The FG has indicated that it could withdraw the licences of eight power distribution companies over an alleged breach of market rules. The Nigerian Electricity Regulatory Commission said the eight power firms, the Abuja DisCo, Benin DisCo, Enugu DIsCo, Ikeja DisCo, Kaduna DisCo, Kano DisCo, Port Harcourt DisCo and Yola DisCo, breached some provisions of the Electric Power Sector Reform Act in July 2019. The regulator said the DisCos failed to meet up with the expected minimum remittance to the Nigerian Bulk Electricity Trader for the July billing cycle. According to the notice issued to the firms, each of them is expected to “show cause” in writing within 60 days from the date of receipt of the notice to explain why their licences should not be cancelled in accordance with section 74 of EPSRA.
Nigeria wants to recover about $62 billion from international oil companies in an effort to boost its revenue after a drop in output and in the price of crude oil. The country, relying on a 2018 Supreme Court ruling, said it can increase its share of income from production-sharing contracts. The FG said energy companies failed to comply with a 1993 contract-law requirement as they claimed that the country received a greater share of revenue when the oil price exceeds $20 per barrel, according to Bloomberg, quoting a document prepared by the attorney general’s office and the Justice Ministry. The media said the ministry verified the document. The government said it wants to negotiate with the company but didn’t mention how it will recover the money. Nigeria previously targeted foreign companies, fining mobile operator MTN almost $1 billion for failing to disconnect undocumented SIM-card users, and suing firms including JPMorgan Chase & Co. in a corruption scandal. The fine imposed on MTN was negotiated down from an initial penalty of $5.2 billion. Under the production-sharing contract law, companies including Shell, ExxonMobil, Chevron, Total and Eni agreed to fund the exploration and production of deep-offshore oil fields on the basis that they would share profit with the government after recovering their costs. When the law came into effect 26 years ago, crude was selling for $9.50 per barrel. The oil companies currently take 80 percent of the profit from these deep-offshore fields, while the government receives 20 percent according to the document. Oil companies, including Shell, have, however, gone to the Federal High Court to challenge the FG’s claim that they owe the state any money, arguing that the Supreme Court ruling doesn’t allow the government to collect arrears. They also contend that because the companies weren’t party to the 2018 case, they shouldn’t be subject to the ruling.
President Buhari has asked Nigerians to be wary of statistics developed abroad by the World Bank, IMF and other foreign organisations. Agreeing to the significant role an accurate collection of data can play in the country’s social and economic planning, the President recommended that local institutions are better suited over foreign agencies to collate such records. “Some of the statistics from foreign bodies are wild estimates that bear little relation to the facts on the ground,” Buhari said via his official Twitter handle. He said he had raised the matter with the recently-constituted economic council; Presidential Economic Advisory Council and urged them to prioritise a framework on data collection that would make national planning and policymaking more feasible. The National Bureau of Statistics, established under the Statistics Act, 2007, has been the only public institution collecting centralised data on social and economic activities across Nigeria. According to the bureau’s director-general, Yemi Kale, the NBS is largely responsible for most of the data collected for use in Nigeria and by foreign bodies. The foreign bodies do not collect data in the country, he said, but the World Bank, IMF and other foreign institutions regularly enter into a partnership with the bureau for data collection.
The IMF has advised the CBN not to be too aggressive with banks in the country on loan to deposit ratio policy, which the CBN pegged at 65 percent before the end of this year. The Senior Resident Representative and Mission Chief for Nigeria and leader of the IMF team on a staff visit to the country, Amine Mati urged the monetary regulator to look into the matter carefully before taking an aggressive stance. He noted that the loan policy could have a huge negative impact on the banks, especially on their asset quality, prudential buffers and others. However, the global lender said that the prudential ratios of the Nigerian banking industry was recording an improvement, pointing out that consolidating the capital buffers of banks would prevent the sector against any external shock. The CBN had in July this year directed banks to increase their LDR to 60 percent before 30 September 2019, threatening to punish any financial institution that fails to adhere. This month, the regulator slammed 12 banks with a fine of ₦499.2 billion for not meeting up with the 60 percent LDR and this caused banking equities at the stock market to fall on 2 October 2019. The CBN had explained that it came up with this policy to boost lending to the real sector of the economy. Since the country went into recession in August 2016 and got out a year later, the economy has not fully recovered.