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Oil gas sector records mixed performance in 1H – Report

By BusinessNews Staff on September 1, 2014

As quoted companies in the various sectors of the Nigerian Stock Exchange continue to upload their half year results to the public domain, indications have shown the prevalence of a mixed performance in the oil and gas sector.

A report by the finance and investment advisory firm, Financial Derivatives Company Limited, last week said the oil and gas sector continued to drive performance in the period under review with the newly listed indigenous upstream firm, Seplat Plc, recording a marginal decline of seven per cent in revenue but a significant decline of 45 per cent in PAT.

“The firm witnessed 28 days of no production at one of its fields and suffered from increased costs,” the report stated, adding that the downstream players had mixed performance.”
The report said Mobil Oil Plc’s revenue, on the other hand increased by 8.8 per cent while its Profit After Tax increased by 190 per cent on the back of an impressive financial management, adding that the company recorded a 983 per cent increase in finance income and a 62 per cent decline in finance cost.

In a related development, market watchers have said the sustained growth of the nation’s external reserves in recent times is not likely to slow down soon in spite of the prevailing marginal decrease in the global oil prices.

FDC said the upward trend in the nation’s external reserves is sustainable in the medium term.
Nigeria’s external reserves level had grown by 3.31 per cent ($1.27) to $39.59billion as at August 15, relative to the corresponding period in July. This level, the report noted, is 18.97 per cent below the 2013 peak of $48.86billion and 9.2 per cent lower than December’s level of $43.6billion. It also noted that the level of import cover has increased to 8.37 months, while the imports plus payments cover is now 5.89 months.

Although the report predicted volatility at the interbank market to continue, driven by increased liquidity in the money market, it also noted that the monthly joint venture cash calls of oil companies are expected to resume in the next few weeks, a development which it said is expected to provide some respite to the naira.

Global oil prices (Brent) decreased by an average of 1.92 per cent to $102pb in comparison to mid-July; spurred by an ease in geopolitical tensions and increased output by Libya, which is expected to boost supplies.
FDC however explained that the effect of the decline will be felt in November due to the 90-day time lag.
Similarly, the industrial goods sector of the Nigerian Stock Exchange was said to have recorded a surge in earnings in the first half of the year.

According to FDC bi-monthly economic and business review, the industrial goods sector continued to impress investors as Lafarge WAPCO and Ashaka Cement Plc’s H1’2014 earnings showed revenue growth of 11.88 per cent and 4.43 per cent respectively.
FDC said despite increases of 34.56 per cent and 17.27 per cent in administrative expenses, the firms’ pre-tax profit increased by 28.53 per cent and 166.16 per cent improved operating efficiency and declining finance costs (34.7 per cent) were instrumental to Lafarge WAPCO’s performance.

“Ashaka Cement’s cost of sales declined by 24.22 per cent and this boosted after tax profits, which surged by 204.19 per cent. FDC report noted that investors rewarded the firms as their stock prices increased by 8.53 per cent and 2.5 per cent respectively within the month,” the report said.
Meanwhile, Transnational Corporation of Nigeria Plc outshone UACN as the benefits from its entry into the power sector crystallised.

According to the FDC report, Transcorp recorded an impressive 176.5 per cent and 177 per cent growth in revenue and PAT respectively, while UACN recorded a 7 per cent and 3.5 per cent growth for the same indicators.
However, the feat recorded by companies in the industrial goods sector could not be replicated by quoted firms in the consumer goods category as, according to FDC report, most of the leading operators in the milling business reported revenue declines except Flour Mills Nigeria Plc that reported a 10 per cent increase in revenue in its full year result for the year ended March 2014.
Northern Nigerian Flour Mills Plc (FY’13 and Q1’14), Dangote Flour and Dangote Sugar all posted revenue declines of 2.65 per cent, and 9.79 per cent 3.73 per cent and 9.87 per cent respectively.

ICRC Decries MDAs Non-compliance with Contract Terms

Infrastructure Concession and Regulatory Commission (ICRC) has blamed cancellation of some concessional agreements on refusal of ministries, departments and agencies (MDAs) to comply with conditions of Public-Private-Partnership deals.
Chairman of the commission, Sen. Ken Nnamani, made this known in the 2013 Annual Report of the commission released last week.

According to a News Agency of Nigeria (NAN) report, Nnamani said the recalcitrant disposition of the MDAs to the concessions’ terms had led to persistent disputes in law courts and avoidable cancellation of some concessions.
“We regret that some MDAs still require a lot of pressure to submit to the regulatory guidance of the commission on PPP development, monitoring and compliance.
“More worrisome is the refusal of some MDAs to comply with contract terms and conditions of their PPP contracts.

“This is a situation which invariably leads to avoidable arbitrary cancellation of concessions and persistent disputes in law courts,’’ he said.

He, however, said the commission assisted the MDAs to deliver world-class infrastructure projects by issuing Certificates of Compliance for two critical PPPs in 2013.
According to him, the list of these projects will be presented to the Federal Executive Council for approval.

He named the projects as the Maritime Surveillance Platform under Nigerian Maritime Administration and Safety Agency (NIMASA) valued at 120 million dollars and the 1.2 billion dollars Lekki Deep Sea Port in Lagos.
“In addition, a total of 28 projects are being executed through PPP and have reached various stages.
“One of these projects, the automation of activities of the citizenship and business department, is currently under implementation.

“Others are six roads and bridges projects, two deep sea ports and an inland port, one lighter terminal at Kirikiri, the concession for the Operation and Maintenance of narrow gauge Eastern and Western Railway lines,” he said.

The chairman added that the list also included the development and modernisation of road network in the Federal Capital Territory, Abuja Medical City Mall and Abuja Mass Transit Railway Lot 2.

He stated that the commission had also provided regulatory guidance for the development of many roads, bridges, sea ports and power projects across the country.

“As part of its regulatory activities, the ICRC has endeavoured to carry out monitoring and compliance activities on the Federal Housing Authority’s PPP projects and made interventions where necessary,’’ he said.

On the commission’s achievements in 2013, he said Katampe urban infrastructure development, which served as a model for the development of urban infrastructure in the FCT reached 25 per cent completion during the period.

He said that NIMASA’s concession agreement with a private sector proponent on a “Supply-Operate-and-Own” basis for a suite of offshore surveillance platforms for the Nigerian maritime domain was sealed during the period.

“It is also worthy to note that the project preparation for the second Niger Bridge, the deep sea ports at Ibom and Lekki, together with Lagos-Kano and Port Harcourt-Maiduguri narrow gauge railway lines are moving according to schedule.

“As at December 2013, the second Niger Bridge reached the significant milestone and an accelerated procurement of concessionaire is in progress,’’ he said.
The former President of the Senate disclosed that certain weaknesses in the enabling law of the commission was affecting its operations and called for a speedy review of the law.
“A proposed amendment of the ICRC 2005 Act is at present before the Federal Executive Council for consideration,’’ he stated.

[This Day]

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