said, though belatedly, that the right thing should be done, after a site visit to Aba Power Electric Limited and Geometric Power Aba Limited.

In a report submitted by NERC, seen by BusinessDay, the commission concluded that from the infrastructure already on ground at the generation plant, the distribution substations and lines, the GPAL and APL had gone a long way to meet their own end of the tripartite agreement.

“It will be a disservice to the country in general and the company (GPAL and APL) in particular, after investing such huge amount of money on power infrastructure of such magnitude, to be denied the terms of the tripartite agreement.

A disregard of the agreement will cast bad light on the Federal Government’s privatisation process and send a wrong signal to other prospective investors in the power sector,” NERC said in its recommendation, adding that the tripartite agreement between Geometric, FG and PHCN should be upheld and made effective by excising the former Aba business unit from Enugu Disco licence areas. Sources close to the presidency tell us that the actions of the vice president in this Geometric power affair are unbecoming of his office.

“The vice president is acting like a common contractor,” said the source. “Instead of leveraging his considerable powers to win the hearts of the people of the South East for the president, by allowing Geometric Power to proceed with lighting up Aba, he chooses to be in cahoots with Emeka Offor to deprive the Igbo of electricity for their greatest industrial city.”

FRANK UZUEGBUNAM, PATRICK ATUANYA & FEMI ASU

Tuesday, 15 April 2014 01:54

GTBank records N242bn gross earnings

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Guaranty Trust Bank (GTB) Plc has grown its group’s gross earnings by 8.8 per cent from N223.06 billion in 2012 to N242.67 billion last year.

Its Chairman Egbert Imomoh, said the financial institution also posted a Profit After Tax of N107.09 billion, which represents an increase of 3.94 per cent higher than the N103.03 billion reported in 2012.

According to him, the group’s cost containment strategies continued to yield rewarding results with only a 5.82 per cent growth in operating expense from N78.06 billion in 2012.

Imomoh, who disclosed this at the 24th Annual General Meeting (AGM) of the bank held in Lagos, said the bank’s total assets rose by 21.21 per cent to N2.10 trillion as at December 2013 over N1.73 trillion reported in 2012, while loans and advances to customers grew by 28.6 per cent to N1.01 trillion. He said that deposit liabilities for the year stood at N1.43 trillion, 24.32 per cent above the N1.5 trillion reported in December 2012.

On subsidiaries, he said “during the year, the bank was able to increase its African footprint and expand into Kenya, Rwanda and Uganda through the purchase of a 70 per cent equity stake in FINA Bank. This increases the number of countries where we have business operations to 10, namely, Nigeria, Cote d’lvoire, Gambia, Ghana, Sierra Leone, Liberia, Kenya, Uganda and the United Kingdom.

“The contributions of our subsidiaries to the group’s bottom line remained strong during the review period and they continue to play an important part in our quest to emerges as foremost and dominant bank in Africa in the medium term,” he said.

Speaking at the event, the Managing Director/Chief Executive Officer of GTB, Segun Agbaje, said the bank would continue to maintain its commitment to maximising shareholder value with a dividend payout of 170 kobo as against 155 kobo paid in 2012, saying that shareholders’ fund grew from N281.83 billion to N332.35 billion, representing a 17 per cent appreciation in 2013.

He added: “A review of our financial performance for the year shows a cost to income ratio of 43.53 per cent, making us one of the most efficient financial institutions in Nigeria today and return on average equity of 29.32 per cent. Despite the appreciation in risk assets, our ability to manage the inherent risks associated with lending in Nigeria ensured non-performing loans form only 3.58 per cent of our total loan book.”

In a bid to create more opportunities for its SME customers, he said the bank built the SME market hub.

He explained: “This is an online e-commerce portal on which businesses and institutions can open online storefronts and sell their offerings to people on the internet, which, according to available statistics, amount to over 40 million Nigerians. The platform also provides access to free business and financial management tools that will help our business partners grow profitability and enhance efficiency.”

Oil India Ltd. (OINL), the nation’s second-biggest state-run explorer, is studying an acquisition of Nigerian oil and gas assets owned by Royal Dutch Shell Plc (RDSA), according to people familiar with the matter.

Oil India is weighing a bid for stakes Shell holds in some onshore blocks, valued at as much as $2 billion, the people said. It will partner with India’s Sandesara Group on the potential purchase, according to the people, who asked not to be identified as the deliberations are private.

