Akeem ReachnaijaDecember 20, 2018


Stock market indices were weakened on Wednesday as President Muhammadu Buhari presented his government’s budget estimate for the 2019 fiscal year.

In his budget christened Budget of Continuity, Mr Buhari, during the presentation to a joint session of the National Assembly, said a total of N8.83 trillion is expected to be used in the coming year.

In reaction, the stock market suffered a decline as a result of the losses posted by some large cap equities on the Nigerian Stock Exchange (NSE).

The poor performances of Seplat, Dangote Cement and some other stocks dragged the market down by 0.35 percent, leaving the year-to-date loss at 19.71 percent.

While Seplat depreciated by N38.80 percent to settle at N555.20k per share, Total Nigeria went down by N3 to finish at N195 per share.

Also, Dangote Cement crashed by N3 to end at N186 per share, Mobil Oil Nigeria had its share value reduced by N2 to quote at N168 per share, while Julius Berger depreciated by 90 kobo to close at N20.10k per share.

On the flip side, Nestle Nigeria topped the gainers’ chart with N20 added to its share price to close at N1470 per share.

Forte Oil grew by N2.35k to end at N26.20k per share, while Nigerian Breweries appreciated by N1.80k to quote at N78.50k per share.

Furthermore, Stanbic IBTC went up by 45 kobo to close at N46 per share, while Flour Mills rose by 35 kobo to settle at N21.85k per share.

During trading yesterday, the volume of shares transacted reduced by 36.43 percent to 201 million units from 316.2 million units, while the value went down by 19.49 percent to N4.1 billion from N5.1 billion.

Zenith Bank dominated the activity chart on Wednesday with a turnover of 51.9 million shares transacted for N1.2 billion.

It was followed by Lafarge Africa, which sold 38.7 million units worth N457.3 million, and FBN Holdings, which transacted 15.9 million shares valued at N120.4 million.

GTBank exchanged 12.3 million equities for N427.6 million, while Fidelity Bank sold 9.6 million shares worth N18.4 million.

A look at the major market indices showed that the All-Share Index (ASI) declined by 109.21 points to settle at 30,704.98 points, while the market capitalisation went down by N39 billion to finish at N11.216 trillion.

Akeem ReachnaijaDecember 14, 2018


Sustained negative investors’ sentiment on the equity sector of the Nigerian Stock Exchange (NSE) yesterday dragged the All-share index further by 0.24 per cent.

At the close of trading yesterday, the All Share Index (ASI) shed 74.3 absolute points, representing a dip of 0.24 per cent to close at 30,568.05 points.

Similarly, the market capitalisation shed N27 billion at N11.166 trillion.

The downturn was impacted by losses recorded in medium and large capitalised stocks, amongst which are; Seplat Petroleum Development Company, Nestle Nigeria, Nascon Allied Industries, Stanbic IBTC Holdings and Flour Mills Nigeria.

Analysts at Afrinvest Limited said: “We expect the domestic bourse to recover from yesterday’s negative performance on the final trading session of the week, in line with the undulating trend recorded throughout the week.”

Also reacting to market performance yesterday, the Managing Director of Investdata Consulting Limited, Ambrose Omodion said; “We expect this volatility to be sustained as bargain hunting and portfolio repositioning for year-end to shape performance of the market ahead of Santa Claus rally, as number of companies hitting new 52-week low are on the increased to reflect undervalue state of the market.

“The ongoing volatility will persist as Q3 numbers assist investors and fund managers re-balance their portfolios, while watching the political space and ahead of full year company earnings position and post-election market dynamics.

“These are likely to drive prices north, or south, while determining market direction before or after the Presidential Election.
Investors should review their positions in line with their investment goals, strength of the company numbers and act as events unfold in the global and domestic environment.”

Market breadth closed slightly negative with 20 gainers against 21 losers.

John Holt and AXAMansard Insurance recorded the highest price gain of 10 per cent, each to close at 44 kobo and N1.98, respectively, Forte Oil followed with a gain of 9.79 per cent, to close at N24.10 per share.

Newrest ASL Nigeria appreciated by 9.52 per cent to close at N6.90, while Union Bank went up by 8.33 per cent to close at N5.85, per share.

On the other hand, United Capital led the losers’ chart by 9.86 per cent, to close at N2.56 per share.

Seplat followed with a decline 9.83 per cent to close at N540, while Cutix depreciated by 9.64 per cent to close at N1.78 per share.

