Connect with us

Business

Appraising Rivers Infrastructural S&P Ratings

Published

on

Indications that the lines that seperates public and private sector are thinning out became clearer last week when the global rating agency, Standard and Poor beamed its searchlight on Rivers State. In the latest ratings, S&P revised to pos­itive, its outlook on Rivers and affirmed its ‘B’ long-term issuer credit rating and its ‘ngBBB’ Nigeria National Scale rating on the state.

The assessment which focused on the government’s ongoing public sector reforms and huge investment in infrastruc­ture, has given vent to the argument that running government like a business entity can place government at the disposal of the citizens without stress.

S&P confirmed that the Rivers State gov­ernment is taking steps to modernise public sector administration, including a substan­tial Information Technologies (IT) upgrade, and a move toward greater accountability and transparency.

In its report made public last week, S&P predicted an increasing budgetary pres­sures ahead but equally predicted recourse to the bond market. “We see increasing budgetary pressures ahead, as Rivers is scaling up expenditure to upgrade the state’s infrastructure and modernise the public administration. Consequently, we anticipate after-capex deficits hovering around 15 percent in the period 2010-2012, and borrowing needs of some Nl00 billion ­which may be tackled by a bond issuance next year.

“Based on the above, we expect Rivers to continue to generate large operating rev­enues, which together with a Nl00 billion bond issuance should enable it to carry out some N200 billion in annual investments in the period 2010-2012, and maintain a comfortable liquidity position.

“Weakening budgetary performance is a negative rating factor. In the case of Rivers, the latter is offset by our expectation that the state will continue to post excellent operating surpluses in 2010-2012; self-­finance a large portion of programmed investments; continue to enjoy a very good liquidity position; and back the bond serv­ice by’ an Irrevocable Standing Payment Order (ISPO) by means of which debt serv­ice payment will be deducted by the central government from Rivers’ large statutory allocation.

It argued that since larger spending sets the foundation of a more diverse economy and improves the efficiency of public ‘administration, the overall impact on rat­ings would be positive.

Our base-case scenario also assumes that Rivers will gradually increase its inter­nally generated revenue to approximately N80 billion by 2012; that capital expendi­ture will not surpass N200 billion on annu­al average in the period 2010-2012; and that oil prices and national oil and gas produc­tion will not substantially diverge from our current forecast.

According to S&P latest reports, the long-term outlook for the state is revised upwards to “Positive” from “Stable” in the 2009 rating, on the strength of significant ongoing infrastructure investments (in roads, IT, healthcare, education and urban renewal) and relentless effort to transform the public finance framework. All this should help lift the state’s social and economic status in” the long run.

Notwithstanding the current weakness of the system, Standard & Poor’s views this modernisation as a key element of Rivers’ credit profile.

Perhaps, one of the steps taken by the present administration in the state that attracted the positive ratings from S&P is the state’s very low-though improving ­information quality and disclosure by international standards and weak public finance system, which hinders management capabilities.

Other factors’ working in its favour, according to the rating agency is the credit quality which reflected in the state’s cur­rent strong cash holdings, low debt and very-healthy operating balance.

Additionally, expenditure flexibility is limited because of large development needs that entail capital investment pres­sure. Also, Rivers has high exposure to oil revenues, which we expect to be lower dur­ing 2010-2012 than at the 2008 peak.

“The rating action reflects our view that Rivers State’s commitment to modernise the public finances may start yielding results gradually but steadily. Also, we believe that the current low sophistication of Rivers’ financial management cannot jeopardise debt service. At present, debt is virtually zero; and we believe that, were Rivers to issue debt, the debt service would be- deducted at the source by the central government from Rivers’ oil revenues,” the report stated.

A very substantial part of the nation’s natural gas deposits and, to a smaller extent, crude oil production, is located in Rivers. Major operators in the state include the main multinational oil companies, which are accompanied by a cluster of pri­vate local companies. Although periodic episodes of violence in the Niger Delta can temporarily affect GDP growth and! or relocate economic activities, oil-related activities bolster sustainable employment in the long run-as evidenced by per capita GDP that is triple the domestic average­and, thus, form a relatively solid tax base. “While our issuer credit rating on Rivers is ‘B’, we would not automatically assign the same rating to Rivers’ debt issuances. Specifically, Some types of debt issues could contain structural features that enhance credit quality-for example, an ISPO. In these cases, Standard & Poor’s may analyse the transaction structure and assign a rating that is different to the issuer credit rating.

