Chinese company wins $1.85 bln contract for railway in troubled Nigerian state – Reuters

HONG KONG Aug 29 (Reuters) – China’s state-owned railway construction firm has been awarded a $1.85 billion contract to build a light railway line in the northern Nigerian state of Kano, it said on Monday.

Growth in Nigeria – an OPEC member whose economy, the largest in Africa, has been hammered by low oil prices – has been stunted for decades by a lack of investment in the road and rail network.

Development efforts have also been hampered by Islamist militant group Boko Haram, which has carried out bomb attacks on targets in northern Nigeria, including Kano state, during its seven-year insurgency.

Finance Minister Kemi Adeosun said earlier this month that 60 billion naira ($180 million) in additional spending would be allocated for capital projects as part of the 2016 budget to boost the economy.

Adeosun said Nigeria would tap partnerships with the private sector to boost investment and the government was also in talks with General Electric to develop and operate rail services to improve transport for goods.

China Railway Construction Corporation Ltd issued a statement saying two of its subsidiaries had been provisionally awarded the light railway project in Kano.

“The contract amount of the project is approximately $1.851 billion, accounting for approximately 2 percent of the operating revenue of the company for the year 2015,” it said in the statement, issued to the Hong Kong stock exchange.


CBN reserves fall to $19bn as non-oil exports drop by 43% – The Cable

The Central Bank of Nigeria’s portion of the foreign reserves fell to $19.44 billion as non-oil exports fell by over 43 percent in the second quarter of 2016.

“Provisional data showed that total non-oil export earnings, at US$576.97 million, fell by 43.2 per cent, below the level in the preceding quarter,” CBN said in its second quarter economic report.

“The development, relative to the preceding quarter, was attributed, mainly, to the significant decline in receipts from manufactured and food products as well as minerals export.

“A breakdown by sectors showed that proceeds from the export of agricultural, minerals, industrial, manufactured products, food products and transport sectors stood at US$196.87 million, US$185.51 million, US$84.34 million, US$79.44 million, US$30.68 million and US$0.12 million respectively.

“The percentage shares of agricultural, minerals, industrial, manufactured products, food products and transport sectors in the total non-oil export proceeds were 34.1 per cent, 32.2 per cent, 14.6 per cent, 13.8 per cent, 5.3 per cent and 0.02 per cent, respectively.”

This saw the gross external reserves at the end of the second quarter of 2016 stand at $26.51 billion, showing a decline of 3.0 per cent and 6.5 per cent, compared with the levels in the preceding quarter and the corresponding period of 2015, respectively.

“The development, relative to the preceding quarter, was due to increased sales of foreign exchange at the interbank market and notional changes in the value of third currencies.

“A breakdown of the official external reserves showed that CBN reserves stood at US$19.44 billion (73.3%), Federation reserves, US$2.45 billion (9.3%), and the Federal Government reserves, US$4.61 billion (17.4%)”.

The CBN said “a total of US$4.31 billion was sold by the CBN to authorized dealers during the second quarter of 2016”.

“This reflected an increase of 22.7 per cent above the level in the preceding quarter, but a decline of 41.5 per cent relative to the level in the corresponding period of 2015.

“The development, relative to the preceding quarter, was attributed to the increased intervention by the CBN at the forex market and swap transactions.”

Niger Delta Avengers says halted hostilities in Nigerian Delta – Reuters

LAGOS Aug 29 (Reuters) – A Nigerian militant group, which has claimed responsibility for a series of attacks on oil and gas facilities in the southern Niger Delta energy hub in the last few months, said on Monday that it had halted hostilities.

The statement by the Niger Delta Avengers comes just over a week after the militant group said it was ready for a ceasefire and talks with the government.

The swampland region – which produces most of the oil that makes up 70 percent of government revenue – has been hit by pipeline attacks since January which have cut the OPEC member’s output by 700,000 barrels a day to 1.56 million bpd.

“We have listened carefully and halted hostilities in the Niger Delta,” said the Avengers in the statement, presented as an “open letter” to President Muhammadu Buhari on the group’s website.

“We expect a genuine and positive attitude to restructuring and self-determination for every component unit of Nigeria,” the group said. It added that “no amount of troop surge and simulation exercises will make you win the oil war”.

Nigeria’s military on Saturday said that it had launched a new offensive against militants in the Delta, killing five and arresting 23, to crack down on criminal activities.


