Monday , 22 July 2019
Latest
Home » Business

Business

NNPC posts N6.33bn trading surplus in May

The Nigerian National Petroleum Corporation (NNPC) has announced a trading surplus of N6.33 billon for the month of May 2019, a figure which is 13 per cent higher than the N5.60 billion surplus posted in the preceding month of April 2019.

Details of the report contained in the May 2019 edition of the NNPC Monthly Financial and Operations Report (MFOR) released today, attributed the modest rise to the increase in gas and power output which contrasts with the figure for the preceding month.

The report made public by the Group General Manager, Group Public Affairs Division of the Corporation, Ndu Ughamadu, also attributed the result to the surplus recorded by the corporation’s downstream entities like NNPC Retail, PPMC, NPSC and Duke Oil.

The report further indicated that within the period, the NNPC recorded a total of $580.32 million in export sale of crude oil and gas which is 23.39 per cent higher than the previous month’s figure. Out of this number, crude oil export sales contributed $458.59 million which translates to 79.02 per cent of the entire dollar transactions compared with $342.11 million contributed in the previous month.

The report also showed that between May 2018 and May 2019, crude oil and gas worth $5.97 billion was exported.

In the downstream, to ensure uninterrupted supply and effective distribution of petrol across the country, a total of 2.06bn litres of petrol translating to 66.49mn liters/day were supplied for the month of May 2019.

It was noted that beyond supply, the corporation continued to diligently monitor the daily stock of petrol to achieve smooth distribution of petroleum products and zero fuel queue across the nation.

Within the period, a total of 60 pipeline points were vandalized which represents a remarkable 52 percent decrease from the 125 points vandalized in April 2019.

The Atlas Cove-Mosimi and Ibadan-Ilorin pipelines accounted for 38 percent and 23 percent respectively and other locations accounted for the remaining 39 percent of the total breaks.

The report noted the spirited efforts by NNPC in collaboration with the local communities and other stakeholders to continuously strive to reduce and eventually eliminate this menace.

The May 2019 NNPC MFOR is the 46th in the series designed to provide greater transparency and remove the perception of opacity hitherto associated with the operations of the national oil company.

The new NNPC Management headed by Mallam Mele Kyari has pledged to enhance the current approach to encourage increased citizenship participation and greater accountability to the public.

FG to sell NIGCOMSAT, 10 NIPPs this year: – BPE

The Bureau of Public Enterprises will be putting up for sale the remaining 10 Nigerian National Integrated Power Projects.

The BPE said the planned sale is part of efforts by the Federal Government to boost power supply for Nigeria’s industrial expansion vision.

The Director-General of the BPE, Mr. Alex Okoh, who spoke in Abuja on Friday at the signing of a Memorandum of Understanding with an infrastructure credit enhancement firm, InfraCredit, also disclosed that the Nigerian Government-owned Satellite Communications company, NigComSat, would be privatised to make it more competitive.

According to him, a committee to prepare the NIPPs privatisation transaction has been put in place with the target of the completion of the task billed for this year, while handover of the NIPPs to the successful investors is projected for the first quarter of next year.

The MoU seeks to provide guarantee for a longer tenor credit of up to 15 years for prospective investors in the NIPPs.

The aim is to de-risk the power sector investment and attract competent investors to avoid the pitfalls of the power sector privatisation bedevilled by epileptic service delivery arising from short tenor financing.

According to Okoh, InfraCredit has committed to guarantee as much as N300 billion of financing for the power divestment transaction to investors and believes the development will boost the much needed sound corporate governance culture that would ensure investible resources and create sustainable value for the economy.

“In this regard, InfraCredit intends to partner with the Bureau to de-risk the financial environment, especially with regards to power sector investments. They have a target of achieving N300 billion worth of investments deals within three years,” Okoh revealed.

The Managing Director of InfraCredit, Mr. Chinua Azubike, expressed his firm’s delight to be associated with de-risking Nigeria’s financial sector, aimed at assisting it to perform its mandate in Nigeria.

Azubike said his firm, a triple ‘A’ rated guaranteed company, is owned by the Nigerian Sovereign Investment Agency (NSIA) and equally backed by GuarantCo, a private infrastructure development Group; KfW Development Bank and the African Finance Corporation.

According to him, InfraCredit has already played a major role in guaranteeing credit for investment with the pension funds in Nigeria among other interventions.

The NIPPs project was conceived in 2004 under the administration of former president Olusegun Obasanjo. It was formed to address the issues of insufficient electric power generation and excessive gas flaring from oil exploration in the Niger Delta region. Seven power plants were designed in gas-producing states as part of the project.

Planned power plants included Ihovbor Power Station Benin, Edo State with the capacity of 4 x 112.5 MW (ISO 126 MW); Calabar Power Station, Cross River State with the capacity of 5 x 112.5112.5 MW (ISO 126 MW); Egbema Power Station, Imo State with the capacity of 3 x 112.5 MW (ISO 126 MW); Gbarain Power Station, Yenagoa, Bayelsa State with the capacity of 2 x 112.5 MW (ISO 126 MW); Sapele Power Station, Delta State with the capacity of 4 x 112.5 MW (ISO 126 MW); Omoku Power Station, Rivers State with the capacity of 2 x 112.5 MW (ISO 126 MW); and Ikot Abasi Power Station, Akwa Ibom, with the capacity of 2 x 112.5 MW (ISO 126 MW) (replaced later by Ibom Power Station).

Together, the projects generated contracts worth $414,000,000 for the supply of turbines and electricity generation equipment to General Electric (GE). The primary turbine is GE 9E gas turbine with a nominal ISO rating of 126MW. After adjusting for site conditions, the capacity was set to 112.5 MW. The plants are low efficiency simple cycle but have provision for future extension to combined cycle
administration changes in 2007 interrupted funding for more than two years.

The NIPP projects includes 11 power plants and 4 FGN Power Stations: Alaoji Power Station, Abia State, combined cycle plant with the capacity of 4 x 112.5 MW (ISO 125 MW) and 2x steam 255 MW;
Omotosho II Power Station, Ondo State, with the capacity of 4 x 112.5 (ISO 125 MW); Olorunsogo II Power Station, Ogun State, combined cycle plant with the capacity of 4 x 125 MW and 2 x steam 125 MW; and Geregu II Power Station, Kogi State, with the capacity of 434 MW.

Following the Afam V and Geregu I plants, Geregu II is now the third gas-turbine power plant to be constructed by Siemens in Nigeria as a turnkey project and completed on schedule. The scope of delivery supplied by Siemens for Geregu II included three SGT5-2000E gas turbines, three SGen5-100A generators, as well as all the electrical systems and the SPPA-T3000 control system.

The Ikot Abasi NIPP power plant has been replaced by Ibom Power, which is a 190 MW project of the Akwa Ibom State Government. The revised project involves large-scale transmission projects across all of Nigeria, which are crucial to ensure power distribution from generation plants to final customers.