“Rivers liquidity is strong. At year-end 2009, Rivers had N83 billion in cash hold­ings. As of July 2010, Rivers continued to enjoy a very comfortable liquidity position. It had N43.9 billion in local currency and $11 million in US dollars, mainly deposit­ed at the First Bank of Nigeria Plc and Skye Bank Plc. We expect that cash holdings at year end should be at around N50 billion, based on our capex assumption of NGN200 billion.”

Rivers has no substantial debt burden. As of year-end 2009, outstanding debt of N3.3 billion comprised a foreign currency source from the statutory allocation.

The assessment is premised on the expec­tation that the state government will contin­ue to make good disclosure of its activities since international ratings are usually relied upon by international investors to make investment decisions. The rating agency therefore said it expects Rivers to continue to improve its financial management and that this will shortly yield substantive results. “Specifically we expect that the state will progressively implement the main ongoing IT developments, and particularly, the full deployment of properly functioning budgetary, accounting, and financial mod­ules. We thus expect Rivers to start disclos­ing sufficient information for a timely and comprehensive assessment and forecast of its. budgetary performance and liquidity.

Senior Adviser, media and publicity to the Governor Mr. David Iyofor, said the lat­est report was based on the strength of sig­nificant ongoing infrastructure investments in the state. He said the investments should help lift the state’s social and economic sta­tus in the long run.

According to him, continued heavy Capi­tal Expenditure (CAPEX) might require ulti­mately tapping external resources such as the capital market, which should help ease pressure on the state’s reserve and revenue allocation.

He said the credit rating initiative under­scores the commitment of Governor Amaechi to build the right institutions for long term sustainable devel0l’ment of Rivers State, while adhering to principles of transparency, accountability and due process in its financial management.

“The state will ride on the momentum of the rating process to continuously improve upon its fiscal policy framewotk and sys­tematically modernise, strengthen and stan­dardise its public accounting functions based on global best practices, to attract and reinforce investor confidence in the econo­my of Rivers State,” he said.

He said that Rivers State remains the first and only state in Nigeria with dual interna­tional credit rating. In September last year, it was rated B+ by Fitch Agency with “Stable” long term financial outlook and A- domes­tic rating? This year’s rating opinion by Fitch Agency is expected later in the year.

“The state considers such independent financial opinion as very crucial guideline for continuing the modernisation of its gov­ernance standard, in other to firmly entrench accountability and information transparency, while strengthening public finance operating framework,” he said.

