Johannesburg Stock Exchange has finally lifted the suspension on trading in the Shares of Oando Plc. Oando disclosed this in a filing on Wednesday.

Oando Plc, an indigenous energy group in Nigeria listed on the Nigerian Exchange Limited ,NGX, and the Johannesburg Stock Exchange ,JSE.

In a letter dated March 27, 2024, JSE halted trading in the company’s shares due to its inability to meet the extended deadline to publish its 2022 audited year-end results.

The company sought an extension of time to submit the required documents, which was denied by JSE.

However, the South African bourse has lifted the suspension on the shares of Oando.

Oando said it has received “Confirmation from the JSE that the suspension on the secondary listing of the company’s securities has been lifted. This change will take effect today, June 5, 2024, allowing trading to resume.

“The company acknowledges and appreciates the patience of stakeholders during this time. Furthermore, the company remains committed to maintaining the highest corporate governance and transparency standards”.

By Dickson Pat

A survey on crude oil production in May has revealed that Nigeria’s average crude oil production increased by 50 thousand barrels. 

Besides Nigeria, Iraq also increased its production output by 50 thousand with a marginal increase from oil powerhouse, Saudi Arabia but Algeria produced below its quota for the month. 

Despite Iraq’s pledge to reduce production, the country, the second-largest producer in OPEC, saw an increase in output. This rise occurred despite commitments from Iraq and OPEC+ member Kazakhstan to offset earlier overproduction by implementing further cutbacks throughout 2024.

According to the survey based on shipping data and industry sources, the Organization of the Petroleum Exporting Countries ,OPEC, increased its output to 26.63 million barrels per day (bpd) last month. This marked a rise of 145,000 bpd compared to April.

The survey indicated that OPEC surpassed its implied target by approximately 250,000 bpd for the nine members bound by supply cut agreements. Iraq was responsible for the majority of this surplus production.

Countries exempt from output reductions, such as Iran and Venezuela, also experienced slight increases in output. Iran’s production levels are nearing a five-year peak achieved in November, despite facing U.S. sanctions, with one of OPEC’s most significant output expansions occurring in 2023.

In January, various members of OPEC+, a coalition comprising OPEC, Russia, and other allies, implemented fresh cuts in response to economic fragility and heightened supply from non-member sources. 

At the most recent meeting of the JMMC on Sunday, producers opted to maintain these cuts for the third quarter, following an earlier extension until June and set production quota for 2025 among other resolutions. 

Nigeria’s designated production quota has remained steady since November of the previous year when the cartel convened to establish production levels for 2024.

Within that timeframe, Nigeria’s proposed production quota rose from 1.38 million barrels per day to its current level.

The set production quota of 1.5 million barrels per day falls far below the daily production target of 1.78 million barrels outlined in the 2024 budget, prompting concerns regarding budget execution.

To achieve the target $1 trillion economy, President Bola Tinubu has set a target to increase production to 4 million barrels of oil per day.

Crude oil production in Nigeria has increased marginally in the last one year but has failed to reach the highs of 2 million barrels produced around 2019.

Factors responsible for this include; insecurity and oil theft in the Niger Delta, low investment in oil exploration, and maturing oil fields amongst others. 

By Cyril Ogar

Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, has presented the Accelerated Stabilisation and Advancement Plan ,ASAP, designed to address key challenges affecting the reform initiatives and stimulate development in various sectors of the economy.

The document officially acknowledges that the government has continued subsidising Premium Motor Spirit ,PMS, popularly known as petrol, as it revealed that the “government is still supporting downstream consumption”.

“At current rates, expenditure on fuel subsidy is projected to reach N5.4 trillion by the end of 2024. This compares unfavourably with N3.6 trillion in 2023 and N2.0 trillion in 2022″, the plan noted.

This showed that the amount has ballooned to almost the amount paid in 2022 and 2023.

The presentation of the stabilisation plan to the President on Tuesday occurred about 48 hours after Mr Edun, during a television interview on Sunday, said a stabilisation package was underway to help the Nigerian economy.

Recall that President Bola Tinubu had recently reiterated that his administration removed fuel subsidies, with the oil minister, Mr Heineken Lokpobori also echoing his principal last month despite admissions from oil marketers, workers, and global institutions.

