- The naira weakened to
N345 to the American dollar on the parallel market on Thursday after petrol prices were raised by 67 percent, traders said. A trader said that the new rate was because of a scarcity occasioned by people holding on to dollars in anticipation of an increase in demand for dollars by oil importers following the FG’s announcement that petrol importers were now allowed to get dollars from the parallel market to help ease acute shortages. Oil industry insiders say that they would now have to source foreign exchange for importation of petrol from the parallel market, as the CBN still emphasises a lack of forex.
- Nigeria is maintaining its revenue forecast for this year’s budget based on daily oil production of 2.2 million barrels despite output falling over the past month, reaching a 22 year low. Minister of Budget and National Planning, Udo Udoma added that the FG is keeping price assumptions at $38 per barrel. Nigeria recently dropped to second place behind Angola as Africa’s largest oil producer following a resurgence in militant attacks and leaks in the Niger Delta causing production to fall to 1.4 million barrels per day. The budget gap, equivalent to 2.14 percent of GDP, will be plugged with foreign and domestic borrowing. Nigeria’s revenue is estimated at
N3.85 trillion and corporate tax at N1.88 trillion in this year’s spending plan.
- New militant group, the Niger Delta Avengers has issued a warning to oil companies, announcing the beginning of their campaign. The group said earlier attacks came after issuing an ultimatum to the Nigerian government about developments in the Niger Delta. “To owners and operators of these oil blocs in our region, the Niger Delta Avengers is giving you two weeks ultimatum to shut down your operations and evacuate your staff. If at the end of the ultimatum, you are still operating, we will blow up all the locations. It will be bloody. So just shut down your operations and leave,” the group warned in a statement.
- A significant decline in biological assets has dampened the profit of oil palm producer, Presco. For the year ended December 2015, Presco’s net income fell by 55.23 percent to
N2.32 billion as against N5.19 billion as at December 2014. Sales increased by 14.34 percent to N10.44 billion, driven by decline in global prices of palm oil prices as well as the company’s aggressive planting. The faltering performance at the bottom lines was as a result of an 81.62 percent drop in biological asset valuation to N1.06 billion. Presco’s net margin fell to 22.22 percent in 2015 from 56.84 percent in 2014. Gross margin reduced to 63.50 in the period under review as against 64.95 percent as at December 2014. The company has embarked on aggressive expansion with a view to bolstering top lines and increasing its share of the market. The company’s total land area increased by 18 percent to 16,650ha while mature palm trees increased by 46 percent to 15,356ha in 2015, according to a recent report by FBN Capital. As a result of its expansion drive, finance costs increased by 95.22 percent to N707.15 million while total debt in the balance jumped by 75.47 percent to N4.56 billion. The availability of improved oil palm nuts/seedlings, accessibility of fertiliser to farmers, flexible government control and adherence to good field maintenance practices are, according to experts, the prerequisite to deepening growth in a sector that was a major driver of the economy in the 1960’s.