Akanbi writes for Thisday

Continue Reading

Business

NCDMB, Dangote Refinery Unveil JTC On Deepening Local Content

Published

on

The Nigerian Content Development and Monitoring Board (NCDMB) and the Dangote Petroleum Refinery and Petrochemical Company have inaugurated a Joint Technical Committee (JrefineryTC) aimed at advancing local content implementation during the operational phase of the 650,000 barrels per day  plant.
A statement from the Directorate of Corporate Communications of the Board noted that the inauguration ceremony took place at the Dangote Free Trade Zone, Ibeju-Lekki, Lagos State.
The statement also said the inauguration marks a pivotal moment in fostering strategic collaboration between the both institutions, and was a significant move to reinforce local content development in the oil and gas sector.
Presided over by the Executive Secretary of the NCDMB, Engr. Felix Omatsola Ogbe, and the Group Vice President, Oil and Gas, Dangote Group, Chief Edwin Devakumar, the event featured the formal sign-off of the Committee’s Terms of Reference (ToR), a guided tour of the refinery, other critical facilities, and the official commencement of the JTC’s responsibilities.
According to the Board, the visit also featured the presentation of the certificate of the Nigerian Content Downstream Operator of the Year Award won by the Dangote Petroleum Refinery and Petrochemical Company at the inaugural ‘Champions of Nigerian Content Awards’ held recently in May.
The NCDMB’s boss made the presentation to the President of the Dangote Group, Alhalji Aliko Dangote, who expressed delight at the recognition, noting that he would display the certificate proudly at his office.
Ogbe congratulated the Dangote Group on the successful development and commissioning of the largest single train refinery in the world, as well as petrochemical and fertiliser plants, describing the projects as a historic milestone not for Nigeria alone, but for the entire continent.
He emphasized that the Dangote Refinery stands as a testament to the success of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act of 2010 and the transformative potential of Nigerian-led industrial projects.
“At an optimal daily production capacity of 650,000 barrels, this refinery will significantly enhance Nigeria’s energy security and contribute to the supply of refined petroleum products across West Africa.
“Nigerians, have to own the plant, we have to make sure that the plant works well. We have to secure it, we have to maintain it. The NCDMB would continue to collaborate with Dangote Petroleum Refinery”, Engr  Ogbe said.
Highlighting the need to ensure more value retention in the sector, as mandated by the Nigerian Oil and Gas Industry Content Development Act (NOGICD) 2010, the Board’s helmsman demanded compliance with Sections 32 and 33 of the NOGICD Act, with particular reference to local manpower utilization and requirements for NCDMB’s approval prior to the engagement of expatriates.
“The NOGICD Act stipulates that no expatriate can be employed in any organization in the oil and gas industry without the prior approval of the NCDMB. We will work with you, We’ve to protect jobs for Nigerians. It’s critical to job creation, skills development, and national capacity building in line with the ‘Renewed Hope Agenda’ of President Bola Ahmed Tinubu”, he said.
He commended the firm for training and employing Nigerian engineers, saying the collaboration will ensure that qualified Nigerians were given opportunities across all operational roles, while also urging the Dangote Petroleum Refinery and Petrochemicals to support the Board’s initiative which aims at developing oil and gas industrial parks across the country to foster local content and manufacturing in the sector.
He noted that the Nigerian Oil and Gas Parks Scheme (NOGaPS) seeks to create an enabling environment for Small and Medium Enterprises in the sector.
“NOGaPS was conceived by the Board to develop facilities close to oil fields where manufacturing of oil and gas components, as well as research and development, can be carried out.
“We would like Dangote to support one of our major activities, which is the oil and gas industrial parks scheme. The parks are aimed at creating an enabling environment for SMEs in the industry to do fabrications and create more jobs for Nigerians”, the NCDMB’S boss stated.
In his welcome address, the Dangote Group Vice President, Devakumar, highlighted that the refinery project and NCDMB have been working together, promoting local content development during the construction stages of the project.
“We can’t say we have achieved everything, because there is opportunity to do more. We’re grateful to the NCDMB for all their support and advice.  As entrepreneurs, we’re trying to optimise costs. It’s a Nigerian company, it’s also an entrepreneur-driven company. As a Nigerian company, the focus will be on Nigerian content. As an entrepreneur-driven company, it will be cost-focused”, he noted.
Devakumar underscored the long-standing commitment of the Dangote Group to national development and capacity building, saying that the Group’s vision is to grow Nigeria’s industrial landscape.
High points of the visit, according to the Corporate Communications Directorate of the NCDMB, was the inauguration of the Committee members.
The statement from the NCDMB further added that the committee is to ensure the implementation of local content in the refinery’s operations, while its core objectives include promoting the use of Nigerian skilled manpower, services, and locally sourced materials in compliance with Section 3 of the NOGICD Act.
The Tide learnt that the committee will also support Dangote Refinery in aligning its operational procedures with the Act’s requirements.
In his acceptance remarks, Director of Corporate Services at NCDMB and Chairman of the Committee, Mr. Abdulmalik Halilu, expressed gratitude to the leadership of both organizations, reiterating the Committee’s dedication to upholding the highest standards of local content enforcement and fostering measurable outcomes that will benefit the nation’s economy.
Ariwera Ibibo-Howells, Yenagoa
Continue Reading