DAAR Communications declined by 9.09 per cent to close at 40 kobo, while champion Breweries down by 8.62 per cent to close at N1.59, per share. Investors traded a total share volume of 193.25 million valued at N3.7 billion in 2,950 deals.

FBN Holdings traded with 25.29 million shares valued at N182.97 million.

Access Bank followed with 24.1 million shares worth N179.55 million, while Fidelity Bank traded 18.74 million shares valued at N36.7 million.

Zenith Bank traded 17.65 million shares valued at N406.64 million, while Guaranty Trust Bank transacted 15.8 million shares worth N552.56 million.

Akeem ReachnaijaNovember 13, 2018


Following price losses suffered by most blue-chip stocks, transactions on the equity sector of the Nigerian Stock Exchange (NSE) closed on a downturn yesterday, as the All-share index depreciated by 0.18 per cent.

Specifically, at the close of transactions yesterday, the All -share index (ASI) was down by 56.80 absolute points, representing a decline of 0.18 percent, to close at 32,143.41 points. Similarly, the market capitalisation decreased by N21 billion, to close at N11.735 trillion.

The downturn was impacted by losses recorded in medium and large capitalised stocks, amongst which are; Guaranty Trust Bank, Zenith Bank, NEM Insurance, Diamond Bank and Abbey Mortgage Bank.

Analysts at United Capital Plc said: “With the culmination of the third quarter, 2018 earnings season, we expect a mixed theme this week as issues around the polity remain in focus.”
Codros Capital Limited said: “We reiterate our negative outlook for the equities market in the short to medium term, amidst political concerns ahead of the 2019 elections, and the absence of a positive market trigger. However, positive macroeconomic fundamentals remain supportive of recovery in the long term.”
However, market breadth closed positive with 14 gainers and 12 losers. Regency Alliance Insurance led the gainers table by 10 per cent to close at 22 kobo per share.
Union Diagnostic & Clinical Services followed with a gain of eight per cent to close at 27 kobo.
Flour Mill Nigeria appreciated by 7.14 per cent to close at N16.50 per share. Also, Oando went up by 6.45 per cent to close at N4.95 and Honeywell Flour rose by 2.68 per cent to close at N1.08 per share.

On the other hand, Abbey Mortgage Bank led the laggards’ table by 9.40 per cent to close at N1.06 per share.
Diamond Bank trailed with a loss of 9.38 per cent to close at N1.16, while NEM Insurance shed 8.21 per cent to close at N2.57 per share.
Livestock Feeds dipped by 7.14 per cent to close at 52 kobo, while FCMB Groups went down by 2.45 per cent, to close at N1.59, per share.
The total volume traded rose by 17.19 per cent to 142.11 million shares, valued at N1.56 billion, and exchanged in 2,772 deals.
Transactions in the shares of Diamond Bank topped the activity chart with 32.24 million shares valued at N37.68 million.
Guaranty Trust Bank traded 19.98 million shares worth N738.14 million and United Bank for Africa (UBA) transacted 16.06 million shares valued at N128.29 million.
FBN Holdings followed with 13.26 million shares worth N98.73 million, while Zenith Bank traded 11.74 million shares valued at N285.21 million.

Akeem ReachnaijaOctober 14, 2018


The local currency put up a weak performance at the foreign exchange (forex) market last week amid declining external reserves that fell further by 1.30 percent to $43.35 billion as at Thursday, October 11, 2018.

The loss recorded by the Naira was almost across all segments of the forex market.

Specifically, the Naira/Dollar rate depreciated at the Investors & Exporters (I&E) forex segment by 0.08 percent to close at N364.12/$.

Also, the local currency lost 0.33 percent week-on-week (w-o-w) at the interbank foreign exchange market to quote at N362.52/$ despite the weekly injections of $210 million by the Central Bank of Nigeria (CBN) into the market via the Secondary Market Intervention Sales (SMIS).

A breakdown of the intervention showed that $100 million was allocated to Wholesale SMIS, $55 million was allocated to Small and Medium Scale Enterprises and $55 million was sold for invisibles.

The exchange rate also depreciated at both the Bureau De Change (BDC) segment and the parallel market by 0.28 percent each to close at N359/$ and N362/$ respectively despite CBN’s sustained weekly intervention.

Meanwhile, according to Cowry Asset, most dated foreign exchange rate forward contracts at the interbank over-the-counter (OTC) segment depreciated.

Specifically, the 1 month, 2 months and 3 months contracts lost 0.08 percent, 0.06 percent and 0.02 percent to close N367.71/$, N371.26/$ and N374.73/$ respectively.

However, the 6-month contracts gained by 0.02 percent to close for the week at N386.21/$.

Akeem ReachnaijaOctober 12, 2018


Oil prices slumped to more than two-week lows yesterday, as global stock markets fell, with investor sentiment made more bearish by the United States government data that showed domestic crude inventories rose more than expected last week.

Brent crude futures fell by $2.08 or 2.5 percent to $81.01 a barrel. The contra posted a session low of $80.69, its weakest since September 24. The global benchmark has retreated after hitting a four-year high of $86.74 on October 3.

U.S. West Texas Intermediate (WTI) crude CLc1 futures fell $1.81, or 2.5 percent, to $71.36 a barrel. WTI hit a session low of $71.08, the lowest since September 21.

Crude inventories rose by six million barrels in the week to October 5, data from the Energy Information Administration showed yesterday. Analysts had expected an increase of 2.6 million barrels.Refinery crude runs fell by 352,000 barrels per day, EIA data indicated, while utilisation rates dropped by 1.6 percentage points.

Falling U.S. equity markets and a global risk-off environment also weighed on crude futures. On Wednesday, U.S. stock markets tumbled, with the S&P 500 and the Dow Industrials indexes posting their worst day in eight months, as solid economic data reinforced expectations of multiple interest rate hikes next year.

OPEC cut its forecast of global demand growth for oil in 2019 for a third straight month, citing headwinds facing the broader economy from trade disputes and volatile emerging markets.

Akeem ReachnaijaOctober 9, 2018


As the coast becomes clearer following last week’s emergence of candidates for various offices at the party level, activities in the equities sector of the Nigerian Stock Exchange (NSE) witnessed some level of stability at the end of transactions yesterday, causing the All-share index to appreciate marginally by 0.2 per cent.

Specifically, at the close of transactions yesterday, the All –Share Index rose by 61.81 absolute points, representing 0.19 per cent increase to close at 32,444.96 points. Similarly, market capitalisation rose by N23 billion to close at N11.844 trillion.

The improved performance was significantly impacted by gains recorded in medium and large capitalised stocks, amongst which are; Stanbic IBTC Holdings, Conoil, Nigerian Breweries, Zenith Bank and NEM Insurance.

Analysts at Investdata Consulting Limited said: “We believe investors can take advantage of the current low prices of stocks with strong fundamentals in order to reap medium-to-long term benefits. Stage by stage buying is advised as we expect inflation figure for September in the new week.

“There could be repositioning on the strength of earnings in the midst of unfolding events in the political environment. Investors should review their positions in line with their investment goals and take action as events unfolds in the global and domestic environment.”Afrinvest Limited said: “the local bourse opened the trading week on a positive note as bargain hunting in bellwethers.”

Market breadth was positive, with 16 gainers versus 11 losers. Unity Bank recorded the highest price gain of 9.09 per cent, to close at 96 kobo per share. Neimeth followed with a gain of 8.47 per cent to close at 64 kobo, while Mutual Benefit Assurance gained by 7.69 per cent to close at 28 kobo per share. Caverton went up by 7.61 per cent to close at N1.98, while NEM Insurance appreciated by 5.42 per cent to close at N3.11 per share.

On the other hand, John Holts led the losers’ chart by 9.43 per cent, to close at 48 kobo per share. Guinea Insurance followed with a loss of 9.38 per cent to close at 29 kobo, while AIICO Insurance shed 6.02 per cent to close at 78 kobo per share.

Presco depreciated by 5.66 per cent to close at N53.35 and Japaul Oil and Maritime Services declined by 4.17 per cent to close at 23 kobo per share.
Activity level, however, weakened as volume and value traded declined by 27.6 per cent and 9.9 per cent respectively to 120.82 million units and N1.34 billion.

Transactions in the shares of Guaranty Trust Bank topped the activity chart with 21.6 million shares worth N788.57 million.FCMB Groups followed with account of 21.37 million shares valued at N36.62 million; while NEM Insurance traded 11.17 million shares cost N33.1 million.Fidelity Bank traded 7.88 million shares valued at N14.32 million, while Zenith Bank sold 5.78 million shares worth N125.75 million.