A draft copy of the plan presented to Mr Tinubu on Tuesday with an accompanying Executive Order to bolster the plan gave an insight into how the administration seeks to address some of the many problems which seem to be trying to torpedo its reforms, among others.

The plan is structured to advance President Tinubu’s economy-related eight priority areas and is broken down into Agriculture and Food Security Sub-Committee plan,  Energy Sub-Committee plan: Oil, Energy Sub-Committee plan: Gas, Energy Sub-Committee plan: Power, Health and Social Welfare Sub-Committee plan, and Business Support Sub-Committee plan.

The document cited persistent high inflation, high interest rates which make it difficult for businesses to borrow, and a volatile exchange rate with the consequent uncertainty disruptive of economic activity, among others.

It also outlined the various sectoral challenges with specific remedial steps to be applied in addressing them.

It noted that Nigeria’soil sector is currently faced with problems of extensive pipeline vandalisation;  high cost of production with 40% cost premium above other jurisdictions; production level at 1.4 million barrels per day, below the budgeted level of 1.78 million barrels per day, thereby straining country’s fiscal position, adding that “government still supporting downstream consumption”.

The plan therefore recommended the immediate implementation of presidential directives (such as removal of signature bonuses) to attract investments, and support the achievement of Final Investment Decision ,FID, for three identified blueprint projects in 2024 and for other projects enabled to attain FID by 2026.

Equities market is currently trading negative due to selloffs in key stocks like Oando, Fidelity Bank and Transcorp Plc among other decliners.

This suggests that the local bourse would probably closed the day negative again after huge loss posted yesterday due to selling rallies.

In its midday notice, Alpha Morgan Capital Limited told investors that the Nigerian Exchange ,NGX, All Share Index witnessed a negative trend, reflecting a loss of -0.16%.

Stockbrokers stated that this downward movement is due to selling bias of investors in some mid to high capitalized stocks. These decliners have surged in the past trading sessions.

The selloffs followed the need to take early profit as investors’ sentiment begun to wane against in the week, recording two straight downward trend this week already.

Data from the Nigerian bourse showed that OANDO Plc has lost 9.15% of its opening market valuation during the intraday trading session. Also, Fidelity Bank Plc has gave up 5.00%, while selloff has plunged TRANSCORP down by 4.57%. The market has also seen other stocks declining.

Overall, the NGX Banking Index has lost -0.88% at mid-day, according to stockbrokers, suggesting the market will end the day bearish except there is a strong bargain hunting.

…As First Bank recoups N456bn loan before liquidation

By Charles Ebi

Nigerian Deposit Insurance Corporation on Wednesday said it would go after debtors of Heritage Bank owing the bank about N700bn.

The Managing Director of the Corporation Bello Hassan, gave the figure during a chat with journalists in Abuja.

The Central Bank of Nigeria ,CBN, had on Monday took a significant step to ensure stability in the banking sector by revoking the license of Heritage Bank Plc.

This decision had raised questions and concerns among customers, stakeholders, and the general public.

The CBN, in its mandate to ensure a sound financial system in Nigeria, revoked the license of the bank with immediate effect.

This action was taken under the powers granted by Section 12 of the Banks and Other Financial Institutions Act ,BOFIA, 2020.

Speaking on the move, the NDIC Boss said that based on preliminary assessment of the books of the bank, the amount of depositors fund is about N650bn.

The NDIC boss assured customers of the bank that if the N700bn loan is recovered, it would effectively cover the N650bn that customers have deposited with the bank.

He said, “From our preliminary assessment, we have found out that Heritage Bank has N650bn deposits and loans is about N700bn and if we recover this amount, no depositor will lose their deposit

“We assure depositors that there is no need to panic and that they will get their money bank”.

The NDIC has been appointed as the liquidator of Heritage Bank. Customers with insured deposits will be paid up to the insured limit of N5m. There had been fears that customers of amounts exceeding the insured limit may be at risk.

But speaking on the development, Hassan said there is no need for panic.

He said there are 2.3 million depositors of Heritage Bank, adding that about 99.9% of that figure have less than N5m as deposits.

According to him, only about 4,000 depositors have about N5m and above in the bank.

In the same vain, First Bank says it has received the full repayment of “N456bn loan” extended to Heritage Bank.

This recovery is part of a “bailout loan” arranged during the tenure of former Central Bank of Nigeria, Governor Godwin Emefiele.