Business

Food Security: NDDC Pays Counterpart Fund  For LIFE-ND Project

Published

on

The Managing Director of the Niger Delta Development Commission (NDDC), Samuel Ogbuku, says the commission has paid its counterpart fund for the Livelihood Improvement Family Enterprise Project to ensure food security in the region.
The LIFE-ND project is an agriculture intervention project sponsored by the Federal Government, the International Fund for Agricultural Development, and the NDDC to boost food security in the region.
Mr. Ogbuku disclosed this while fielding questions at the commission’s 25th anniversary world press briefing  in Asaba, Delta State.
He stated that the commission has equipped and trained farmers in the region on best practices, adding that it has also established Niger Delta Chambers of Commerce with a commitment of N30 billion, but has released N5 billion to encourage commerce and entrepreneurship in the area.
According to him, agriculture is among the next phase of the commission’s programmes aimed at addressing food security in the region.
“Our target is to use agriculture to fight criminalities in the Niger Delta region”, he said.
The NDDC boss said the commission would hold a retreat to marshal plans to enhance the cultivation of rice, oil palm, cassava, and maize for industrialisation.
He also disclosed that its fund allocation from the Federal Government has improved, adding that funding from International Oil Companies has also increased, with greater compliance.
Ogbuku revealed that although its revenue has improved, the commission had thought it wise not to borrow but to deploy the surplus to execute more projects.
According to him, the commission has gone digital in its documentation and data generation to address its human capital development projects, ensuring the even deployment of resources, which allows people to take turns being trained in their chosen profession.
He stated that the NDDC was committed to addressing environmental challenges in erosion-prone areas in Edo, Delta, and other states, contingent upon the availability of funds.
Continue Reading

Business

Replace Nipa Palms With Mangroove In Ogoni, Group Urges FG, HYPREP

Published

on

A concerned group of stakeholders under the auspices of Khana Coastal Communities has made a passionate appeal to the Federal Ministry of Environment and the Hydrocarbon Remediation Restoration Project (HYPREP) to include the removal of Nipa palms which has taken over the positions of mangroves in the area as part of the ongoing Ogoni Clean Up Exercise.
The group, which decried the invasive and destructive effects of Nypa fructicans, commonly known as Nipa palms, on the ecosystem of the affected communities, made their appeal in a Press Statement issued shortly after the  inspection and survey of the creeks and coastlines of  affected communities.
The communities are Kwiri, Kereken, Kaa, Gwara, Sii, Kpean, Tehnnama, Bane, Kalaoku, and Opuoku, all in Khana Local Government Area of Ogoni, Rivers State.
Signed on behalf of the affected communities by comrades Emmanuel Goteh Bie, Raymond Nwibani, and Chief Barineka Tonwe, the statement emphasized the need for urgent intervention to clear the Nypa fructicans and replace them with mangroves which provided sustainable habitat for aquatic species in the affected communities.
The group commended the Federal Ministry of Environment and HYPREP for their commitment to the Ogoni cleanup process and urged all stakeholders involved in the process not to renege on their complementary roles.
The statement read in part: “As you have seen, the Nypa fructicans has taken over our creeks, displacing native mangroves and aquatic life. The impact on our communities has been severe, with many of our people struggling to make a living due to the depletion of fish and other aquatic resources.
“We commend the Hydrocarbon Pollution Remediation Project (HYPREP) for its efforts in restoring native mangroves in Ogoni, particularly in the Bomu Community. However, we are alarmed by the unintended consequences of removing invasive Nypa fructicans, which has led to the disappearance of fish and aquatic life, threatening the livelihoods of our coastal communities.
“We believe that the removal of Nypa fructicans and replanting of native mangroves will help revive our aquatic life and sustain the livelihoods of our people.”
The group passed a vote of confidence on the Minister of Environment, Balarabe Abbas, and HYPREP Coordinator, Prof. Nenibarini Zabbey, for what it described as their unwavering efforts in ensuring the success of the Ogoni cleanup exercise.
They  called on the Federal Government to release their counterpart funding to HYPREP without delay to sustain the pace of progress recorded in the clean up process.
“The cleanup exercise is commendable, and any delay in funding could stall the progress and undermine the efforts of all stakeholders. We urge the government to prioritize the Ogoni cleanup exercise and provide the necessary support to ensure its success”, they stated.
They also used the opportunity to caution against the antics of self-inflicted activists or bodies that might attempt to hijack the cleanup agenda and create unnecessary agitation, and assured the total support of the affected  communities to HYPREP’s activities to enhance the holistic success of the Ogoni clean up exercise.
Bemene Taneh
Continue Reading

Trending