$652m needed to reactivate, complete Ajaokuta steel plant -Audit

An audit conducted by Nigerian and Ukrainian experts showed that a total of $652m is required to reactivate and complete the Ajaokuta steel plant, an audit report has revealed.

According to the information sourced from the company’s website in Abuja on Monday, the audit was conducted in April 2018 by Nigerian engineers, technicians, and other professionals as well as two Ukrainian experts in steel plant,

According to the audit, the controversial plant, which was started in the 1970s, had reached 95.7 per cent completion.

On its portal, the company said that the audit report was presented to a former Minister of State for Mines and Steel Development, Mr Bawa Bwari, by the Sole Administrator of the company, Mr Sumaila Abdul-Akaba.

It did not state when the report was presented to Bwari. However, Bwari took charge of the ministry (till May 29 when the first tenure of President Buhari ended) following the departure of a former Minister of Mines and Steel Development, Dr Kayode Fayemi, who had gone to contest the governorship election in Ekiti State in 2018.

The company said, “The technical audit report on Ajaokuta Steel Plant, which ascertained that the plant is 95.7 per cent erection ready has been submitted. Reactivation and completion requirement stands at $652m.

“The internal technical audit, which was conducted on the facilities of the steel plant between February and April 2018 was an updated version of the last technical evaluation done in the year 2010 by M/S Reprom Nigeria Limited.”

Abdul-Akaba was quoted as saying, “The 2018, technical audit of the Ajaokuta steel plant was undertaken fully by Ajaokuta Steel Company Limited engineers, technicians and other professionals.

“This is in line with the policy of the present Federal Government on the utilisation of maximum local content possible in the execution of sundry public works in the country.

“The Ajaokuta steel plant had been under the care of professionals over the years, some of who even partook in the construction and erection. It was therefore an opportunity to know hidden details which no outside contractor could get.

“It also afforded the company the opportunity to assemble raw information on the plants and equipment which can form the basis for future assessments and decisions if need be. This advantage was not there in the previous exercises that were wholly carried out by foreign contractors.”

The sole administrator also explained that some specialists assigned by the president of the Nigerian Society of Engineers as well as two experts in steel plant from Ukraine were involved in the audit, which produced a report presented in four parts. Part two of the report was said to be in 10 volumes.

The House of Representatives had in 2018 resisted the proposal of the government to sell Ajaokuta to private-sector investors. They asked the government to complete the plant rather than sell it to investors. The lawmakers also passed a vote of no confidence on Fayemi and Bwari for failing to appear during its probe hearing on the steel plant.

External debt rises by $15.3bn under Buhari

The nation’s external debt stock rose by 148 per cent in almost four years of the President Muhammadu Buhari administration, data from the Debt Management Office showed.

The external debt soared to $25.61bn on March 31, 2019 from $10.32bn on June 30, 2015, according to the DMO.

Eurobonds worth $10.87bn accounted for the largest chunk of the external debt, as it rose by 625 per cent from $1.5bn on June 30, 2015.

The debt owed to the World Bank rose to $8.90bn from $6.19bn in the period under review.

China, through its Export-Import Bank of China, is the third biggest lender to Nigeria with a loan of $2.55bn as of March 31, 2019, up from $1.39bn as of June 30, 2015.

Other lenders are African Development Bank ($1.25bn), African Development Fund ($834.18m), Arab Bank for Economic Development in Africa ($5.88m), Export Development Fund ($59.15m), Islamic Development Bank (15.51m) and the International Fund for Agricultural Development ($176.19m).

Bilateral debts from France (Agence Française de Développement), Japan (Japan International Cooperation Agency), India Exim Banking of India and Germany (KfW) stood at $366.07m, $74.63m, $26.46m and $171.79m, respectively.

Financial and economic experts, who spoke with our correspondent in separate interviews, described the $15.3bn increase in the nation’s external debt as a cause for worry.

A former Director- General, West African Institute of Financial and Economic Management, Prof Akpan Ekpo, said the country’s debt profile had been increasing at an alarming rate.

He said, “The increase in external debt is something to worry about even though we have not exceeded the threshold and that was because we rebased our GDP. But what should worry us more is our debt servicing, which is increasing at a rate that is not comfortable. We should be cautious how we borrow, and let us know what we are borrowing for.

“I am not in support of Eurobond because it’s commercial and it has a higher rate. The World Bank and the ADB loans are flexible; if you cannot pay, you can renegotiate and the rates are lower. The multilateral institutions are better than Eurobonds because they will give you a long period of repayment. But we have to be very careful with the Chinese loans because the Chinese are very shrewd negotiators.”

The Managing Director and Chief Executive Officer, Financial Derivatives Company Limited, Mr Bismarck Rewane, said, “Part of our external reserves is borrowed money. We have borrowed but let us see the projects that the borrowings have been used to accomplish. But if they cannot show us the completed projects, then we have a problem.”

The DMO said last month that the Federal Government would borrow $2.7bn from foreign sources this year, adding that it planned to first access cheaper funding from multilateral and bilateral lenders while any balance would be raised from commercial sources, which might include securities issuance such as Eurobonds in the international capital market.

“As long as it is to finance projects, it is a good decision. But if it is to finance consumption, then we are in trouble,” Rewane said.

The nation’s external reserves stood at $45.109bn as of July 15, 2019, according to the Central Bank of Nigeria.

A professor of Economics at the Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Sheriffdeen Tella, who also raised concern over the significant increase in the external debt, said the government should be cautious about further borrowing.

NNPC, Shell to grow Nigeria’s oil reserves

The Management of the Nigerian National Petroleum Corporation (NNPC) and its age-long partner, Shell Petroleum Development Company (SPDC), on Tuesday expressed resolve to grow existing business relationship aimed at increasing the nation’s crude oil reserves.

Welcoming the high level Shell delegation led by the Vice-President of Shell Nigeria and Gabon, Peter Costello, to the NNPC Towers, Abuja, Group Managing Director of the NNPC, Mallam Mele Kyari, acknowledged the fact that Shell was its oldest and biggest partner in upstream operations and would continue to enhance the relationship for the benefit of the industry.

He said that NNPC would work with Shell to expedite action on some crucial deepwater projects and create enabling environment to entrench the ideals of transparency and enduring governance framework for the industry.

Speaking earlier on behalf of the Shell delegation, Osagie Okunbor, Managing Director of SPDC and Chairman of Shell Companies in Nigeria, congratulated the NNPC GMD on his appointment while expressing confidence in his ability to steer the industry to enviable height.

Okunbor said Shell was in sync with Kyari’s vision and growth trajectory for the industry as laid out in his blueprint.

He noted with interest the push towards renewed transparency and openness, stating that the essence of the visit was to “underline our unflinching support for you and your team”.

No plan to increase pump price, says NNPC

The Nigerian National Petroleum Corporation (NNPC) has dismissed reports that it is planning to increase the price of premium motor spirit (PMS) better known as petrol.

In a statement, Ndu Ughamadu, group general manager, group public affairs division of NNPC, said mischief makers are behind the reports.

