Economists Call for a Hike in Gas Flaring Charges on Oil Majors

Data from the National Oil Spill Detection and Response Agency (NOSDRA) revealed that Nigeria has so far flared over 200bn standard cubic feet (Million MSCF) of gas since its net zero commitment at COP26 in November 2021. Based on the adopted Gas Flare Tracker (GFT) estimates, the gas flared within the period emitted 11.5m tonnes of carbon dioxide (CO2), valued at US$757.9m. Some analysts believe the projects or funding required to curb gas flaring are not readily available and thus are responsible for continued flaring. Proshare analysts argue that the country's continuous gas flaring is due to a lack of a significant deterrent or punishment. The current penalties for gas flaring in Nigeria officially stand at US$2 per 1000 standard cubic feet (scf). Increasing the penalty on gas flaring would deter the act and provide additional liquidity to fund the emission reduction programmes of the government (see chart 1 below). 

Chart 1: Gas Flare Tracker Estimated Volume (Million MSCF)

Repurposing Ajaokuta Steel and Mining Company May be Better than Concessioning, Say Analysts

At the Nigerian Mining Week opening in Abuja, Vice President Professor Yemi Osinbajo said concession plans for Ajaokuta Steel Complex and Itakpe mining company are ongoing.  The Ajaokuta Steel Company, which has a total of 43 plants, has changed ownership severely under various failed sale programs by the government. But since its inception, the project meant to take advantage of the country's large iron ore, coal and limestone deposits to produce flat steel sheets has not been operational. Analysts believe the plants' design is old-fashioned and proposes a negative or low net asset valuation (NAV). Past buyers were noticed to have asset-stripped due to their inability to run the plants efficiently due to technological obsolescence. At inception, the $8bn complex, which has a 68km road network, and 24 housing estates, was expected to create as many as 500,000 jobs.

Emerging Africa Capital Limited Issues N3bn Commercial Paper

Emerging Africa Capital Limited issued a N3bn Series 1 & 2 commercial paper under its N15bn commercial paper Programme. The issuance has a tenor of 182-days and 269days with the discount rate allotted at 16.94% and 17.43% while the yield is at 18.50% and 20%, respectively. The issuance proceeds will meet the company's short-term working capital and funding requirements. The offer was launched yesterday and intends to close on November 7, 2022, and investors can invest with a minimum of N5m and multiples of N1,00 after that. The maturity date is May 9, 2023, for the 182-day, and August 4, 2023, for the 269-day. The issuer's audited financial statement for 2021 shows gross earnings of N1.77bn and N24.6bn total assets. Datapro allocated "A-" rating for the company, indicating an adequate capacity for timely payment of financial commitments. The attractive yields should nudge huge subscriptions to the issuance. 

Bears Dominate the Equity Market as November Gears Up

The NGX All-Share Index inched down 0.21% to close at 43745.73 Index points against a 0.17% loss recorded at the end of the previous trading session. The NGX Market CAP recorded a loss of N50.84bn. Sectorial performance was broadly negative; five (5) Sector indices closed positive, ten (10) sectors closed negative, and three (3) sectors closed flat. The NGX INDUSTRIAL sector topped the gainer's chart with +1.33%. The Oil and Gas Index declined by 4.31% to top the losers' chart. The Year-to-Date (YTD) gain stood at +2.41%. Analysts noted that with increasing inflation and depreciation of the Naira in both the official rate and BDC rate, Naira investment looks unattractive to investors as investors look for safer assets (see table below). 

Table 1: Top Gainers and Loser By Sectors in Listed Equity Market November 1' 22

Cryptocurrencies Turn Bullish as Commerce Goes Long

MoneyGram has launched a system that enables users to buy, sell, and hold Bitcoin and Ethereum via a mobile app. The newly introduced service will provide exposure to several mainstream cryptocurrencies, including Bitcoin (BTC), Litecoin (LTC), and Ethereum (ETH), allowing users to invest in these assets as the cryptocurrency industry makes global penetration. Prominent South African consumer goods retail platform "Pick n Pay" is set to begin accepting Bitcoin and other cryptocurrencies as payment for goods. The payment can be utilized through local crypto wallets. Customers can pay for products at the participating retail points by scanning a QR code through any local cryptocurrency wallet with a bitcoin lightning feature. Pick n Pay also noted that the transaction would take only 30 secs, as it is generally accepted with most blockchain transactions, with an average fee of 70cents.