According to top sources from First Bank, the CBN credited the tier-one bank prior to its decision to revoke Heritage Bank’s license, thus averting what could have been a significant impairment charge for First Bank.

On Monday, the CBN announced the revocation of Heritage Bank’s license, stating that “the bank has continued to suffer and has no reasonable prospects of recovery”, which led to the bank’s eventual collapse.

Verified information indicates that the actual amount received by First Bank was N456 billion, concluding a seven-year wait since First Bank supported Heritage Bank in clearing.

First Bank’s financial statements reveal that the bank held balances with other banks amounting to N688 billion as of the first quarter ending March 2024, down from N735 billion in December 2023.

According to First Bank, these balances include clearing balances with other deposit money banks. First Bank provides clearing services for some banks in Nigeria, and the current balances within Nigeria include clearing exposures to banks as of December 31, 2023.

Efforts to recover the N456 billion loan intensified as Heritage Bank’s situation worsened over the years. However, a resolution was not reached until a new board and management took over the holding company of the bank earlier this year.

The amount was eventually credited to First Bank ahead of the official announcement of Heritage Bank’s license revocation, ending the seven-year wait.

This payment is expected to be reflected in FBN Holdings’ half-year financial statements, bolstering its cash positions and preventing the bank from incurring a write-off for the loans.

FBN Holdings reported a pre-tax profit of N358.8 billion in the first quarter of 2024, alongside an impairment provision of N227.4 billion.

Heritage Bank’s troubles began in 2019 when it faced severe distress and appeared on the verge of collapse. However, under Godwin Emefiele, the CBN pursued a policy of not allowing banks to fail, supporting Heritage Bank through various measures.

First Bank was given the green light by the CBN to backstop Heritage Bank’s clearing obligations.

Clearing in Nigerian banks refers to the process of settling financial transactions between banks, ensuring the correct transfer of funds from one account to another.

This process is vital for maintaining the banking system’s integrity and efficiency, involving several steps and mechanisms to facilitate the smooth exchange of financial instruments such as checks and electronic funds transfers.

Banks excluded from the clearing process are technically insolvent, indicating distress and preventing further exposure by other banks.

However, under Emefiele’s policy, the CBN supported Heritage Bank through First Bank, issuing a “Letter of Comfort” to the tier-one bank. This guarantee ensured that First Bank did not have to make significant provisions for the loan.

Auditors had often requested a provision for the loan, but this request was repeatedly dropped due to the CBN’s letter guaranteeing loan repayment.

This successful loan recovery is a significant financial maneuver for First Bank, reflecting strategic financial management and timely intervention by regulatory authorities to maintain stability within Nigeria’s banking sector.

According to information contained in the 2021 audited financial statement of the bank at a negative reserve of N230.8 billion as of December 2021. The bank had a share capital of just N53.9 billion and accumulated losses of N459.3 billion making it technically insolvent.

As of 2021, Heritage Bank reported it had a balance of N247 billon as balances due to banks in Nigeria. The bank also cited First Bank as the only bank owed the amount at the time. It is likely that the N456 billion paid to First Bank includes accumulated interests. Heritage Bank is yet to make public its 2022 and 2023 financial statements.

The CBN revoked the banking licence of Heritage Bank Plc with immediate effect, citing the bank’s persistent financial instability and breach of regulatory requirements.

In a press release on Monday, the CBN disclosed that Heritage Bank had failed to adhere to Section 12 (1) of BOFIA 2020, which necessitated regulatory intervention.

Despite multiple supervisory measures prescribed by the CBN to mitigate the bank’s declining financial performance, Heritage Bank has been unable to improve its financial health. 

The bank’s continuous underperformance poses a significant threat to financial stability, compelling the CBN to revoke its licence. 

The Nigeria Deposit Insurance Corporation ,NDIC, has started the liquidation process of Heritage Bank Plc following the revocation of its banking license by the CBN.  

The Corporation noted that depositors are protected, as the NDIC is currently verifying to pay customers of the bank up to N5 million, depending on their deposits. 

In other news the CBN also denied allegations suggesting that it plans to revoke the licenses of three more banks following its recent regulatory action against Heritage Bank Plc.

The rumours emerged shortly after the CBN’s regulatory intervention with Heritage Bank Plc, leading to speculations about further actions against other banks. However, the CBN has assured the public that the Nigerian financial system remains robust and resilient.