During a visit to Senate President Ahmad Lawan on Wednesday, Mele Kyari, group managing director of the NNPC, had said it is very difficult to make fuel available at N145.

After this, reports of plans to increase pump price started circulating on social media.

Ughamadu said it was improper for people to conclude that the corporation had made plans to hike the price of the product.

He said NNPC is “not even in a position to regulate the price of petroleum products.”

Ughamadu said what Kyari meant was that “the price of petrol was abysmally low in Nigeria compared to what obtained in neighbouring West African countries.”

“Mallam Kyari had observed at the event that the huge disparity in the pump price of petrol between Nigeria on the one hand and her neighbouring country on the other hand tended to encourage cross-border leakages, as he sought the support of the leadership of the National Assembly to curb the malaise of smuggling,” the statement read.

NNPC cautioned petroleum products marketers not to sell petrol above N145 per litre.

Ughamadu urged Nigerians to report cases of increased fuel price to the Department of Petroleum Resources (DPR) in order to take disciplinary measures against defaulters.

Governors kick against fuel subsidy

Governors have described as unsustainable, payment of oil subsidy to marketers by the Nigeria National Petroleum Corporation (NNPC).

The governors called on the federal government to do away with it, saying fuel subsidy is a drain on the nation’s resources.

Kayode Fayemi, chairman of the Nigeria Governors’ Forum (NGF), made the demand when he led a delegation to Mele Kyari, the new group managing director of the corporation.

He said subsidy remains a major drawback on government revenues, adding that there is need to consider a new deal on how government will absorb its cost.

This he said has become necessary given the new reality of low oil revenues and rising government commitments.

“It is important to highlight that subsidy remains a major drawback on government revenues. We may need to consider a new deal on how governments will absorb the cost of subsidy,” he said.

“This has become necessary given the new reality of low oil revenues and rising government commitments. We believe that at the current course, subsidy costs will continue to offset any recovery in the oil market. The country recorded one of its lowest cost of subsidy in 2016 when oil traded at an average of US$48.11 pb. Total subsidy that year was around N28.6 billion; but the amount rose to N219 billion in 2017 and N345.5 billion by mid-2018, as the price of oil and domestic PMS consumption rebounded.These are important considerations for us, with direct implications on energy security and economic stability in the country.”

The NGF chairman said having worked with Kyari when he was minister of mines and steel, he believes that the NNPC GMD is a man of integrity who would deliver on his promises to the nation.

Governors are the latest to oppose fuel subsidy. Last month, Muhammadu Sanusi, emir of Kano, asked President Muhammadu Buhari to end fuel subsidy. He had said “N1.5 trillion on subsidy is N1.5 trillion out of education“.

Six days ago, Stuart Symington, US ambassador to Nigeria, also advised the federal government to get rid of fuel subsidy.

Airtel Africa lists 3.7bn shares on NSE, adds N1.3trn to market cap

Airtel Africa Plc on Tuesday listed on the Nigerian Stock Exchange (NSE), promising to build leadership position that would create values to all stakeholders.

Segun Ogunsanya, the Chief Executive Officer and Managing Director, Airtel Nigeria, gave the assurance during the listing.

He said that Nigeria was a great place for business and Airtel Africa remained committed to building a leadership position.

Ogunsanya said: “Investors have been interested to hear our story, most importantly, they have been interested enough to invest in our business and are now ready to share the future with us.

“There is age potential for Africa, Africa is a growing continent with a huge number of young people who consume data.

“In terms of opportunity in mobile money, we would take advantage of this opportunity to reach the unbanked in Nigeria. Nigeria is a great place for business.”

Ogunsanya said that Airtel had 45 million subscribers in the country which made it one of the biggest.

He said that the telecoms firm planned to leverage robust opportunities in Nigeria’s mobile money space to grow its earnings.

The company listed 3,758,151,504 ordinary shares at N363 per share, adding a total of N1.364 trillion to the market capitalisation of the exchange.

The company listed on the Nigerian NSE after its London Stock Exchange (LSE) listing at an offer price of 80 pence.

Ogunsanya said the company was a leading provider of telecommunications and mobile money services, with presence in 14 countries in Africa, primarily in East, Central and West Africa.

He said the company offered an integrated suite of telecommunications solutions to its subscribers, including mobile voice and data services as well as mobile money services both nationally and internationally.

He added that the group offered traditional mobile voice services, with an increasing focus on data and non-voice services through the expansion of its 3G and 4G networks.

Ogunsanya hailed Nigerian regulators for support in ensuring successful listing of the company on the nation’s bourse.

He also praised Nigerian investors for support in the initial Public Offering and assured them that they would not be disappointed.

The Chief Executive Officer of Airtel Africa, Raghunath Mandava, said: “Airtel Africa is delighted to be listed on the main board of the exchange.

“This is an exciting time for Airtel Africa in the 14 countries it operates and an important milestone in our development as a leading provider of telecommunications and mobile money services in Africa.

“Investors have been interested to hear our story and have been interested enough to invest in our business and are now ready to share the future with us,’’ Mandava said.

Ms Awuneba Ajumogobia, Member, Airtel Africa Board, said that the company was proud to be listed on the NSE in spite of challenges.

Ajumogobia said that the company looked forward for a joint prosperity.

Oscar Onyema, NSE Chief Executive Officer, commended Airtel Africa for the initiative.

Onyema said that the listing reaffirmed Airtel Africa’s long-term commitment to expanding opportunities and providing everyday services to Africans and Nigerians in particular.

He said that listing of the company’s shares added N1.36 trillion to the market capitalisation of NSE, further deepening the Nigerian capital market.

According to him, it will also increase the visibility of Airtel Africa to investors on the continent and across the globe.

“This listing serves to deepen the telecoms and technology sector for investors, and provides an opportunity for a wider group of Nigerians to be part of the African telecoms growth story”.

“Today’s listing is a promising development in Africa with Airtel Africa also being admitted to the premium listing segment to trade on the main market of the London Stock Exchange.

According to Onyema, this lends credence to the successful partnership between the two exchanges.

He urged other companies to explore different opportunities for raising capital on the NSE platform.

We will reposition NNPC to global company of excellence – Mele Kyari

The newly appointed Group Managing Director of Nigerian National Petroleum Corporation (NNPC) Mele Kyari has pledged to reposition the corporation.

Kyari said he would make the NNPC to be a global company of excellence to portray the good image of the company.

He made the pledge on Tuesday in Abuja when he paid a courtesy visit on the Secretary to the Government of the Federation (SGF) Boss Mustapha in his office.

Accompanied by his predecessor, Maikanti Baru, Kyari expressed gratitude to God for the reappointment of Mustapha as SGF.

According to him, we are here on a courtesy visit to the SGF, and also for the outgoing GMD to formally hand me over to him.

He said he would continue with the good works executed by his predecessor to take the company to the next level.

“We will reposition and we will make NNPC a global company of excellence. As part of the leadership of the company before now, there are good works that my predecessor has done during his tenure and we will continue from there, ” he said.