$309 million flows into Nigeria’s forex market in one trading day – The Cable

The Nigerian foreign exchange market recorded an inflow of $309 million on Monday — a considerable surge from Friday’s transactions.

Bola Onadele, head of market regulator, FMDQ OTC securities exchange, told Reuters that the trade included one $270 million transaction at 345 naira per dollar, by foreign investors buying local currency bonds.

The inflow of forex saw the Nigerian naira firm from its opening 319.50/$1 earlier in the day to 315.50 per dollar.

The Nigerian forex market had experienced an artificial dollar scarcity over the past week, following the decision of the Central Bank of Nigeria (CBN) to cut nine deposit money banks from the market.

The banks were banned, following a breach of Treasury Single Account (TSA) guidelines by the lenders.

United Bank for Africa (UBA) was readmitted into the forex market after the regulator confirmed it had remitted all Nigeria National Petroleum Corporation (NNPC) funds into the TSA.

Eight other lenders stand suspended until they remit the funds worth about $2.1 billion back to TSA.

The fresh inflows are expected to boost liquidity and ease the pressure on the naira.

Nigeria FX market trades $327 mln as offshore funds buy bonds – Reuters

LAGOS Aug 29 (Reuters) – Nigeria’s currency market registered $327 million worth of trades on Monday, about six times more than its usual volume, the market regulator told Reuters.

That included a single $270 million transaction at 345 naira per dollar, by foreign investors buying local currency bonds, Bola Onadele, the managing director of FMDQ OTC Securities Exchange, said in an interview. Other transactions were carried out from 314.50 to 317.34 per dollar.

Average trading is around $50 million a day on normal days. It might reach $100 million on days the central bank intervenes in the currency market.

Traders also said the central bank sold an undisclosed amount of dollars, close to the end of market session, to help prop up the naira. The currency closed at 305.50 on Monday, around the level where it’s closed for the past week.

Monday’s surge in trading came after the central bank said on Friday that it would offer 212.85 billion naira ($675 mln) in treasury bills maturing between 91 days and one year on Wednesday. The debt will be sold on Wednesday.

The bank has been selling short-dated open market bills at yields as high as 18 percent in an effort to attract offshore funds, most of whom fled Nigeria’s bond and equity markets during a financial crisis that began when oil prices plunged.

The crisis ultimately led the central bank to let the naira’s value float, in June. From its controlled rate of 197 naira to the dollar, the Nigerian currency plunged to as much as 309 to the dollar on the interbank market and 412 to the dollar on the black market .

‘Vulnerable’ naira falls ahead of NBS ‘official recession report’ – The Cable

Naira opened weak on Monday as Nigeria awaits the official gross domestic product (GDP) report from the National Bureau of Statistics (NBS), which will declare Nigeria’s recession position.

The NBS is billed to release the official report on August 31,and it is expected to confirm how deeply Nigeria has slid into recession, following a 0.36 percent slip in the first quarter of 2016.

The naira opened at 413 to the dollar at the parallel market, while the interbank market rate spiked from its closing 315.25 on Friday to 319.25 on Monday morning.

The British pound and the Euro went for N530 and N455 on Monday at the parallel market.

Lukman Otunuga, FXTM research analyst, said the Nigerian government showed resilience by approving the “three-year budget plan despite concerns remaining elevated over slowing growth which weighed heavily on sentiment”.

“The Federal Executive Council (FEC) has approved the medium-term expenditure framework (MTEF) and Fiscal strategic paper (FSP) for 2017-2019, which could be seen as a blueprint on how the nation plans to recover in this period of uncertainty,” Otunuga said.

“With low oil prices seriously punishing Nigeria, the Federal Government may have been forced to adopt a conservative approach in the three-year project.

“The Federal Government has fixed average prices of oil per barrel at $42.5 for 2017 with 2.2 million barrels of crude created daily. Growth rate was also targeted to 3% in 2017 and 4.26% in 2018 as the nation embarked on the journey to diversification.”

Otunuga added that the NBS GDP report may heavily influence investors, and render the naira vulnerable.

“While some optimism could be felt from the approval of the three-year budget, investors may heavily focus on the second quarter GDP report, which will be released on the 31st of August and which may offer clarity on how the economy is faring.

“Fears of a recession still linger and a second quarter GDP which fails to meet expectations could dent sentiment further consequently leaving the Naira vulnerable to heavy losses.”