The explorer joins Dangote Group, controlled by Africa’s richest man, and Seplat Petroleum Development Co. in seeking to acquire Nigerian assets being sold by Western rivals. Shell and Chevron Corp. are divesting fields in the country amid persistent violence and crude theft in the oil-rich Niger River delta.

India’s government-run oil companies are building on their record $5.5 billion of acquisitions last year to secure supplies for Asia’s second-biggest energy consumer. Oil India, which had 124.9 billion rupees ($2.1 billion) of cash at the end of September, has purchased stakes in gas fields in Mozambique and shale assets in the U.S. over the past two years.

Oil India Chairman S.K. Srivastava and finance director Rupshikha Saikia Borah didn’t answer two calls each to their mobile phones yesterday seeking comment. Sandesara Group Chairman Nitin Sandesara didn’t respond to an e-mail and phone call to his office.

‘Within Tolerance’

Oil India shares slid 0.1 percent to 483.55 rupees in Mumbai yesterday. The stock has fallen 8 percent in the past year, compared with a 24 percent gain by the benchmark S&P BSE Sensex. Of 42 analysts who track the stock, 37 recommend buying and none favor selling, according to data compiled by Bloomberg.

“While Oil India’s capex will increase over the next few years as the company implements its domestic exploration and development programs, and acquires and develops its overseas assets, we expect these expansion activities to be funded by a mixture of operating cash flow and debt such that Oil Inida’s credit metrics will remain well within the tolerance level of its ratings,” Vikas Halan, senior analyst at Moody’s Investors Service, wrote in an April 2 report.

Sterling Energy & Exploration Production Ltd., a unit of Sandesara Group, has more than 250 million barrels of certified oil reserves and one trillion cubic feet of natural gas reserves in the Niger Delta, according to its website. Nigeria pumped about 2.1 million barrels of crude a day last month, data compiled by Bloomberg show.

Divestments Deferred

Shell, Europe’s biggest oil company, said in October divestments in Nigeria have been deferred to 2014. The Anglo-Dutch company’s earnings in the country were curbed by almost $1 billion last year because of oil theft and a liquefied natural gas export blockade by the government, Chief Financial Officer Simon Henry said March 13.

Earlier this year, Oil & Natural Gas (ONGC) Corp. and Oil India paid $2.5 billion for a 10 percent stake in a Mozambique natural gas field. Securing fuel supplies is crucial for Prime Minister Manmohan Singh as India relies on imports to meet about three-quarters of its oil requirements.

Seplat Petroleum, based in Lagos, and its partners are bidding for two Nigerian oil and gas permits Shell is selling, Chairman A.B.C. Orjiako said March 11. Dangote Group is in talks to purchase onshore oil blocks in the country as international companies sell assets, Group Executive Director Devakumar Edwin said in January.

Bloomberg

Diamond Bank Plc has announced a profit after tax of N8.447bn for the first quarter of 2014.

The amount represents a 34 per cent rise on the N6.289bn PAT it posted for the same period of 2013.

According to the bank’s ‘Statement of financial position as of March 31, 2014’, which was posted on the Nigerian Stock Exchange website, its profit before tax for the period under review was up by six per cent.

It rose from N8.735bn in the first quarter of 2013 to N9.241bn in the review period.

In the same vein, Diamond Bank’s total assets rose by four per cent from N1.519tn to N1.584tn.

In a statement, obtained by our correspondent on Friday, the bank said its ‘strategic partnerships and innovative product mix’ played a part in the performance.

The statement read in part, “Following the release of our 2013 financial year results, Diamond Bank is pleased to announce a further confirmation of our capability in sustaining profit growth in 2014.

“Our balance sheet continued to grow on the back of efficient and sustainable growth in our retail business, while we continued to maintain cautious growth in our loan portfolio. Our strategic partnerships and innovative product mix has helped us maintain our growth trajectory in our chosen markets.”

The bank added that it was encouraged by the improvements recorded in its profit despite the tight monetary policy stance of the Central Bank of Nigeria and promised to remain committed to its goals.

It said, “These achievements have resulted in improved profitability in Q1 2014, with PBT rising six per cent year-on-year despite the impact of Cash Reserve Requirement charge on our earnings.

“We are encouraged by these results and we will sustain the commitment to continue delivering healthy shareholder returns in 2014 and beyond.”

Diamond Bank Plc had recently announced a 29 per cent growth in its profit after tax for the year ended December 31, 2013 as well as a 16.7 per cent increase in profit before tax to N32.1bn for the year.

