CAPITALDIGEST DAILY NEWS, 05/12/2022

NNPCL FLARES 100% GAS OUTPUT, EARNS ZERO REVENUE IN SEPT Despite the federal government’s gas monetisation policy and pledge to the United Nations to attain net zero by 2060, state oil firm, Nigerian National Petroleum Company Ltd flared 100 per cent of their gas output in September and earned no revenue from it during this period. The NNPCL gas production and utilisation data for September 2022, obtained by the PUNCH, described its subsidiary, Nigerian Petroleum Development Company as one of the worst offenders in gas flaring in September, as the firm and its Joint Venture partners, Seplat Petroleum Development Company and NPDC-Chevron Nigeria, flared 100 per cent of their entire gas output of 106 million standard cubic feet of gas and 7 million standard cubic feet of gas, respectively. The firm further noted that Newcross Exploration and Production Ltd and Belema Oil flared about 96 per cent and 75 per cent of their 112 million standard cubic feet of gas and 21 million standard cubic feet of gas, respectively. About 8 billion SCF of gas was flared in the month under review, representing 5 per cent of the total gas output for the month, compared with 10 billion SCF of gas flared in the month of August, according to the report. This is coming at a time the country is battling a cash crunch due to a drop in its oil revenue on the back of a significant decline in oil production which dipped to below 1 million barrels per day, the lowest in 32 years. The government has been relying heavily on borrowing to finance its activities, as its debt reached an all-time high of N42.84 trillion in June. The NNPCL gas production and utilisation data did not state why the firm had flared the whole of its gas production for the month. The firm’s spokesperson, Garba Deen did not also respond to both phone calls and messages sent to him. CBN DEFENDS NAIRA WITH $11.24BN IN SEVEN MONTHS The Central Bank of Nigeria injected $11.24bn into the economy to stabilise the value of the naira from January 2022 to July. This was obtained in the banking regulator’s monthly economic reports on foreign exchange market developments. The report showed that $7.6bn was used to stabilise the naira in the first five months of the year. It stated, “Total foreign exchange sales to authorised dealers by the Bank were $1.75bn in July, a decrease of 15.4 per cent relative to $2.07bn in June. A breakdown shows that foreign exchange sales at the interbank/invisible window and matured swaps decreased by 22.0 per cent and 59.1 per cent, respectively, to $0.13bn and $0.27bn, below their respective levels in the preceding month. “In contrast, FX sales at Investors and Exporters, Secondary Market Intervention Sales and Small and Medium Enterprises windows rose by 5.8 per cent, 0.6 per cent and 65.7 per cent, respectively, to $0.44bn, $0.72bn, and $0.19bn, compared to their levels in June.” In earlier report, the CBN said it had intervened in the markets with $1.65bn, $1.39bn and $1.82bn in January, February and March, while the interventions were $1.56bn and $1.18bn in April and May respectively.  The report read, “Total foreign exchange sales to authorised dealers by the bank were $1.18bn, a decrease of 24.4 per cent, below $1.56bn in April. “A breakdown shows that foreign exchange sales at the Investors and Exporters and interbank/invisible windows decreased by 37.9 per cent and 0.7 per cent to $0.16bn apiece, below their respective levels in the preceding month. BANKS’ CONSUMER LOANS UP 31% TO N2.55TRN ON RISING INFLATION On the back of rising inflation rate in Nigeria, banks’ consumer loans rose by 31 per cent or N615.82 billion in one month to N2.55trillion in July 2022 from N1.93trillion in June 2022, the Central Bank of Nigeria (CBN) economic report for the month of July 2022 has revealed. The CBN in the report stated that, “As a share of total claims on the private sector, consumer credit rose to 9.4 per cent, from 7.2 per cent at end-June. The increase in consumer credit could be attributed to general rise in prices which impacts on households’ budget and spending behaviour.” The inflation rate opened in January 2022 at 15.6 per cent and increased to 19.64per cent in July 2022, according to the National Bureau of Statistics (NBS). Banks’ consumer loans in its Year-on-Year (YoY) performance has increased by 38.34 per cent or N706.45billion from N1.84trillion in July 2021 to N2.55trillion in July 2022 amid increasing inflation rate and hike in CBN’s Monetary Policy Rate (MPR). The CBN  had in a report disclosed that banks’ consumer loans grew by 0.17 per cent to N2.08trillion in January 2022, from N2.07trillion in December 2021, accounting for 8.7 per cent of total credit to the private sector. The report attributed the increase to growing confidence in the economy following gradual pick-up in economic activity as well as the various policies of the CBN, such as the loan-to-deposit ratio (LDR) policy and the collateral registry. However, the report for the month of July 2022 stated that a disaggregation of consumer credit shows personal loans stood at N1.93trillion billion, accounting for 75.7 per cent, while retail loans stood at N620.29 billion, and accounted for 24.3 per cent. Consequently, banks raised lending rates, and the average prime lending rate increased to 12.1 per cent in July from 11.68 per cent in January, while average maximum lending rate rose to 27.61 per cent in July from 27.65 per cent in January. FG RAKES N2TRN FROM INDIRECT TAXES, AS BANKS’ TAXES RISE 41.7% TO N135BN Despite the economic headwinds, the Federal Government, FG, received N2.01 trillion in indirect taxes in the third quarter of 2022, Q3’22, up 16.6 per cent from the N1.72 trillion collected in the corresponding period of 2021, according to the data of the National Bureau of Statistics, NBS. Indirect taxes paid to the government by a producers or retailers and later passed on to the consumers. They include value-added taxes (VAT), customs or import duties, excise duty, among others. Indirect taxes are calculated based on current basic prices. Meanwhile, 15 leading banks listed on the Nigerian Exchange Limited, NGX,    paid N135.3 billion as tax in Q3’22, showing 41.7 per cent rise against N  95.49 billion in the corresponding period of    2021, Q3’21. The banks’ tax figure also represents 14.7 per cent of their Profit Before Tax, PBT, declared in Q3’22 as against 12.6 percent in Q3’21. The PBT of the banks rose 21.6 percent to N  920.024 billion in Q3’22 against N  756.574 billion in Q3’21. Findings by Vanguard from the latest figure released by the NGX show that Tier-1 banks which are First Bank, Access Holdings, Zenith Bank, Guaranty Trust Bank and UBA accounted for 84.6 per cent of the total tax paid by the sector in Q3’22 as against 89.8 per cent in Q3’21.Details of individual bank’s tax figure show that Guaranty Trust Bank led with N  39.375billon followed by Zenith Bank with N  28.218billion and UBA with N  22.451billion came third. The other Tier-1 banks, First Bank and Access paid N14.203 billion and N10.289 billion respectively. FOREX FLOWS FALLS 36% TO $17.4BN Foreign exchange flows through the economy fell year-on-year (YoY) by 36 percent to $17.4 billion as at July 2022 from $27.3 billion in the corresponding period of last year. Data from the Central Bank of Nigeria, CBN, monthly Economic Report for the month showed that aggregate foreign exchange inflow into the economy was $43.02 billion, compared with US$49.6 billion in the corresponding period of 2021, while total foreign exchange outflow rose by 14 percent to $25.58 billion relative to $22.37 billion. Consequently, a net inflow of $17.4 billion was recorded during the period. The data also showed that outflows through the CBN rose by 19.9 percent to $20.05 billion in July 2022 from $16.71 billion in the corresponding period of 2021. However, this came as CBN foreign exchange sales to authorized dealers fell YoY by 14 percent to $11.42 billion in the July of 2022 from $13.35 billion in the same period last year. A breakdown showed that SME interventions and matured swap contracts declined YoY by 2.7 percent and 17.9 percent to $739 million and $1.92 billion from $759.68 million and $2.34 billion respectively in 2021. However, sales at the investors & exporters window, interbank/invisibles and SMIS windows, increased by 27 per cent, 33 per cent and 17.8 percent to $2.68 billion, $953.92 million and $4.55 billion compared with $2.1 billion, $714.6 million and $3.86 billion respectively in 2021.