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Buhari approves 65 licences for private refineries

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President Muhammadu Buhari has granted licences to 65 Nigerian companies to construct modular refineries.

The companies were selected from about 285 applications that were screened for the purpose.

Modular refineries are mini-refineries with capacities ranging from 1,000 to 10,000 barrels per day, bpd, which can be assembled and separated easily for enhanced performance and efficiency.

Although the Department of Petroleum Resources, DPR, the industry regulator, feigned ignorance of the development, one of the beneficiary companies confirmed to that the measure is also meant to cushion the impact of crashing oil prices at the international market.

The decision to award Licence to Establish, LTE, which was taken within 10 days of his assuming office in June, may not be unconnected with his desire to see the increase in domestic refining capacity to meet local demand, thereby reducing huge import bills for subsidy.

The shock is not only in the period the approvals were given, but also in the numbers granted considering the fact that 18 LTEs were granted in 2002, but only one of them had come on stream with just 1,000 barrels per day, bpd, capacity.

The refinery is operated by Niger Delta Petroleum Resources, NDPR, which produces only automotive gas oil, AGO, popularly called diesel.

How approvals were granted

Chief Executive officer of the beneficiary company, who spoke in confidence, said the number was not unilateral, but “the mop up of all applications for private refining since 2007.”

He admitted that the process took a period of six months, dating back to former President, Goodluck Jonathan’s administration, adding “the process was rigorous as they looked at many issues including, land, investment, technical competence, design and a host of many others.”

He added that licences were offered on a two-year tenure, after which it will elapse, and that “the beauty of these awards is that there was no lobbying, as the whole exercise followed due process.”

In his opinion, there is nothing wrong with the high number of awardees, arguing that “for a country like Nigeria, the more in-country capacity, the better for us, because in a falling oil price regime, the more you refine, the more value you add and the more revenue you earn from your crude.”

 

 

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BUSINESS

Netflix lays off 150 employees due to slow revenue growth and business needs

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Netflix is reportedly laying off nearly 150 employees in the coming days due to disappointing earnings and slow revenue growth.

According to a Variety report, the Amazon Prime Video rival might also terminate its contract with contractual contributors.

The layoffs are about 2 per cent of Netflix’s US workforce. “As we explained [in reporting Q1] earnings, our slowing revenue growth means we are also having to slow our cost growth as a company. So sadly, we are letting around 150 employees go today, mostly U.S.-based,” a Netflix spokesperson said.

The statement further revealed that the decision was primarily driven by business needs rather than individual performance. Netflix reported $7.87 billion in Q1, which was short of Wall Street’s estimates of $7.93 billion.

The report further reveals that nearly 70 part-time employees in Netflix’s animation studio will have to pack up and leave. A report by The Verge stated that about 26 contractors working on Netflix’s fan-focused Tudum website might see a termination.

“A number of agency contractors have also been impacted by the news announced this morning. We are grateful for their contributions to Netflix,” the company said.

Netflix, in its recent earnings call, revealed that it lost thousands of subscribers, which is a first for the company in over a decade.

The company expects to lose an additional 2 million in the next quarter due to the ongoing war between Russia and Ukraine. Netflix has shut shop in Russia following the country’s invasion of Ukraine.

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Dollar breaks N600/$ ceiling ahead of party’s presidential primaries

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Less than two weeks to the presidential primaries of the political parties ahead of the 2023 elections, the US dollar has broken the N600/$ mark at the parallel market and set the tone for a possible uptick in the coming days.

The black market rate had traded between N570/$ and N590/$ since the beginning of the year while the Central bank of Nigeria (CBN)’s intervention at the Nigerian Autonomous Foreign Exchange (NAFEX) has kept its rate under N420/$.

With the latest slump of the naira, the arbitrage between the parallel and NAFEX, which is regarded as the official window, is now inching close to N200/$. The spread measures the deviation of the controlled official rate from the real rate of exchange, with experts calling for liberalisation of the market to enable naira to find its true value.

The World Bank and the International Monetary Fund (IMF) have also warned of the repercussions of sustaining an artificially high naira while calling on the CBN to embark on market reform.

But the CBN has maintained that Nigeria, with the current high level of importation and underperformance of the industrial sector, cannot afford to float the naira completely as the exchange rate could spill out of control.

At the Lagos street market, yesterday, naira traded between N595/$ and N600/$ band. With the presidential primaries of the two leading political parties scheduled for Abuja next weekend, there is an expectation the demand pressure has not peaked, suggesting that naira is in for a protracted pressure.

At peer-to-peer (P2P) trading platforms, the dollar has been trading above N600 in the past three weeks, which had signaled that the black market rate could break through the psychological ceiling.

With that eventually happening, naira could be on a renewed free fall.

But there is also hope that it is a season to offload warehoused hard currencies for political campaigns to possibly shore up supply.

Experts are not sure where rising demand and supply of foreign exchange would lead the naira to, but the interplay between the movements of the two variables is a key factor in predicting the value of the naira in the tense political season. Godwin Owoh, a professor of applied economics, advised Nigerians to prepare for a steeper fall of the local currency, saying partisan politics and intra-party meetings, which are highly dollarised would bring much pressure to bear.

The CBN has promised to continue to protect the naira but its ability could be constrained by the equally falling reserve. For the first time in eight months, the gross reserves dropped below N39 billion on Monday, when CBN data put the figures at N38.92 billion. Effectively, the country’s reserves have depleted by $160 billion year-to-date.

Bismarck Rewane, an economist, had projected the reserve to collapse to $32 billion in the year as he expected the CBN to spend $8 to $10 billion defending the naira, which is taking much pressure from excessive importation.

The value of Nigeria’s imports increased by 64 per cent last year to N20.84 trillion. Sadly, the value of exports increased at a slower rate – 51 per cent – to N18. 91 trillion in the same period. The falling reserves and rising imports have put the apex bank in dire straits in its efforts to continue to defend the naira.

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Stock market sets new milestone as investors gain over N5tr in four months

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Amid uncertainties in the global economy and rising insecurity in the country, the nation’s stock market continued its bullish run, giving hope to patient investors who endured long periods of downturn on the Nigerian Exchange Limited (NGX).

After getting to a rock-bottom low for several years, the equities market have recorded an unprecedented upbeat rally since the beginning of the year to emerge the best performing market in Africa and third in the world.

The NGX’s All Share Index (ASI), an indicator used to track the general market movement of all listed equities on NGX, crossed 53,000 mark to hit a 14-year high for the first time since 2008, as indices soared significantly by N5.4 trillion from the beginning of the year.

Specifically, market capitalisation opened the year at 43,026.23 to close on Friday, May 13, at 53,098.46 points for the first time since 2008, representing 19 per cent appreciation, while trading for the year opened on January 4 with N23,187 trillion to close on Friday at N28,625 trillion, representing N5,438 trillion increase.

The Chief Executive Officer, Wyoming Capital and Partners, Tajudeen Olayinka, hinged the upswing trend on improved system liquidity that is traceable to massive reinvestment of 2021 yearly dividends by investors, who received their payments recently from listed companies.

According to him, the fact that dividends are now paid electronically means that institutional investors who do not have immediate need for cash can reasonably deploy such dividends to more profitable stocks given the low and attractive

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