The new NNPC boss also assured that the country’ s refineries would be revamped to ensure that incessant fuel scarcity was curtailed.

“We will sustain and build on the progress we met on ground and also to ensure that we align completely with the vision of Mr President to ensure that there is peace in the Niger Delta region.

“To also ensure that petroleum supply is sustained in such a way that Nigerians do not cry any more over fuel issues in the country, ” he said.

Femi Gbajabiamila, Speaker of the House of Representatives, who was also on a courtesy visit to the SGF, emphasised on the need for harmonious relationship across all arms of governments to reposition the country.

According to Gbajabiamila, my visit to SGF is to come and congratulate him on his reappointment, deliberate on issues affecting the government.

“We are going to have a good executive/ legislative working relationship in the next four years. So what we are trying to do here is to have a good working relationship in both arms of government

“What we discussed today was basically issues that affect government, relationship between the two arms of government, areas were we need to block loopholes, areas were we need to develop,” he said.

This, he explained is all about good governance which would affect Nigerians positively.

In his response, Mustapha assured them of good working relationship in order to have a stable government in the next four years.

According to the SGF, in all the interactions I have had with the outgoing GMD of NNPC, the transition process in itself attest to the fact that we will have stability in the NNPC industry.

Heritage Bank: Of Moral Hazards and the Unravelling of a Deposit Money Institution

 

Three months ago Proshare had cause to commit resources to investigate and produce an hitherto unpublished Confidential Report on Heritage Banking Company Limited, in direct response to the promptings of the advisory board members who wanted to know the true state of the bank which had another financial institution handling clearing operations for it at some time.

By this time, and curiously; it wasn’t such a big news that some of the bank depositors had experienced recurring challenges with withdrawals and staff exits did little to help matters. Yet, the restraint was important in order to ensure and support financial system stability as well as give the institution an opportunity to execute its resolution strategies without hindrance. After all, the institutional frameworks were in place to protect depositors and the system in general.

The task involved a lot of stakeholder engagements including sources we understood to be in a position to recognize, appreciate and make informed decisions. The revelations offered little comfort from history to, interventions up to the current state. We limited ourselves however to facts, data and evidence and submitted the report.

Further to the completion of this initial review, and in the interest of giving the financial system an opportunity to resolve the bank’s challenges through normal regulatory intervention and management effort at recapitalizing the institution or determination of the banks going concern status through a merger and acquisition (M&A) arrangement; the report remained private.

The burden of a moral hazard however appeared a bigger burden than tolerable or envisaged, especially given the evident ‘sailors survival’ approach that appears to have kicked in as seen through senior management exit, non-improving conditions, non-progressing talks around mergers and acquisitions; and recapitalization plans.

It has become compelling to highlight concerns about the bank formally; with the hope that ‘some intervention’ can happen to alter the trajectory of an inevitability. and remove the spectre of a bank waiting to die that overshadows the institution, unfortunately.

Proshare’s investigation into the bank revealed a few major concerns related to corporate governance and operational stability/sustainability. The primary issues included, but were not limited to the following:

• The acquisition of Enterprise Bank which is turning out to be a major strategic error;

• HBL’s non-performing loans (NPLs) portfolio, which are amongst the most challenged in the industry. Impairment charges in H1 2018 was estimated at N37.5bn but by year end, we extrapolated that the figure should settle around N634.5m;

• The bank posted an operating loss before tax of N38.5bn in H1 2018 and a loss of N4.4bn in the unaudited figures for the month of December 2018;

• The bank’s leverage has been a major sore point for management. The banks debt to equity ratio was -0.17. The negative value reflected negative shareholders fund which could be impaired by as much as $1bn

• Equity capital has been virtually wiped out by accumulated losses, a legacy issue;

• The bank’s regular recourse to the CBN’s short term borrowing window highlights persistent liquidity resolution issues;

• Corporate governance has been a challenge as a number of the bank’s directors have allegedly been involved in a series of poor performing insider loan transactions, and little known about such resolutions (if any);

• The bank’s 2018 unaudited financial figures shows a dire situation in several operational metrics; and

• The bank has not been engaged in direct cheque clearing for a while, HBL’s instruments have been cleared through a third party first tier bank which got a full CBN guarantee against clearing loses.

IEI’s Pound of Flesh

It is instructive to recall how this sorry pass all began. Records indicated that Heritage Bank was in a difficult place from the start. It’s managing director and chief promoter, Ifie Sekibo, was the former Executive Vice Chairman (EVC) of International Energy Insurance (IEI) Plc from where a sizable amount of the acquisition money for the old SGBN was raised. Sekibo has been in a stretch of back and forth with the Board of his former company on this subject, as the directors of the company insist that Heritage Bank should be considered as part of the assets of the Insurance group; going as far as alleging that Sekibo had invested the insurers money in the bank without the approval of then Board members; or indicating/stating IEI’s consideration in the bank acquisition, if any.

The matter of using IEI resources to acquire the former Societe Generale Bank of Nigeria (SGBN) which was renamed Heritage Banking Company Limited has been the subject of a longstanding Economic and Financial Crime Commission (EFCC) investigation and continues to hound the bank’s CEO till date. Our background work on the matter then, enabled us to sight documentations that lends credence if not validity to the role played IEI as reflected in presentations made to its board.

Mr. Sekibo has over the past few years tried to work out an amicable settlement with the IEI Group and directors, but matters are still fluid with necessary concessions being made on both parts. That said, the CEO’s travails still continue as he has had to deal with a few other issues concerning related-party transactions that have crystallized and left the bank’s books in a difficult position.

Weak Governance and Control

Heritage Bank’s problems have most certainly not been about Sekibo, alone. Far from it, the bank’s Board of directors (including former directors) has created a permissive culture that led to this.

Heritage Bank’s erstwhile chairman was also known to have used the banks tills to acquire two electricity distribution licenses’ the underlying cash flow difficulties of the businesses were subsequently and promptly transmitted to the bank, resulting in large repayment defaults. Indeed the loans have become ‘hardcore’ non-performing assets sitting on the bank’s books and creating both liquidity and profitability difficulties.

Managers of the bank, particularly branch managers, were in the past profligate in granting authorized and unauthorized loans to associates. Temporary overdrafts (TODs) routinely skipped repayment dates while structured loans also habitually missed the terms of the loan indenture, resulting into phantom profits and worsening liquidity.

Huge public sector deposits were beauties turned into monsters. The introduction of the Treasury Single Account (TSA) policy by the federal government in 2015 subsequently left the bank’s Asset and Liability Management (ALM) position in tatters.

The TSA policy did four things to undermine the bank’s fiscal stability:

• Sharply reduced the bank’s deposits;
• Significantly raised the banks cost of Funds (CoF);
• Reduced the bank’s ability to give short term loans; and
• Weakened the bank’s already fragile profitability.

Since the bank was already nurtured on a culture of entitlement, finding strategic options to wriggle from, under the weight of government policy and patronage became impossible.

