CAPITALDIGEST DAILY NEWS, 05 JUNE 2021

  MONDAY 28/6/2021 – PETROL LANDING COST HITS N232, SUBSIDY RISES TO N5.58BN DAILY From an average of N143.60 per litre in December, the landing cost of petrol rose to N231.98 per litre on June 16 this year on the back of the rally in global oil prices and the depreciation of the naira against the dollar. The Petroleum Products Pricing Regulatory Agency had in March this year released a pricing template that indicated the guiding prices for the month. The template, which showed that petrol pump price was expected to range from N209.61 to N212.61 per litre, was greeted with widespread public outcry and was later deleted by the agency from its website. The pump price of petrol has remained at between N162 and N165 per litre at many filling stations in Lagos since December. The template, which was based on an average oil price of $62.22 per barrel for February and an exchange rate of N403.80 to a dollar, showed that the landing cost of petrol was N189.61 per litre. Last month, the Central Bank of Nigeria devalued the naira as it adopted the NAFEX exchange rate of N410.25 per dollar as its official exchange rate, days after removing the N379/$ rate from its website. The price of crude oil, which accounts for a large chunk of the final cost of petrol, has continued to rise in recent months, with Brent, the international oil benchmark, closing at a record high of $76.18 per barrel last Friday, up from $73.88 per litre on June 16. The Group Managing Director, Nigerian National Petroleum Corporation, Mele Kyari, said on March 25 that with the current market situation, the actual price of petrol could have been anywhere between N211 and N234 per litre. He said the Federal Government was subsidising petrol with about N100bn to N120bn monthly (N3.3bn-N4bn daily) as it was being sold for N162 per litre. The PUNCH had in an April 20, 2021 report estimated that the subsidy on petrol would gulp N500bn in the first five months of this year as the Federal Government decided to leave the pump price of petrol unchanged in the period despite the increase in global oil prices.   TUESDAY 29/6/2021 – CBN WARNS AGAINST NAIRA ABUSE The Central Bank of Nigeria has frowned on continued abuse of currency note by the general public, especially during weddings and other occasions. Speaking on Monday in Gombe at a Fair with the theme ‘Promoting Financial Stability and Economic Development’, Principal Manager, Currency Operations Department, Ngozi Etim, said the law banning people from matching money subsisted. The CBN Fair is a harmonised sensitisation on all CBN initiatives which includes Real Sector Financing and Intervention, Payment System Initiatives, Consumer Protection Clean Naira Note Policy, Financial Inclusion, Consumer Rights etc, held simultaneously in Bauchi and Gombe states. Etim noted that envelope remained the best and acceptable means of extending goodwill at events and not by deliberately attempting to discredit the Nigerian currency by spraying and eventually stepping on it. She said, “Money should not be squeezed but put into the envelope. Oil should not be allowed to touch the money; keep it neat like your clothes. “You don’t dirty your clothes and you don’t keep your clothes on the ground. So, there is need to keep our money well. Don’t match our money, so that it can stay long. Naira is our symbol of identity.” She added that the current CBN Act empowered the bank to arrest those who abuse the currency, adding that the proper handling would ensure the durability of the notes.   WEDNESDAY 30/6/2021 – SEC ISSUES FRAMEWORK FOR INTERCONNECTING CSDS The Securities and Exchange Commission (SEC) has commenced moves to ensure interconnectivity and interoperability among the Central Securities Depositories (CSDs) to enhance the efficiency of trading and settlement system in the capital market. The Commission stated this yesterday in a notice titled: “Interoperability among Central Securities Depositories: Proposed Interoperability/FMI Link Framework”, saying that interconnectivity among the CSDs would ensure investor protection, while aligning the operations in the market with international best practices. In line with the framework, the Commission said that all the securities exchange and CSDs in the capital market are expected to establish a peer-to-peer link to facilitate interoperability with each other and put in place the required infrastructure, systems, processes and risk management for the effective operation of the interoperable arrangement. According to SEC, the CSDs are also expected to allow for fair and open access to their services based on reasonable risk-related access requirements as well as have adequate reconciliation procedures to ensure that their respective records are accurate and current. “The Nigerian capital market has witnessed remarkable growth in the last few years in terms of size, market participants and tradable instruments.   THURSDAY 1/7/2021 – COMPANIES RAISE N800 BILLION IN BOND MARKET Nigerian companies have raised over N800 billion bonds from the capital market in the first half of 2021 (H1) just as predicted by Norrenberger in its 2021 Economic Outlook Report. Norrenberger, a financial services group, had predicted in its 2021 economic outlook report published in December 202o that yields on fixed income instruments would remain low and thus was expected to result in many corporate borrowers to see bonds as a suitable source of capital to cover their increasing cost of operations. The Report titled “Seizing The New Reality,” was designed for local and foreign investors who seek to understand the investment/capital market in Nigeria. The report had explained that while major policies and actions from government authorities and international organisations should be enough to restore economies to the growth path, aggregate consumption was expected to grow at a gradual pace. “With the announcement of the federal government’s N5.06 trillion deficit in the 2021 budget and the activities of corporate borrowers, we expect minimal impact on fixed income rates. We also project corporate issues between N2 trillion and N3 trillion, for a meaningful impact on yields. In our opinion, rates would remain low over the short term while pressures build-up for an upward movement in yield over the medium term,” Norrenberger had said. Various companies have taken advantage of the low performance in the fixed income market to raise bonds at rates below 10 per cent to the tune of N800 billion   FRIDAY 2/7/2021 – EXTERNAL RESERVES SLIDE FURTHER, LOST $905.5M IN JUNE – CBN The country’s external reserves maintained a downward trend as it lost $905.5m in June, figures obtained from the Central Bank of Nigeria showed on Thursday. According to the CBN’s data on the movement of reserves, the reserves fell to $33.32bn as of the end of June 30 from $34.23bn on May 31. The reserves stood at $34.88bn at the end of April 30. Financial experts have expressed the need for the government to attract more foreign direct investment into the country and stimulate domestic production to attract more foreign exchange and reduce the demand on forex for importation. At the last Monetary Policy Committee meeting, the CBN Governor, Godwin Emefiele, while speaking on the decline in external reserves, said, “This reflects sales to the foreign exchange market and third-party payments.” The CBN, in its January economic report, said, “As a consequence of the lower foreign exchange receipts, the official external reserves declined. “External reserves stood at $35.44bn at the end-January 2021, a decrease of 2.8 per cent and 3.5 per cent from $36.46bn in December 2020 and $36.73bn in January 2020.” Meanwhile, the naira was bought and sold at the parallel market at N499/$ and N500/$ on Thursday, according to figures obtained from the naijabdcs.com, the CBN’s official website for the Bureau de Change operators.