Consequently, it proposed a dividend of 30k per 50k ordinary shares for the financial year, with the Managing Director, Diamond Bank, Dr. Alex Otti, being quoted as saying the result was rooted in the bank’s ability to attract low-cost deposits and deploy them into various assets at profitable yet acceptable risk levels.

Friday, 11 April 2014 13:54

Reps okay N4.7 trillion 2014 budget

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AFTER months of deliberations, the House of Representatives Thursday passed the 2014 Appropriation Bill amounting to N4,695,190,000,000 with a call for its speedy execution.

  Of the amount, the sum of N408,687,801,891 is for Statutory Transfers, while the sum of N712,000,000,000 is for debt servicing.

  About N2,454,887,566,702 is for Recurrent (Non-Debt) Expenditure, while the balance of N119,614,631,407 is for contribution to the Development Fund for Capital Expenditure for the year ending December 31, 2014.

  The passage of the budget came after the lawmakers endorsed the report of Mr. John Owan-Enoh-led Committees on Appropriations and Finance at the proceeding of the House presided by Speaker, Aminu Waziri Tambuwal.

  It was however not a smooth sail for the budget as a member representing Obio/Akpor Federal Constituency of Rivers State, Mr. Kingsley Chinda, while relying on the Standing Rules of the House, sought for a compendium detailing the items and estimates approved in the budget.

  Chinda, who was ruled out of order after the House Minority Leader, Mr. Femi Gbajabiamila, maintained that such call was ill-timed and justified his position saying there was the need to allay the fears of those who think that there was no provision in the budget for Rivers State.

  Spokesperson for the House, Alhaji Zakari Mohammed who addressed reporters after Tambuwal announced that the House would be embarking on a two-week recess, explained that Chinda’s position was uncalled for since the entire committees of the House had screened the entire gamut of the budget during the budget defence session with Ministries, Departments and Agencies (MDAs).

  He disclosed that the budget passed by the House was similar to the one okayed by the Senate, adding that it was a deliberate act to avert the constitution of a conference committee comprising members of both chambers that could take weeks to arrive at a conclusion.

  Zakari stated that as things stand, the MDAs have no excuse not to execute the budget since they have eight months to hit the ground running in executing the capital component of the budget required to impact positively on the lives of Nigerians.

  Among heads for the substantial votes in the recurrent (non -debt) expenditure costing a total of N1,951,836,168,306  were the police formation and command – N295.6 billion; Defence, Ministry of Defence, Army, Air Force/Navy – N314.3 billion; office of the National Security Adviser (NSA) – N66.6 billion; and Education – N373.5 billion.

  The capital component of the budget for MDAs also indicates that Petroleum Resources Ministry had N106.3 billion; Office of the NSA N51.1 billion; Works – N106.3 billion; Education – N50 billion; Police Formation and Commands – N7.3 billion and Health – N49.5 billion; Niger Delta – N49.4 billion were among those with substantial amount of votes.

  Subsidy Re-investment and Empowerment Programme (SURE-P) was allocated the sum of N268.4 billion while a N100 billion was allocated for the execution of the special intervention and constituency projects.

  The sum of N150 billion was voted for the National Assembly, National Judicial Council – N73 billion; Independent National Electoral Commission (INEC) – N45 billion and the NDDC –N49.030 billion; among others.

Jaiz Bank Plc, Nigeria’s first and currently only full-fledged interest free bank has grown its investment portfolios in the last two years by more than 380 percent.

It’s Chairman, Board of the Directors, Alhaji Umaru A. Mutallab, CON disclosed this in Sokoto during the commissioning of the Bank’s branch in the state.

Mutallab said: “We have grown our Investments by more than 380 percent from N1.9 billion to N9.4 billion. Our Customer Deposits took a massive leap of more than 460 percent from N3.2 billion to N18.6 billion.In terms of profitability, your Bank grew its total earnings by more than 750 percent during the year.”

He said the bank was able to achieve this progress and achievements through the use of “unique and robust IT platform in delivering exceptional customer services to our clientele.”

With just three locations when it started in 2012 in Abuja, Kano and Kaduna, the Bank has expanded its operation to 13 locations. The Bank now has branches in Gombe, Sokoto, Maiduguri, Katsina, Gusau, three branches in Kano, and additional two in Abuja- Wuse and National Assembly with more branches scheduled to be opened soon.

“Our plan is to be at every State capital of Nigeria before the fifth year of operation

,I have the privilege of informing you that we have as at December, 2013, submitted our application for National Banking License to the Central Bank of Nigeria (CBN) and am hopeful that this will come through before the end of the second quarter Insha Allah,” the Chairman said.

In his vote of thanks, the Managing Director of Jaiz, Muhammad Nurul Islam, said the bank has made tremendous progress in just two years of its operation and “the potential for your Bank is very bright and we are confident that we will achieve our notable vision of being the dominant Non-Interest Financial Service Provider in Sub-Saharan Africa.”

LeadTrader, a new on-line real-time trading platform launched Tuesday at the Nigerian Stock Exchange (NSE) by Lead Securities & Investments Limited, a broker-dealer subsidiary of LeadCapital plc offers investors a secure channel to buy and sell shares of companies listed on the Nigerian Stock Exchange.

LeadTrader which provides investors the comfort and convenience of executing their trades on-line via a range of devices as desktops, laptops, tablets and other mobile devices conforms with the global best solutions for on-line, real-time trading of securities utilised by retail and institutional investors in advanced economies.

The Nigerian Stock Exchange is committed to building a world class exchange in Nigeria and by extension the West African sub-region. The launch of the X-Gen Trading Platform in September 2013, a robust 21st Century technology with FIX-enabled trading capability, providing on-line real time market data to vendors clearly demonstrates that commitment.

“Lead Securities & Investment Limited promptly responded to the initiatives of the NSE by upgrading its existing trading infrastructure to a world class trading portal. Orders submitted via LeadTrader pass through a FIX compatible Order Management System (OMS) where appropriate compliance checks are in place to prevent erroneous orders going into the NSE’s trading platform,” Abimbola Olashore, chairman, Lead Securities & Investment Limited.

Wale Adewumi, managing director, LeadCapital plc said that LeadTrader gives investors full control over their mandates, adding that any investors who is concerned about trades being executed with precision to the market at any given time, “LeadTrader is the solution for you. This has been made possible with the enabling technology put in place by the Nigerian Stock Exchange and our technology partners, working together to building a securities market that will match the very best in the world.”

Entities from Kenya, Nigeria and South Africa were Wednesday ranked at the top of a business technology magazine's list of the 10 most innovative companies in Africa.

Kenya's iHub, Sanergy and One Acre Fund were named as Africa's foremost leaders in innovation.

Heading the list, iHub is said by Fast Company to be “connecting, amplifying and accelerating Africa's tech community.”

The not-for-profit operation functions as a “hybrid co-working space and university commons, which has grown to more than 10,000 members in just three years,” the magazine says. Ihub has incubated 150 companies — “many of which are dedicated to finding technological solutions to Africa-specific problems,” Fast Company adds.

Number two on the list is Sanergy, which is cited for “bringing sustainable sanitation to sub-Saharan Africa.”

The article notes that more than 12,000 Kenyan slum-dwellers now use portable toilets equipped with toilet paper, sawdust, soap and water “thanks to Sanergy's sustainability model.” It enables local residents to become “micro-entrepreneurs” by purchasing and managing the sanitation facilities, Fast Company reports.

As an additional economic and environmental benefit to Kenya, waste from the toilets is treated in accordance with government standards and turned into fertiliser for East African farmers who could not otherwise afford crop-growth stimulants.

One Acre Fund, listed as the third-most innovative business entity in Africa, was launched in Kenya in 2006 and now assists 130,000 small farmers in Burundi, Rwanda and Tanzania.

The company provides seed and fertiliser on credit and trains farmers to use them while also helping them find buyers for their harvests. One Acre Fund is “fostering a new generation of farmers in Africa,” Fast Company writes. “The model is simple, but the impact is huge.”

Nigeria is home to three of the seven other businesses included on the magazine's list of Africa's most innovative. South Africa places two companies in the top 10. And Mauritius-based UpEnergy, which does much of its business in Uganda, is ranked seventh for “making it safer to cook in rural Africa.”

Julius Berger Nigeria said on Friday its 2013 full-year pre-tax profit rose 31 percent to 16.22 billion naira ($98.36 million) from 12.34 billion naira in 2012.

The construction company said turnover rose to 212.73 billion naira from 201.56 billion naira a year ago.

Reuters

Sterling Bank said, on Wednesday, its 2013 full-year pretax profit rose 24 percent to N9.31 billion ($56.51 million) from N7.49 billion the previous year.

The bank said it would pay a dividend of N0.25 per share from its profit, up 25 percent from the N0.20 paid in 2012.

Gross earnings rose to N91.62 billion from N68.85 billion, the bank said in a filing with the Nigerian Stock Exchange.

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