Connect with us

Business

Fuel scarcity: DPR blows hot over hoarding, diversion of petrol

Published

on

The Ibadan Field Office of the Department of Petroleum Resources (DPR) has restated its commitment to check the ongoing hoarding and diversion of petroleum products.

Mr Oluyemi Olaonipekun, Controller Operations, DPR Ibadan Field Office, told newsmen in Ibadan on Monday that the office would continue to intensify its surveillance on illegal petroleum activities.

Olaonipekun said that DPR recently sealed five petrol stations suspected to be hoarding the Premium Motor Spirit (PMS).

“We noticed that there ought not to be scarcity, especially with quantity of products being pushed out, so we intensified surveillance.

“We suspected that the stations were hoarding products, they refused to sell, and refused our efforts to dip into their tanks,” he said.

Olaonipekun stated that DPR would ensure that petroleum products distributed to stations were sold to members of the public.

“Apart from ensuring that hoarding does not work, we shall ensure that sharp practices such as pump adjustment are stamped out,” he said.

Facebook Comments
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

Coronation Research’s Nigeria weekly update: CBN goes for growth

Published

on

We are accustomed to the Central Bank of Nigeria (CBN) limiting Naira liquidity for fear of upsetting the foreign exchange market. Now the CBN is unafraid of liquidity and is pushing growth – for now. Fixed income rates are falling. See page 2.

FX
This year US$18.79bn has flowed into the NAFEX market with Foreign Portfolio Investment (FPI) accounting for 65.40% of inflows (US$12.29bn). The CBN’s supply of US dollars to the NAFEX market has been 3.02% of inflows (US$0.57bn). In effect, FPI is supplying sufficient US dollars to take the pressure off the CBN, hence our confidence that the exchange rate will hold this year. And the CBN has new-found confidence to target growth.

Bonds & T-bills
The yield on a Federal Government of Nigeria (FGN) Naira bond with 10 years to maturity fell by 24bps to 13.95%, and at 3 years declined by 25bps to 13.20% last week. The yield on a 364-day T-bill fell by 51bps to 12.50%. The yield on a T-bill with 3 months to maturity declined by 27bps to 10.30%.

Investors are reacting to the CBN’s revised Standing Deposit Facility (SDF) placement by banks which is now capped at N2.0 billion (US$5.7 million) from N7.5 billion previously. The T-bill market is currently characterised by high demand and strong market liquidity which depressed yields this past week. In the absence of frequent Naira fixed income auctions by the CBN, we expect yields to be stable and not derail significantly from current levels. With this amount of liquidity in the market the initiative lies with the CBN to set rates.

Oil
The price of Brent rose by 3.99% last week to US$66.72/bbl. The average price, year-to-date, is US$66.10/bbl, 7.80% lower than the average of US$71.69/bbl in 2018, but 20.75% higher than the US$54.75/bbl average seen in 2017.

The 2019 oil market is themed by supply cuts, for the most part. The latest report from the International Energy Agency (IEA) shows that oil supply exceeded demand by 0.9 million barrels per day for the first half of the year. This comes on top of pre-existing stockpiles and rising shale production. With oil price protection in view, OPEC’s tightening measures are understandable, especially with the US/China trade war still unresolved.

Equities
The Nigerian Stock Exchange (NSE) All-Share Index lost 2.41% last week, resulting in a year-to-date return of negative 9.11%. Last week Cadbury Nigeria (+8.64%), Flour Mills of Nigeria (+8.00%) and Unilever Nigeria (+3.13%) closed positive while Forte Oil (-23.33%), PZ Cussons (-10.14%) and Nestle Nigeria (-8.92%) fell.

Last week saw the listing of Airtel Africa which closed the week at N323.50/share, down 18.98% from its listing price of N363.00/share. Such a reception continues to show weak investor sentiment in the market. While investors maintain a cautious stance on investing in equities, some stocks are trading close to multi-year lows and present a good entry point for investors, in our view.

The CBN pushes the growth pedal
The last few weeks have seen a flurry of activity from the CBN; a circular on mobile money & financial inclusion; hints of banking sector re-capitalisation 2.0; another circular prohibiting banks from a loan to deposit ratio less than 60%; and finally a ‘no thank you’ note to banks which may wish to park excess cash in the CBN vault, for excess cash balances above two billion Naira (US$5.6m).

What is the overall signal?
The CBN’s recent focus for the past two years has been on monetary stability. Following a 7.50 percentage point decline in inflation, a rise in foreign exchange reserves and hard-earned currency stability, one could argue that it has won the battle. And it has been helped by the downward prospects for US dollar interest rates, which take the pressure off emerging market currencies to some extent. Now the CBN can return to its other agenda. It wants economic growth.

Nigeria’s GDP growth rate mimics the growth rates of developed countries even though it isn’t one. One sign of sluggish growth has been slow growth in commercial bank loans, which suggests, among other things that the supply side of the economy is weak. The CBN’s approach to galvanising growth had been skewed towards the supply side, and it has deliberately held down loan rates in several areas, such as agriculture, in order to implement its policy. The problem with this initiative is that commercial bank loans have not grown as a result, leading the CBN to come up with more radical measures than before.

Typically banks keep cash balances when the CBN Open Market Operation (OMO) auctions are imminent, driving up overnight lending rates around auction dates. But there is a clear downward trend this year in the rate at which very short-term unsecured loans are traded between banks around OMO auction dates.

In fact, on 4 July the cost of overnight loans between banks fell to its lowest this year (4.86%) suggesting that for a given level of liquidity mop-up by the CBN, banks are willing to lend to themselves at cheaper rates than before. During H2 2018, this relationship was upward trending (when adjusted for outliers).