FG to earn N17bn annually from cargo tracking note – Today

The federal government will realise more than N17 billion per annum from the implementation of International Cargo Tracking Note (CTN) on all imports into the country.

The Executive Secretary of the Nigerian Shippers’ Council (NSC), Mr. Hassan Bello, disclosed this in an interactive session with journalists yesterday.

The ICTN was first introduced in Nigeria in 2009 under the management of Nigerian Ports Authority (NPA).

It was suspended in 2011, following widespread criticisms by stakeholders in the maritime industry.

Four years after its suspension, the federal government through the NSC re-introduced it to curb activities of importers and ship owners who swindle the federal government the much needed revenue from the ports through under declaration of tonnages.

President Muhammadu Buhari who endorsed the project had fixed November 3, 2015 as its implementation take off date.

However, the implementation date had been suspended following stiff opposition by the Manufacturers Association of Nigeria (MAN) and ship owners. Also the NSC also needed to fine tune the system to ensure it functions perfectly.


CBN sterilises another N72b, interbank rates – Guardian

The money market observed the weekend with less liquidity in circulation as the apex bank sustained its efforts to support naira exchange rate by N71.6 billion mop-up exercise.

The action, executed through the treasury bills auction of 195-day instrument, also gave the holders an 18 per cent interest.
Meanwhile, the interbank lending instruments- Open Buy Back (OBB) and Overnight RATES remained high, at 18.17 per cent and 20 per cent respectively, but lower than last week’s record.

Besides, the instruments have traded at that range all week, as low liquidity and the persistent cash withdrawal through treasury bills sales by the regulator continued.

 But the optimism among traders has rebounded over tapered interbank rates this week, as signal for the disbursement of July’s budgetary allocation to agencies of government is strong.“Hopefully, the financial system will get the July allocations as the weekly activity resumes. That will help to moderate the interbank lending rates, which has been high. This will only last if there is no big intervention from the regulators again,” a forex trader said.

The Naira on Friday continued its free fall at the parallel market to N412 per dollar, while on some other areas of Lagos, it went for N410 per dollar.


Government records N1.90tr deficit financing in second quarter – Guardian

An estimated deficit of N1,090.96 billion was recorded in the fiscal operations of the Federal Government at the end of the second quarter of this year.

According to the Central Bank of Nigeria (CBN), in its Second Quarter (Q2) Economic Report, the deficit indicates an increase of 96.4 per cent above the provisional quarterly budget deficit of N555.49 billion.

The report just released and obtained by The Guardian yesterday said provisional data indicated that federally-collected revenue during the second quarter of 2016 was N1,159.05 billion which represents 51.3 per cent, and is 8.6 per cent lower than the quarterly budget estimate and receipts in the preceding quarter, respectively.

The CBN said: “The decline in federally-collected revenue (gross) relative to the budget estimate was attributable to the shortfall in receipts from both oil and non-oil revenue, during the reviewed quarter.”

It further reviewed that at N537.19 billion or 46.3 per cent of the total revenue, gross oil receipt was lower than the provisional quarterly budget and the receipts in the preceding quarter by 39.2 per cent and 19.4 per cent, respectively. It also said the decline in oil revenue relative to the budget estimate was caused by the persistent fall in receipts from crude oil and gas occasioned by low price of crude oil in the international market and the series of production shut- ins and shut-downs.


Forex: CBN’s suspension of nine banks bad for economy – LCCI – Today

The Lagos Chamber of Commerce and Industry (LCCI) has faulted the Central Bank of Nigeria (CBN) for suspending nine banks from foreign exchange operations, saying the move is already fuelling uncertainties and impacting negatively on investors.

Director-General, LCCI, Muda Yusuf, in a statement issued in Lagos yesterday, said it was shocking that the nation’s economy had drained due to inconsistent policies in foreign exchange management by the apex bank.

He lamented that the situation had also led to poor inflow of foreign direct investment (FDI) into the country.

Yusuf said the apex bank should have managed the situation carefully bearing in mind the multiplier effect on the nation’s economy.

He said the major challenge facing the economy at this time was the inability to regain the confidence of investors, both local and foreign, adding the instability and inconsistency in foreign exchange management policy had also been complicating matters.

According to him, the economy has a major structural defect of being heavily import dependent that cannot be fixed in the short term.

He, therefore, pointed out that the shocks arising from the collapse of oil price and the corresponding depreciation in the naira exchange rate were inevitable.