Heritage Bank’s narrow retail base and its poor quality risk assets put inevitable pressure on profitability and liquidity. To compound matters, the bank’s internal control and compliance functions appears to have operated under a cloud of breaches than in the protection of standard corporate governance requirements, as directors willy-nilly violated single obligor limits. The poor internal control and audit process and administration at the bank thus complicated an already combustible bad loan and poor liquidity situation.

 

Coup de Foudre (Unintended Consequences)

As a way out of its myriad of challenges, the bank fell in love with another entity, committing a tragic error. In a bold but ill-digested move, Heritage Bank decided to acquire the Asset Management Company of Nigeria’s (AMCON’s) legacy deposit money institution, Enterprise Bank, this was the decision that let all the evil spirits out of Pandora’s box. The acquisition of Enterprise Bank was the classic example of a Cobra Effect or a situation where a cure becomes worse than the original disease.

The decision to acquire Enterprise Bank for N56bn in 2014 resulted in unintended consequence. At the time, the bank’s Board rationale in acquiring Enterprise Bank from AMCON was to rapidly expand the retail end of HBL’s operations and reduce its cost to income ratio based on representations that informed their decision. That gambit has proven to be a disaster and a cautionary tale on acquiring distressed banks unfortunately.

The Enterprise Bank wedlock, as consummated, turned into a fiasco as it added a further two hundred (200) branches to the banks operations and cut interest expense while improving net interest income (see chart 1 below). This led to the following outcomes:

• A sudden and significant rise in the bank’s bad debt to asset ratio;
• A leap in the bank’s debt provisioning or loan impairment requirements;
• A major rise in operational costs;
• A rise in the banks cost to income ratio (99% in FY 2018, as against the 53% of a bank like StanbicIBTC). (See chart 2 below);
• Stretching human capacity by lifting managers to their highest levels of administrative and technical (in)competence (The Peter Principle); and
• Low Interest Income (as a result of slowing lending activities, (see chart 3) and high interest expense (as a result of a relatively low retail customer base, (see chart 4).

Chart 1 Net Interest Income FY2018, Heritage Bank and StanbicIBTC Bank


Source: Reported Financials Submitted / Estimated

Chart 2 Operating Expenses/Income FY2018,Heritage Bank and StanbicIBTC Bank


Source: Reported Financials Submitted / Estimated

Chart 3 Interest Income FY2018, Heritage Bank and StanbicIBTC Bank


Source: Reported Financials Submitted / Estimated

Biting into the Heritage Saga – What The Report Says

To understand the nexus between weak corporate governance, hubris, regulatory indulgence and Heritage Bank, the reader needs to carefully read the PDF report.

The report attempts a holistic look at the bank’s realities and lays bare the challenges that occur when individuals and institutions fail to live up to the exacting standards that are required to turn fragile ideas into enduring legacies.

The report was carried out as an intervention guidance to prompt action from the various parties and interested entities; all in the overall interest of the financial system.

To protect the financial system from contagion, the Central Bank of Nigeria (CBN) may need to move into the affairs of Heritage Bank and any of three actions are now plausible:

• Wind up the institution with shareholders losing their money (as things stand today shareholder’s funds have been completely eroded) while depositors resort to the National Deposit Insurance Corporation (NDIC) for part recovery of deposited funds;
• Find fresh investors interested in the institution and intermediate a best effort basis sale of exiting shareholder interest and recapitalization of the institution as a going concern; and
• Liquidation of the institution and the running of the bank under a new franchise as a legacy institution managed by AMCON and available for purchase by third party investors.

The preferred solution would appear to be either the second or third options.

The second option would be of particular preference as it would not involve heavy ‘menu cost’ by way of rebranding but would involve a new ownership – Board of Directors and management staff. The fresh capital inflow would eliminate the need for initial treasury support from public coffers and would likely result in fresh/foreign capital inflows which would be beneficial for the local currency while also protecting domestic employment. This approach would appear plausible given that the CBN recently gave out new licenses to start up banks; premised on their understanding that there exist room for new entrants with fresh ideas and approach.

The CBN would however have to work fast if Heritage Bank is not to be dark blight on the Governors no-failure record.

From indicators received, there is a small window to achieve a technical resolution of the Heritage Bank situation, lest it could find itself taking remedial action(s) at a much higher economic cost later than it would now.

Heritage Bank’s weak liquidity, impaired shareholder funds and high loan impairment, according to analysts, needs action not tolerance. The time to act is now!

 

AfCFTA: Nigeria targets $30bn annually, 500,000 jobs from non-oil sector

Nigeria can earn $30 billion and create 500,000 export-oriented jobs through 22 products from the non-oil sector.

Segun Awolowo, executive director of Nigerian Export Promotion Council, disclosed this to state house correspondents at the weekend.

Awolowo said the country could generate huge revenue from cocoa, cotton, cement, leather, cashew, sesame, shea butter, palm oil, fertiliser, petrochemicals and rubber.

“What we hope to achieve is to raise more revenue for Nigeria from other sources. You know 90 percent of our revenue is from oil and we cannot survive,” he said.

“Even though oil prices are rising a bit because of Iran, there is problem there. But we should not rest on our oars because, those days of $140 per barrel is gone forever. So we have to look inwards and produce more.

“The zero oil plan is about raising production and productivity, we identified 22 sectors where we can earn foreign exchange apart from oil. We are hoping that in the next 10-15 years we will be able to raise $150 billion from sources outside oil.

“That is what we are working on and we are galvanizing the whole states behind us in other to raise production and productivity. We are working with the relevant Ministries, Departments and Agencies (MDAs) to achieve this. You know the Central Bank of Nigeria CBN just announced an initiative on five of our products and giving them low interest rates to farm and raise production.”

He also spoke about The African Continental Free Trade Area (AfCFTA) which President Muhammadu Buhari signed at the 12th extraordinary session of the assembly of the union on AfCFTA in Niamey, Niger Republic.

Nigeria is the 53rd state on the continent to append its signature to the document.

“The African Continental Free Trade Area (AfCFTA) agreement is the biggest in the world. We didn’t want to be a dumping ground, that was why Mr. President refused signing the agreement until now. We must be competitive, we must produce more, and we must help our manufacturers get into this market,” he said.

Awolowo said he presented to Buhari, some tomatoes and “Bell peppers” being from Benin, and Casanovas, cassava chips from a cottage industry producing in Idu Industrial Estate, Abuja.

He said the chips are being exported to Germany.

He said he briefed the president on the zero oil implementation plan after he was asked for an update.

“Cocoa is an immediate win for us because, its been our number one none oil revenue making. But we are on less than 300,000 metric tons, Ghana is heading to 900,000, Cote d’ Ivoire almost two million metric,” he said.

“So, how do we compete? Meanwhile if you see the landmass in Nigeria you can imagine what we can do. Another sector is Shea nut, cashew is another breadwinner for us, so let’s raise production, let’s give our farmers, plantations low interest loan so that they can raise production for us. We are also looking at value addition for all because that is the way you create jobs, we cannot continue to sell the raw materials.”