The CBN is attempting, through its circulars, to unlock excess liquidity trapped within the banking system in the hope that it will be channeled towards the real economy. Banks now have an extra incentive to target firms, and the affluent with (soft) loans when other forms of risk-free income become pressured.

All of this reads well for consumer spending, which is the dominant component of aggregate demand, but it may mean thinner margins for banks. The argument that banks may still expect to improve or maintain their margins without a corresponding expansion in loan books must be nuanced with the guidance that the CBN may restrict banks’ participation in the OMO and T-bill market for their own account. By and large, the CBN’s actions are likely to drag down interest rates until the point is reached where it finds Naira liquidity is negative for the currency.

Indeed, in our view the CBN may be wary of a steep reduction in market interest rates and what they could mean for the Naira exchange rate, on two counts. One, some of the excess liquidity in the banking system could find its way into the FX market. If stability remains a priority, the CBN will have to part with more of its dollar reserves. Two, moderating market interest rates could erode the appeal of the naira carry trade prompting foreign portfolio investors to unwind their positions.

But these are still early days, and we await the CBN’s upcoming auctions to learn more of its rate policy.

Facebook Comments
Continue Reading

Business

What Dana Airline did to its passengers at Abuja international airport

Published

on

Passengers at the Nnamdi Azikiwe International Airport, Abuja, on Friday expressed disappointment in Dana airline, meant to fly them from Abuja to Port-Harcourt.

A cross section of the passengers who spoke with the News Agency of Nigeria (NAN) on Friday at the airport described their experience as unfortunate.

One of the passengers, Mr Waribo Kuku, said he was supposed to board Dana flight from Abuja to Port-Harcourt since Wednesday (July 10), but no flight was available.

Kuku called on the management of Dana airline to compensate him for the delay and inconvenience.

He also appealed to relevant authorities, such as the Federal Airport Authority of Nigeria (FAAN), Consumers Protection Council and SERVICOM, to address such grievances and ensure that customers were adequately compensated to serve as deterrent.

Another passenger, Mr Jerry Wanodi, told NAN that he booked a Dana flight from Abuja to Port-harcourt since Thursday but couldn’t board the flight due to rescheduling and cancellation of the flight.

Wanodi said that he had been at the airport since 2 p.m on July 11, up till the 6.30 p.m and there was no sign of any Dana Air flight on ground.

Another passenger of the same airline who pleaded for anonymity said he was disappointed with Dana and threatened to sue them for damages.

“I have to go back to my family, you know how women think. It’s like I have been giving excuses on why I haven’t come home yet.

“I am so disappointed with Dana Air and I want relevant authorities to ban Dana from flying in Nigeria

“I also want them to pay compensation to me for keeping me at the airport since Thursday,” he said.

Similarly, Mr Berepelebo George told NAN that he has lost an opportunity to be gainfully employed because of the cancelled flight.

“I have an interview appointment with an organisation in Port-Harcourt which I have missed due to flight cancellations.

“I want the relevant authorities to have regulations on airlines to tackle this impunity,” he urged.

Mrs Amaka Ojeka, another sad passenger, described the development as a national embarrassment.

Ojeka narrated how she flew in from Germany, noting that there was no stroller at the international wing and had to wait for 45 minutes before she was able to secure one.

She also expressed regret that she has been waiting to board Dana to Port-Harcourt but found out that there was no aircraft on ground.

“I am disappointed by what is going on at the airport because you can’t find this in a developed society.

“They are not organised and why is Dana not returning my money but they sent a message via email for me to come to the airport and there was no plane on ground.

“I went back and paid a hotel bill of N10,000 as well as airport taxi.

“Government should look into the matter and take appropriate measures to address it,” she said.

The FAAN authorities and Dana Air management were yet to react to the development in spite of media inquiries.

NAN reports that the passengers waiting to board Dana Airline flight to Portharcourt and Lagos have been kept in suspense amid mounting anxiety.

Facebook Comments
Continue Reading

Business

Ethiopian Airlines In Talks With Buhari Government To Establish National Carrier After Nigeria Air Flopped

Published

on



Ethiopian Airlines has announced that it is in talks with Nigerian government to establish a national carrier for the so-called ‘Giant of Africa’.

Nigeria had announced the plans to establish an airline in 2018 but shortly after its proposal, the government of President Muhammadu Buhari in September 2018 changed its mind and announced the suspension of the airline prompting public outrage.

But Tewolde Gebremariam, the Group Chief Executive Officer, Ethiopian Airlines, told journalists in Abuja on Friday, “We have been discussing and exploring possibilities to establish or support a strong airline in Nigeria. I don’t mean that there is no strong airline in Nigeria, but we want an airline that can satisfy the demand of the domestic market, the regional market, and international market.

“We are also in talks with Ghana government to establish Ghana Airways but the biggest market which is Nigeria has been a challenge, to be honest with you. We make sure that when we start something, we start professionally and make sure that it succeeds.

“Nigeria is a very large country but unfortunately, since the demise of Nigeria Airways, we are unfortunate that we don’t have a strong carrier. So, this concern is part of continental concern because in Africa, non-African carriers have the biggest shares. It is around 80-20 per cent ratio. 80 per cent of the traffic between Africa and the rest of the world is carried by non-African carriers.

“The homegrown carriers have only 20 per cent of the market. This is not fair and it used to be 60 per cent some years ago but now it is coming down. We are also threatened because all of us in Africa are only 20 per cent of the market.

“So, in a declining trend, there is a possibility that the market share can be zero. So, they will wipe us out. We have to make sure that we work together with all African countries to ensure that there are strong homegrown indigenous carriers. We have done this with Asky in Togo and we want to do it in Nigeria.”

Facebook Comments
Continue Reading
Advertisement
Advertisement

Trending

%d bloggers like this: