Business
Shareholders To Recover Lost Investment
Shareholders hitherto relegated to the background in preference for saving depositors’ fund will soon recover their lost investment as the Senate Wednesday finally passed the harmonised Asset Management Corporation (AMCON) Bill.
A statement signed by Mohammed Abdullahi, head, corporate communications of the apex bank said “”the ministry of finance and the Central Bank of Nigeria remain convinced that with the setting up of this corporation, the nation is close to a final resolution of the banking crisis and the repair of bank balance sheets. Also, AMCON will ensure that shareholders recover part of their lost investment and assist in reducing the debt overhang that has slowed down the recovery of the capital market”.
Investors will be particularly pleased to see their investments recouped after a year of steep downturn at the nation’s capital market.
Afrinvest Research estimated that non-performing loans, otherwise referred to as toxic assets worth over N1.0 trillion have been drowned in the rough waters that hit the financial market early last year, with the stock market investors incurring substantial losses.
But with the passage of the AMCON Bill, the toxic assets will be bought over, thus allowing the markets – money and capital – some growth space.
“We also reiterate that the soak up of toxic assets will bear heavily on the outlook for the distressed banks in particular, and for equities in general, as banks remain quite reluctant to create new risk assets (after huge provisions made for bad loans)”, said Afrinvest in its first quarter review.
Abdullahi said the AMCON is a multi-purpose resolution vehicle that is empowered to purchase non-performing assets from banks as well as inject needed capital in the form of appropriate securities (Tier 1 or Tier 2). In the case of distressed banks, AMCON will therefore play the key role of facilitating mergers, acquisitions or capital injection by new investors. The boards of directors of the banks have led and reached an advanced stage of discussion with interested parties.
The bill is expected to be submitted to President Goodluck Ebele Jonathan for assent after which it becomes an Act of the National Assembly. This will pave way for the formal establishment of the corporation as a principal vehicle for recapitalisation of troubled banks. It would be recalled that the AMCON bill was tabled by the executive branch and, therefore, an expedited assent is expected.
Wale Abe, chief executive of the Financial Market Dealers Association of Nigeria (FMDA), told The Tide’s source an interview that the development will bring about improved liquidity situation in the system, as well as reduce the burden that was almost crippling some banks, particularly the rescued ones. This will also ensure that the banks become slimmer to be able to function properly.
Abe said he expects either the AMCOM or the central bank to come out with guidelines that will help establish proper pricing for the toxic assets to allow for seamless take-off of the vehicle that is expected to bring succour to the financial industry.
Razia Khan in her recent report titled On-The-Ground (OTC), Nigeria – Assessing Inflation Risk, said though the decline in the growth rate of private-sector credit preceded the bank rescue, record levels of provisioning across the banking sector last year may have taken heavy toll.
“Banks are risk averse and still cautious about new private-sector exposure”, she said. She however expects the situation to turn around once AMCOM is operational and banks have been relieved of their non-performing loans.
Some Commercial drivers in Port Harcourt have said that the Federal Government’s N1,350 fuel discount is yet to reduce their daily operating cost.
A cross session of commercial drivers who spoke to The Tide correspondents in Port Harcourt said they are yet to feel the impact of the government discount, adding that most filling stations in the city are even selling above the pump price
A driver Jude Ogbo who operates the mile 1 Rumuokoro axis of Port Harcourt said plies the discount has not reflected in his daily fuel expenses.
“Since the discount was announced, many filling stations still sell at the old price. When you go there, you discover they sell you two litres at the price of one. For now, we have not seen any reduction,”_ he said.
Another commercial driver, Comrade Ishmael Uzeho who operates within the Port Harcourt metropolis, said the discount is not being implemented across the country.
“How has the discount affected us? I will say it has not. Many stations are not working. Only NNPC is working and that is just one person in the whole country. If government really wants to help, let the fuel price go down properly,”_ he said.
Uzeho added that if the price of fuel goes down, transport fares will also go down. He noted that his route fare has remained at N500.
On his part, Mr. Moses Dapa, Supervisor at Sam Jaja Foundation Transport Company, said the company has not increased its fares despite the high cost of fuel.
“We are still running normal price. We charge N2,000 and N5,000 depending on the destination. We will not increase our price. I don’t know about other parks, but for Sam Jaja, we are maintaining normal price,”_ Dapa said.
He appealed to passengers to understand that drivers are not using high fuel price as an excuse to charge excessive fares.
Other drivers who spoke said the federal government should monitor the NNPCL retail stations to ensure that the directive is implemented.
Recalled that The Federal Government in abid to reduce transportation cost in the country had announced a 30-day margin discount at NNPC Retail stations across the country from October 1 to 31,
However investigation revealed that the policy is yet to affect transportation cost in the country.
By; Stephens Sopakriba and Saint Davies
In a press statement released to The Tide’s source on Friday in Abuja, the group said Nigeria had a significant resource advantage due to its vast natural gas reserves.
“At a time when global energy markets face unprecedented volatility and rising operational costs, Nigeria stands on a massive resource advantage with its vast natural gas reserves,” the group said.
Highlighting this potential, Alfa Designs urged the nation to move past complaints over energy costs and aggressively embrace Compressed Natural Gas (CNG) as a sustainable engine for economic growth.
While federal policy adjustments have sought to cushion the impact of global energy shocks, industry experts emphasised that long-term relief hinges on a rapid, nationwide transition to gas.
“Transitioning away from expensive traditional petroleum products promises to ease the financial burden on ordinary citizens.
“It will also reposition Nigeria as an attractive industrial hub capable of drawing foreign direct investment and driving job creation,” it said.
To demonstrate the practical feasibility of this transition, the group said it recently partnered with a global Original Equipment Manufacturer (OEM) to lower the entry barriers for commercial drivers.
“By negotiating directly with the manufacturer, we reduced the total cost of acquiring and installing a CNG conversion kit for commercial tricycles (commonly known as Keke NAPEP) from up to N700,000 down to under N450,000.”
The group said this shift offers dramatic immediate financial benefits for local operators, with petrol currently selling at roughly N1,390 per liter.
It said that, in comparison, at a CNG equivalent price of about N98 per liter, a daily commercial driver using 10 liters of fuel reduces its daily energy expenditure from N13,900 to N3,980.
“This represents a daily net savings of N9,920, or more than 71 per cent.
“Over a standard 26-day working month, drivers save over N257,000, allowing them to fully recover the cost of the CNG conversion in less than 46 operational days.”
The company further stated that when scaled nationally, the economic implications are monumental.
“Nigeria consumes approximately 50 million liters of gasoline daily, costing roughly N69.5 billion per day.
“A nationwide 71 per cent reduction in fuel expenditure would generate daily national energy savings of N49.6 billion.
“On an annualised basis, this shift equates to approximately N18.1 trillion, or $13.5 billion, kept within the domestic economy.”
The group added that those recurring national savings would offer a vital mechanism to help address Nigeria’s estimated $2.3 trillion infrastructure deficit.
It said reinvesting those funds into the economy helps eliminate the 30 to 40 per cent operational overhead currently consumed by imported fossil fuels.
“The resulting boost to corporate margins expands the national tax base, generates reliable user-fee revenues to make major transit projects bankable, and creates a self-sustaining financial cycle,” it said.