Air Peace assigned national carrier status on Lagos-Dubai route

Nigeria’s Bilateral Air Services Agreement (BASA) with the United Arab Emirates (UAE) recognises Air Peace as Nigeria’s flag carrier on the lucrative Lagos-Dubai air route, a Nigerian envoy has announced in Dubai on Sunday.

“Air Peace is now recognised as a national carrier, based on the BASA and whatever the airline is doing will be linked to Nigeria,’’ Nigeria’s Ambassador to the UAE, Mr Mohammed Rimi, announced at a ceremony to formally welcome Air Peace to the Arab nation.

He, however, warned the airline to avoid anything that could tarnish the image of Nigeria, while servicing the route, advising the company to ensure on-time flight services to sustain confidence and patronage.

The News Agency of Nigeria (NAN) reports that Air Peace commenced flight operations from Lagos to Dubai en route the Sharjah International Airport in Dubai on July 5.

The ambassador recalled that some Nigerian carriers had previously serviced the Dubai route but could not sustain their operations, due to competition and other factors.

Rimi assured that Nigeria was keen to meet the terms of its BASA deal with the UAE, pointing out however, that Nigeria had yet to service four slots in the air services agreement with the Middle East nation.

The Chairman of Air Peace, Mr Allen Onyema, said the airline’s foray into long-haul flights was aimed at connecting Nigeria to the world and creating jobs for its teeming populace.

“In less than four years, Air Peace has created 3,000 direct jobs and over 9,000 ancillary jobs for Nigerians and that is what is driving us.

“We believe that if more Nigerians are meaningfully engaged, the problem of kidnapping, militancy and ethnic violent clashes will reduce in our country.”

According to Onyema, the airline is targeting to increase its B777 aircraft being deployed for long-haul flights to six before the end of the year to accommodate more routes.

He said that flights from Lagos to Johannesburg would come before the end of August while Guangzhou, Mumbai, London and Houston routes were also being planned.

Onyema said that Nigeria’s BASA with UAE and other countries were one-sided and had left Nigeria open to exploitation by foreign airlines.

He said the Federal Government should protect domestic carriers by halting the granting of multiple entry points for foreign airlines.

The Air Peace boss commended the Federal Government for the support being given to the airlines, citing the removal of value-added tax and waivers on aircraft spares.

He also thanked Nigerians for their support to the airline, which had seen it emerge as the biggest airline in West Africa.

NAFDAC recalls contaminated Eva table water

 

The National Agency for Food and Drug Administration and Control (NAFDAC) has directed Nigerian Bottling Company Limited to recall Eva Premium Table Water 75cl as a precautionary step pending investigation by the Agency.

The company voluntarily reported to NAFDAC on June 20, 2019, a change in colour of the product from colourless to light green and presence of particles in two lots.

According to a NAFDAC statement, the affected Eva Premium Table Water 75cl was produced between 22nd and 23rd May, 2019 at Nigerian Bottling Company Limited, Asejire, Ibadan, Oyo State.

The details of the affected Eva Premium Table Water 75cl are:

Name of Product. Production Date. Best Before Date
Eva Premium Table Water 75cl. 22/05/19.14.27 AC4220520

Eva Premium Table Water 75cl. 23/05/19.15.15 AC4230520

Eva Premium Table Water 75cl produced by Nigerian Bottling Company is registered by NAFDAC. The NAFDAC Registration Number is 01-0492.

The production of Eva Premium Table Water 75cl at Nigerian Bottling Company Limited, Asejire, Ibadan, Oyo State has been suspended pending the outcome of investigation being conducted by the Agency.

NAFDAC implores distributors, wholesalers and retailers to immediately stop the distribution and sale of the affected Eva Premium Table Water 75cl. They should return the stock of the affected product in their possession to Nigerian Bottling Company Limited, Asejire, Ibadan, Oyo State.

Consumers are advised to report adverse events related to use of this product to the nearest NAFDAC office, NAFDAC PRASCOR (20543 TOLL FREE from all networks) or via pharmacovigilance@nafdac.gov.ng.

Air Peace begins flights on Lagos-Dubai route

Air Peace has expanded its flight operations to include the Lagos-Sharjah-Dubai route.

The airline’s first long-haul flight was scheduled to depart Murtala Muhammed International Airport in Ikeja at 8.00p.m. to arrive in Dubai at 5.00a.m. on Saturday.

Sabiu Zakari, permanent secretary in the federal ministry of transportation (aviation), commended the airline for its expansion efforts.

Zakari, who was represented by Hassan Musa, director of air transport management, said the government would continue to support Nigerian airlines for them to sustain their operations.

“We are proud of you. The government on its own will continue to assist domestic airlines,” he said.

“We have gotten waivers on aircraft spares and also opened a special foreign exchange window for them which shows the commitment of the government to our carriers.”

According to Musa, the government is ready to approve new international routes for domestic airlines and assist them in liaising with foreign governments through the ministry of foreign affairs.

Speaking at an event to commemorate the inaugural flight, Allen Onyema, Air Peace chairman, thanked Nigerians for their patronage, which he said, had made the company the largest airline in West Africa within four years of operations.

Onyema noted that the entry of the airline into long-haul services would end the exploitation and short-changing of Nigerians by foreign airlines.

“A six-hour flight from Lagos to Europe costs more than an 11-hour trip from Johannesburg to the same destination,” he said.

“So, we want to put an end to the exploitation of our people. We want Nigerians to know that patronising us instead of our competitors will put back their money into the country’s economy.

“We are optimistic that even if our competitors begin to drop their fares that Nigerians will be wise to stick with us.”

NAN reports that Air Peace has scheduled to operate flights on Tuesdays, Fridays and Sundays to Dubai while Mondays, Wednesdays and Saturdays would be for flights back to Lagos.

The airline is currently the only Nigerian carrier operating on the route, after flights services by Medview Airlines were suspended in March 2018.

N6.5trn pension funds borrowed by FG

Out of the total N9.03tn pension assets as of March 31, 2019, about N6.5tn, representing 72.06 per cent of the entire fund, was invested in Federal Government securities by Pension Fund Administrators.

The figures are contained in a report for the industry obtained by our correspondent on Friday from the National Pension Commission.

An analysis of the report showed that while the Federal Government’s securities took a huge chunk of the pension assets, state government bonds and corporate bonds took the balance of 27.94 per cent.

A breakdown of the figures showed that the highest amount of N4.46tn was invested in Federal Government bonds alone.

This was followed by N1.94tn investment in Treasury bills while N94.11bn, N11.9bn and N8.5bn were invested in Sukuk bond, agency bond and green bond, respectively, indicating that the Federal Government remains the biggest borrower in the economy.

The N8.5bn agency bond, according to the commission, was invested in two government agencies, namely the Nigeria Mortgage Refinancing Company and the Federal Mortgage Bank of Nigeria.

The commission said in the report that the sum of N144.3bn was invested by PFAs in state governments’ securities.