Akeem ReachnaijaOctober 9, 2018


Price of Brent crude oil fell more than 1 percent on Monday after Washington said it may grant Iran some waivers next month.

Brent crude oil declined from over $86 a barrel recorded last week to $83.53 a barrel on Monday. While the U.S. West Texas Intermediate (WTI) drop 54 cents to $73.80 per barrel.

U.S. sanctions are expected to target Iran’s crude oil exports from November 4 and further cut global oil supplies. A move experts believe will push global oil prices to $90 a barrel by Christmas and $100 a barrel by the New Year.

However, in an effort to force lower oil prices as largely demanded by President Trump, a U.S. government official said on Friday that the administration is considering some exemptions for countries that have already reduced their imports of Iranian oil.

A sign Iran oil exports won’t drop to zero in November as India alone is expected to buy 9 million barrels in November, according to a report by Reuters.

Accordingly, hedge funds cut their bullish bets on U.S. crude to the lowest level in almost a year, data showed on Friday.

Again, the ongoing trade war between the US and China also weighed on crude outlook on Monday, especially after data showed the world’s largest importer of crude oil, China’s, manufacturing purchasing managers index grew slower than expected for a second consecutive month.

Chinese stocks declined on Monday despite the People’s Bank of China lowering its bank’s reserve ratio. Another indication of weak business sentiment amid rising uncertainty.

Akeem ReachnaijaOctober 4, 2018


The World Bank has once more reduced its growth projection on Nigeria in 2018 to 1.9 per cent, down from the 2.1 per cent it had estimated for the country in April.

The Bank hinged its decision on the contraction in the agricultural sectoras a result of the farmers and herders’ crisis recorded by the country most part of this year.
It explained: “In Nigeria, declining oil production and contraction in the agriculture sector partially offset a rebound in the services sector and dampened non-oil growth, all of which affected economic recovery.”

“Nigeria’s recovery faltered in the first half of the year. Oil production fell, partly due to pipeline closures.
“The agriculture sector contracted, as conflict over land between farmers and herders disrupted crop production, partially offsetting a rebound in the services sector and dampening non-oil growth.”

This is coming as the Central Bank of Nigeria (CBN) yesterday allayed worries over the fluctuation in Nigeria’s external reserves, assuring that with its current level at over $44 billion, there is no cause for alarm.
The multilateral institution stated this in its October 2018 ‘Africa Pulse,’ a bi-annual analysis of the state of African economies released yesterday.

In April, the World Bank had predicted growth of 3.1 per cent, up from 2.3 per cent last year.
But it anticipated that growth in the region would increase from 2.7 per cent in 2018, to 3.3 per cent in 2019, rising to an average of 3.6 per cent between 2020 and 2021.

“The slower pace of the recovery in sub-Saharan Africa (0.4 percentage points lower than the April forecast) is explained by the sluggish expansion in the region’s three largest economies, Nigeria, Angola, and South Africa.
“In Nigeria, declining oil production and contraction in the agriculture sector partially offset a rebound in the services sector and dampened non-oil growth, all of which affected economic recovery.

“A decline in oil production, due to underinvestment and key fields reaching maturity, weighed on growth in Angola. South Africa’s economy slipped into a technical recession following two consecutive quarters of contracting economic activity, with agriculture, mining, and construction acting as major drags on growth,” it added.

The World Bank noted that several oil exporters in the Economic and Monetary Community of Central Africa (CEMAC) saw an uptick in growth. With higher oil prices and an increase in oil production, both Chad and the Republic of Congo were expected to climb out of recession.

According to the Washington-based institution, growth in non-resource-rich countries remained solid, supported by agricultural production and services on the production side, and household consumption and public investment on the demand side.

“With fiscal deficits narrowing, government debt levels appear to have stabilised, but vulnerabilities remain. Compared to 2012 to 2013, the median public debt level remains high, especially in oil-exporting countries. Debt rose in about two-fifths of the countries in 2017 and was above 60 per cent of GDP in one-third of the countries.
“The external environment facing Sub-Saharan Africa is more challenging for several reasons. These include moderating economic growth among its main trading partners, the stronger US dollar, heightened trade policy uncertainty, and tightening global financial conditions.

“While the tightness of oil supply suggests that oil prices are likely to remain elevated through the rest of 2018 and into 2019, metals prices have been softer than previously forecast and may remain subdued in 2019 and 2020 amid muted demand, particularly in China.

“Against this backdrop, the economic recovery in Sub-Saharan Africa is expected to continue at a gradual pace, supported by a rebound in oil production in Nigeria and Angola, the easing of drought conditions that had depressed agricultural output, and a rise in domestic demand in some countries,” it stated.

“Growth in the region is projected to increase from 2.7 per cent in 2018 to 3.3 per cent in 2019, rising to an average of 3.6 per cent in 2020–21. However, per capita income growth would remain below its long-term average in many countries, highlighting the need for comprehensive policy measures to raise potential output.
“The inefficiencies in the way the region combines its factors of production has become increasingly relevant in explaining Sub-Saharan Africa’s lower aggregate productivity compared to industrialised countries.”

CBN Allays Concerns over Declining Reserves
In a related development, the Central Bank of Nigeria (CBN) yesterday allayed worries over the fluctuation in external reserves, assuring that with its current levels at over $44 billion, there’s no cause for alarm.
The apex bank further assured that it will continue to ensure that finance is provided for all Small and Medium Scale Enterprises (SMEs) which may require support to be able to produce and grow the economy.

CBN acting Director, Corporate Communications, Mr. Isaac Okoroafor, said not only does the apex bank have the reserves to defend the naira, it is also sufficient to encourage small businesses to produce to boost the economy.

He further explained that the current instance of reversal of capital flows was not peculiar to the country as some other economies are also affected following the recent hike in interest rate by the United States’ Federal Reserve.
Speaking at the CBN special day at the ongoing 13th Abuja International Trade Fair, the apex bank’s spokesman added that the country’s current reserves level could support between 17 to 20 months of import compared to the international standard, which stipulated for at least three months of import to remain at a comfortable level.

“And I also want to make it clear: it’s also on social media that our reserves dropped by $1.45 billion in one month…We are not politicians- of course, I want you to understand that the reserves level is a moving figure; at times, it rises and other times, it comes down. And as we speak, it’s a little over $44. Giving reasons for the fluctuation in external reserves, Okoroafor said,”You’ll recall that there was a time we survived on even $23.2 billion; the economy was running. “Now, we are over $44 billion and the reason why it is going down gently is because there’s a global squeeze on emerging markets: the Central Bank of the USA which is the FED had been raising interest rate and you know international capital goes to where it earns better returns.

“So, those who came into our economy to take advantage of the returns here seems to have found better returns in the US- and it’s not just in Nigeria- it’s happening to South Africa, Egypt, Pakistan, Iran, Argentina, Brazil, Turkey even China.”

According to him:”China has lost over 1.3 per cent of its currency, Argentina lost 134 per cent; Iran, India, some of them lost 18 percent, 17 percent- but here in Nigeria, our currency has gained 6 percent in the last one year.
“You can see that the reversal of capital flows which is eating most economies and bringing about depreciation in their currency is not affecting us for two reasons- we’ve built enough buffers of reserves to be able to tackle situations like these.

“Secondly, we are using the reserves to defend the value of our currency- so that also accounts for why it’s dropping.
“Investors who brought in dollars- of course, we’ve a capital importation policy- if you bring your dollars, when you’re leaving, we give it to you. And so they brought their dollars and they want to leave to the US, we give them because our word is our bond and so that has tended to make the reserves drop a little.”

He, however, assured that, “At $44 billion, we still have between 17 and 18 months of import cover, meanwhile, the international standard is three months of import cover.
“We are very comfortable- we have the reserves to defend the value of the naira, and we have the local support to also encourage our SMEs to go into production.”

The CBN director also seized the opportunity to counsel the trade fair participants on how best they could access the various interventions by the bank.
He said,”Unfortunately, we cannot do it (the financial interventions) directly, we’ve to do it through banks.
“And that’s why we say again, people who engage in business should open an account with a bank, run that account and demonstrate that you are in business.

“Once you keep your record and you show evidence that you are in business, banks will always give you loans.
“But in a situation where people do not keep records, and there’s no difference between the money in their pocket ad their working capital, it’ll be difficult for banks to be able to do an examination and given you loan.”

Akeem ReachnaijaOctober 2, 2018


Nigeria’s crude oil export appreciated by 17.38 per cent to N7.308 trillion in the first six months of 2018 from N6.226 trillion recorded in the last six months of 2017, according to data obtained from the National Bureau of Statistics (NBS).

The NBS, in its Second Quarter 2018 Foreign Trade Statistics, stated that first half 2018 crude oil export figure represented an increase of 52.25 per cent compared with an export of N4.8 trillion recorded in the same period of 2017.

Giving a breakdown of Nigeria’s crude oil export on a quarter-on-quarter basis, the NBS report stated that in the first and second quarters of 2018, N3.58 trillion and N3.729 trillion worth of crude oil was exported respectively, compared to N2.97 trillion and N3.255 trillion recorded in the third and fourth quarter of 2017 respectively.

In the second quarter of 2018, the NBS report noted that India emerged the highest importer of Nigeria’s crude oil, with the purchase of N635.25 billion, representing 87.9 per cent of its total import of N722.58 billion from Nigeria.

The Netherlands, Spain, South Africa, United States and Italy purchased Nigerian crude oil valued at N421.28 billion, N372.91 billion, N359.17 billion, N303.7 billion and N214.58 billion respectively.

Others in the top ten category are France, Sweden, Brazil and Thailand which imported Nigeria’s crude oil worth N134.81 billion, N175.03 billion, N139.38 billion and N90.25 billion respectively.

The report showed the total value of Nigeria’s merchandise trade was N6.569 trillion in the second quarter of 2018, which was a decline of 8.89 per cent compared to N7.211 trillion recorded in the first quarter of 2018, while it represented an increase of 14.56 per cent from N5.73 billion recorded in the second quarter of 2017.

The report indicated: “In the reviewing quarter, mineral products accounted for N4.275 trillion or 95.8 per cent of the total export from Nigeria. This category of export was dominated by crude oil exports which contributed N3.728 trillion or 83.5 per cent of total exports.

“The second largest component of export in second quarter 2018 was vegetable products, which recorded N65.45 billion or 1.5 per cent of the total export in the reviewing quarter.

“The value of crude oil exports recorded in second quarter 2018, N3.728 trillion, was 4.2 per cent higher than the value in first quarter 2018, which was N3.579 trillion and 53.7 per cent higher than the value in second quarter 2017, which was N2.425 trillion.

“Other oil products exports in second quarter 2018 stood at N516.32 billion, declining in the reviewing quarter by 3.6 per cent compared to N536.68 billion from first quarter 2018, and a 0.8 per cent growth from the value recorded in the second quarter of 2017, which was N512.41 billion.”

The report noted that Nigeria exported most products to Europe, Asia and Africa, accounting for N1.849 trillion or 41.4 per cent, N1.284 trillion or 28.8 per cent and 639.3 or 14.3 per cent respectively.

However, the report added that within Africa, Nigeria exported goods valued at N265.1 billion to ECOWAS member states representing 41.5 per cent of the total export trade to Africa.

Market prospect

There are indications that the oil market would continue to be stable in the coming months, thus ensuring high revenue to Nigeria and other exporters, especially as the Organisation of Petroleum Exporting Countries (OPEC), has painted a bright prospect in its latest World Oil Outlook (WOO).

In launching the WOO, OPEC Secretary General, Mohammad SanusiBarkindo, said the past year had been a historic one for the organisation, as well as the global oil industry, with the historic ‘Declaration of Cooperation,’ “helping accelerate the return of balance to the global oil market, bringing more optimism to the industry, which in turn, has had a positive effect in the global economy and trade worldwide.”
He added: “the importance of these recent developments, specifically in terms of helping achieve sustainable market stability, is clearly vital across all timeframes,” which is evidenced in the analysis provided in the WOO 2018.


The Outlook has it that: “All forms of energies will be required in the future; it is not about choosing one form of energy over another. Oil is expected to remain the fuel with the largest share in the energy mix throughout the forecast period to 2040. Total primary energy is set to expand by a robust 33 per cent between 2015 and 2040, driven predominantly by Developing countries, which see almost 95 per cent of the overall energy demand growth.

“Natural gas witnesses the largest demand growth in absolute terms, and renewables the largest growth in percentage terms. Long-term oil demand has been revised upward for the second consecutive year, with total demand at over 111.7 mb/d in 2040. Demand growth is driven by non-OECD regions, which see a huge increase of around 23 mb/d to 2040.

“There is no expectation for peak oil demand over the forecast period to 2040. Long-term demand growth comes mainly from the petrochemicals (4.5 mb/d), road transportation (4.1 mb/d) and aviation (2.7 mb/d) sectors; the total vehicle fleet – including passenger and commercial vehicles – is projected to increase to around 2.4 billion in 2040.

“The majority of the growth continues to be for conventional vehicles, but the long-term share of electric vehicles in the total fleet is projected to expand and reach a level of around 13 per cent in 2040, supported by falling battery costs and policy support. Non-OPEC liquids supply is forecast to increase by more than 9 mb/d between 2017 and 2027, with the major driver being US tight oil, but beyond this period non-OPEC supply is set to decline by around 4 mb/d.

“The demand for OPEC crude is projected to increase to around 40 mb/d in 2040, up from 32 mb/d in 2018. The share of OPEC crude in the global oil supply is estimated to increase from 34per cent in 2017 to 36 per cent in 2040. Global refinery additions are projected mainly in developing regions, led by the Asia-Pacific and the Middle East, but also Africa and Latin America.

Excess revenue

Nigeria 2018 was benchmarked at $51 per barrel and 2.3 million barrels per day. At the current market price, hovering at between $80 and $83 per barrel, the nation generates excess revenue of $32 per barrel of oil exported.

Meanwhile, experts, including Director General, Lagos Chamber of Commerce and Industry,Mr.Muda Yusuf, have called judicious deployment of resources in order to enable the nation fully reap the gains of the current stability in the global oil market.

Akeem ReachnaijaSeptember 20, 2018

The debt status of states in Nigeria have been revealed.

Most of the states’ debts exceeded 50 per cent of their annual revenues.

The debt profiles of about 18 states exceed their gross and net revenues by more than 200 per cent.

Lagos, Osun and Cross River states record over 480 per cent debt to gross revenue.

The Fiscal Responsibility Commission, FRC, stated this in its 2016 Annual Report obtained by Punch in Abuja on Monday.

It said that the debt may have increased by 2017 since there were no effort by the states to clear them.

FRC said the development was contrary to the guidelines of the Debt Management Office on debt sustainability.

The guidelines said that the debt status of each state should not exceed 50 per cent of the statutory revenue in the previous 12 months.

The report stated, “In the light of the DMO’s guidelines on the Debt Management Framework, specifically, sections 222 to 273 of the Investment and Securities Act, 2007 pertaining to debt sustainability, according to the guidelines, the debt to income ratio of states should not exceed 50 per cent of the statutory revenue for the preceding 12 months.”

An analysis presented in the FRC report, however, showed that most states flouted the directive.

In fact, the debt status of many states exceeded the debt to revenue ratio by more than 100 per cent. The analysis was based on the debt profile of the states as of December 31, 2016.

The states with the highest debt to gross revenue ratios were Lagos (670.42 per cent), Osun (539.25 per cent), Cross River (486.49 per cent), Plateau (342.01 per cent), Oyo (339.56 per cent), Ekiti (339.34 per cent), Ogun (329.47 per cent), Kaduna (297.26 per cent) and Imo (292.82 per cent).

Others were Edo (270.8 per cent), Adamawa (261.96 per cent), Delta (259.63 per cent), Bauchi (250.75 per cent), Nasarawa (250.36 per cent), Kogi (221.92 per cent), Enugu (207.49 per cent), Zamfara (204.91 per cent), and Kano (202.61 per cent).

The debt to net revenue ratio of the states put some of the states in even more precarious situations. The debt to net revenue of Lagos, for instance, is 930.96 per cent, while that of Cross River is 940.64 per cent.

The only states whose debt did not exceed the 50 per cent ratio by more than 100 per cent are Anambra, Borno, Jigawa, Kebbi, Sokoto, Yobe and the Federal Capital Territory.

The debt to revenue ratio is very important in debt analysis as it can give an indication of the capacity of the debtor to service and repay the debt.

However, the FRC noted that it should not be concluded that a state had over-borrowed because its debt to revenue ratio was more than 50 per cent.

The report stated, “It should be noted that the fact that some states exceeded the threshold of 50 per cent of their total revenue is not an indication that they over-borrowed as the debt limits of the governments in the federation are yet to be set.

“Furthermore, only total revenue is used for the foregoing analysis as comprehensive data on the states’ Internally Generated Revenue were not available. In any case, the IGR on the average is not more than eight per cent of the states’ total revenue except for Lagos State. In essence, the non-inclusion of the IGR may not distort the result of the analysis.

“Therefore, there is a need for each of these states to work towards bringing their respective consolidated debts within the 50 per cent threshold of their total revenue in order to guarantee a general public debt sustainability in the country.”