For the private sector, an analysis of the report showed that the sum of N590.61bn was invested in domestic ordinary shares, while foreign ordinary shares had a total investment of N62.6bn.

Other security instruments where funds were invested were corporate bonds, with N478.1bn; infrastructure bonds, N29.4bn; and supra-national bonds, N5.37bn.

Similarly, the sum of N22.54bn was invested by the PFAs in foreign money market securities; N24.96bn in mutual funds; N231.34bn in real estate properties; N32.34bn in private equity fund, while cash and other asset investments had N25.17bn.

The report reads in part, “A breakdown of pension industry portfolio indicates that the pension fund assets were mainly invested in Federal Government Securities, with an allocation of 72 per cent of the total pension assets.

“The value of investments in domestic ordinary shares was N590.61bn as at 31 March, 2019, indicating a decrease of N15.59bn compared to the value of N606.2bn as at 31 December, 2018.

“The decrease in the value of investments in domestic ordinary shares was primarily due to the market price depreciation of some stocks during the period, as the Nigerian Stock Exchange All Share Index, and market capitalisation depreciated by 1.24 per cent and 0.43 per cent respectively, from N11.72tn, as at 31 December, 2018 to N11.67tn, as at 31 March, 2019.”

NSE postpones Airtel Africa listing

The Nigerian Stock Exchange (NSE) on Friday postponed the planned cross border secondary listing of 3,758,151,504 ordinary shares of Airtel Africa.

The Exchange, in a mail, said that the postponement was necessitated by the need to ensure that the company met all the post NSE approval pre-requisites for listing on NSE.

“NSE will provide further communication on this issue when all the conditions for the listing in its market have been met,” NSE said.

The News Agency of Nigeria (NAN) reports that Airtel Africa listing was earlier scheduled to hold on July 5, with the listing of 3.76bn shares at N363 per share.

NAN also gathers that the company has not completed documentation with the Securities and Exchange Commission (SEC) for the commission to approve its application for listing.

A source close to the transaction told NAN that the company “has not completed its documentation.”

“They are still running helter-skelter to complete their documentation.

“Until that is done, the SEC cannot approve. So, the ball is in their court,” the source said.

NAN reports that on June 18, Airtel Africa officially filed an application with the SEC for listing of its shares on the NSE. (NAN)

Bonga SW/Aparo to achieve 80% Nigerian content – SNEPCO

The Shell Nigeria Exploration and Production Company, SNEPCO, has assured that its Bonga South West Aparo, BSWA, FPSO project, is aimed at achieving 80 percent local content. Bayo Ojulari, managing director, SNEPCO, said the project would surpass the 77 percent Nigerian content achieved in Total’s Egina FPSO.

Ojulari, who gave a timeline on the BSWA, said the head of terms covering dispute resolution and production sharing contract updates for OML 118 was signed in February 2019, adding that contractors are already bidding on five major EPC contracts.

He explained that BSWA is determined to harness and build Nigerian Local Content in scale as never seen in Nigerian deep water, while there will be job opportunities for local engineering and project management companies for three years employing over 500 Nigerian engineers. “The overall Nigerian Content percentage for BSWA is estimated at 80 percent from man-hours on fabrication, engineering and project management activities.

“Project will create 1200 direct employment and 5000 indirect employment during the 4-5 years project execution period. Over 150 Nigerians will be trained in offshore deepwater engineering and construction. 4500mT fabrication to be executed in-country, representing 80 percent of total project fabrication, sufficient to engage in-country fabrication yards for about four years with employment opportunities,” he said.

Speaking at the Nigerian Oil and Gas Conference and Exhibition in Abuja, Ojulari said the IOCs signed the heads of term with the NNPC in February this year, adding that the project would enable the nation’s deepwater space to become very active.

He also added that in other to make the Nigerian deepwater to work, it is important to make sure that whatever legislation that is being put in place is what will unlock the resource volume in the country.

“If we get the fiscal regime right and we make sure that the bill that is passed is the bill that enables business and investment, on my count, I expect another six FPSOs behind Bonga South West Aparo. Just imagine an environment where there are six FPSOs; there is continuity of work and activities. It is going to be a different place, and I think that is where we should put our minds in terms of what the impact of these is going to be on the economy,” Ojulari said.

Osun partners institutions, private sector for mechanised agric

Osun State government is set to partner with the International Institute of Tropical Agriculture (IITA) and private sector to enhance mechanised agriculture.

This development is expected to boost productivity and move farmers away from unproductive usage of traditional farming implements such as hoes and cutlasses. This in turn will promote commercial agriculture and improve farmers’ income and standard of living.

Governor Gboyega Oyetola made this known in a one-day Farmers’ Field Day exhibition that took place in the state capital, Osogbo, on Wednesday.

“Under the partnership with the International Institute of Tropical Agriculture (IITA), the state government has provided 205.5 hectares of land in Ago Owu for the purpose of conducting researches and setting up demonstration farms for best farming practices,” he said.

Oyetola said that the state, under his leadership, is ever ready to support farmers as well as embark on Public-Private Partnerships (PPP) in the agricultural sector. “We will also facilitate the provision of affordable access to farm machinery and equipment for farmers and youths in agriculture,” he added.

He thanked the various institutions that partnered with the state in the past. “Our administration owes a debt of gratitude to our critical development partners, the Central Bank of Nigeria (CBN), IITA, Cocoa Research Institute of Nigeria (CRIN) and National Horticultural Research Institute (NIHORT), and several others who have been very supportive of our dream and drive to take agriculture to the next level”, he said.

Earlier, the head of mechanization unit of IITA, Dr. Peter Kolawole said that the institute is championing the running of a programme called Technologies for African Agricultural Transformation (TAAT) sponsored by the African Development Bank (AfDB). “We are looking at the technologies produced by Nigerians that we can upscale and transform agriculture in Africa. Further we are aiming at taking hoes and cutlasses back to the museum. This will affect both pre-harvest and post-harvest aspects of agriculture,” he said.

Dr. Kolawole explained further that there are technology compacts within TAAT, one of which is the “Cassava Compact.”

He explained that the process of transformation of cassava entails a lot of wastage, in which over 70 per cent is water. To reduce the transportation of water after cassava harvest, the compact involves moving the technology to the site of harvest where initial stages of processing are embarked upon.

Present at the exhibition are Mrs. Kafayat Oyetola, wife of the Governor; Benedict Gboyega Alabi, Deputy Governor; Timothy Owoeye,  Speaker of the House of Assembly;  Chief of Staff, Dr. Charles Akinola, traditional rulers, exhibitors and farmers’ groups across the state.

Fidelity Bank partners PwC on SME funding

Fidelity Bank Plc is collaborating with PricewaterhouseCoopers (PwC) to provide funding for Small and Medium Enterprises (SMEs) operating in Nigeria.

Nnamdi Okonkwo, Managing Director, Fidelity Bank, said in Lagos on Wednesday that the bank came up with the initiative tagged, ‘SME Funding Connect,’ to deepen funding, which remained the biggest headache of SMEs.

Okonkwo who was represented by Executive Director, Lagos & South West, Mrs Nneka Onyeali-Ikpe, said the initiative was aimed at providing funding for SMES through the bank’s funding partners, venture capital and Angel investor, among others.

“Fidelity Bank is SME-friendly and we deemed it necessary to do something that directly affects our base as a bank.

“We have a lot of SME customers who we have worked with and some that we are still working with, and a lot of us know that the SMEs are the engine of any economy that is growing,” Okonkwo said.

He said there were over 40 million registered SMEs in Nigeria, noting that SMEs contributed 80 per cent of the workforce and could not be ignored.

Also speaking, Osaigbovo Omorogbe, Divisional Head, Managed SMEs, said events for the funding of the SMEs would be carried out in Lagos, Port Harcourt, Kano and one other location to be determined by the bank.

Omorogbe said the Lagos event titled ‘Entreprenurship Meets Capital’ would take place on Aug. 7.

He said the funding partners would provide equity capital for SMEs to strengthen growth and development.

“We are not launching a fund, we are not looking to sell any fund to SMES on this paltform. We are creating a platform for everybody in SMEs’ ecosystem to participate,” Omorogbe stated.

He said the programme had six focus sectors: manufacturing, technology, entertainment, lifestyles, agriculture value chain among others.

He, however, said the funding would be anchored by PwC, stressing that Fidelity Bank was not a funding platform but creating a platform for every SME to meet funds providers.

The Fidelity Bank SMEs Funding Connect has 3,000 participants, 60 providers, 60 founders, N12 million in grant, six breakout sessions and three networking cocktails.

Omorogbe said the bank had disbursed N2.3 billion under the Central Bank of Nigeria N220bn SME fund programme.

On his part, Nigeria Chief Economist and Partner, PwC, Andrew Nevin, noted that the programme could develop more SMEs, which would in turn contribute to the development of the economy.

“For the past two years, the Nigerian economy has suffered and it has been difficult for banks to lend to the private sector but Fidelity Bank has risen up to the occassion and should be given credit for what they have done in the SME sector, which is the engine room of every economy.

“From the PwC perspective, we are proud to be part of the initiative and we would also want every state involved to be successful, and not only Lagos, so that they can contribute to the growth of Nigeria,” Nevin said.

FG questions former ministers over alleged $2bn Atlas Mara’s Union Bank shares fraud

The Federal Government has begun interrogation of those implicated in the alleged fraud that left over 65,000 Nigerian shareholders losing $2 billion worth of shares.

Those invited for interrogation were former Minister of Budget and National Planning, Senator Udo Udoma, and his counterpart in the Ministry of Trade and Investment, Okechukwu Enelamah.

Mr Chukwuemeka Obasi , the legal representative of the whistle-blower disclosed this to newsmen on Wednesday in Abuja.

Obasi said that the General Managing Director of Union Bank Nig Plc, Mr Emeka Emuwa, was also questioned.

According to him, the various representatives of all private and public institutions linked with the fraud were also invited and quizzed.

Obasi said the establishments mentioned in the petition included the Chapel Hill, National Security Exchange (NSE), Security Exchange Commission (SEC) and the Central Bank of Nigeria (CBN).

The interrogation hinged on a petition reporting the alleged fraud submitted to the Attorney-General of the Federation, Mr Abubakar Malami, SAN, dated April 3, 2019.

The petition is titled “Official corruption, misuse of FGN USD two billion, fraud and unjust enrichment of persons who dispossessed more than 65,000 Nigerians and conferred ownership of the Bank on few Nigerians and their foreign accomplices’’.

The petition did finger former Central Bank Governor, the Emir of Kano, Alhaji Sanusi Lamido Sanusi II, under whose watch the alleged fraud was perpetuated.
Also accused of alleged complexities in the transactions were the two former ministers.

Enelamah was particularly fingered as the mastermind of the transaction by allegedly leading Africa Capital Alliance to form the Mauritius shell company to house Nigerians pretending to be foreign investors.

The transactions allegedly dispossessed Nigerian shareholders and investors in order to transfer ownership of the bank to a few persons including insiders, chieftains of competitor banks and others who would not pass CBN’s “fit and proper’’ test for bank ownership.

The petition claimed that Enelamah allegedly organised the registration of the offshore shell company in Mauritius called Union Global Partners Limited for the purpose of disguising the true majority ownership of Union Bank shares concealed in the offshore company.

The petition also alleged that the transactions commenced under Udoma’s supervision as Chairman of Security and Exchange Commission and sealed up when he became the Chairman of Union Bank of Nigeria Plc.

“The circumstances can best be described as official corruption and insider trading’’, the petition alleged.

The petition further alleged that Udoma and other officials illicitly granted a renewable five year waiver to Union Bank of Nigeria to remain listed on the exchange in spite of being owned by a few private equity firms till today.

According to the petition, the alleged unlawful action is to ensure the more than 65,000 Nigeria former shareholders whose shares were diluted from 85 per cent to less than 15 per cent of public float to still be listed on Nigerian Stock Exchange (NSE).

“It is to be recalled that 49% shares of Union Bank of Nigeria plc is now majority owned and controlled by London listed Atlas Mara, the investment company led by Robert Diamond Jr.
“Mr Diamond is a former Chief Executive Officer of Barclays Bank who was sacked for his involvement in manipulating Libor.

“Not only is Mr Diamond not a fit and proper person to own a bank according to the rules of Nigeria, he had also been blacklisted by the Bank of England as a result of the Libor manipulation.

“One wonders how the former CBN Governor, Sanusi Lamido Sanusi authorised the Union Bank change of ownership transaction and bridged it with USD two billion national patrimony, in spite of glaring evidence of fraud and the nature of the ultimate foreign owner who was already known and waiting in the wings.

“There are evidence that Atlas Mara has visions of owning 100% of Union Bank of Nigeria plc which they can only achieve by buying shares warehoused by the few privileged Nigerians that acquired the bank in apparently unwholesome circumstances.

“Those few privileged Nigerians are now cashing in on their loot in transactions with Atlas Mara, at the expense of dispossessed Nigerians,’’ the petition said.

The alleged fraud has international dimensions reaching United Kingdom, Canada, USA, Netherlands and Mauritius.
Official record has it that Atlas Mara controls 49 per cent control share of the bank which is in turn controlled by Fairfax Africa based in Canada and United States.

According to the petition, Mauritius equally has a significant control right, because the offshore shell company called Union Global Partners Limited (UGPL) is another significant owner that has sold and continues to offload its shares to Atlas Mara.

Nigerians who were former shareholders of Union Bank of Nigeria eagerly await the outcome of this investigation.
UGPL acquired 65 per cent of the bank in the odious transaction that dispossessed Nigerians.

The Assets Management Corporation of Nigeria (AMCON) was also compelled to divest its 20 per cent shares to Atlas Mara which the UGPL consortium was unable to pay for.