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Bureau of Public Enterprises (BPE) yesterday said it has
formally written to Omen International Limited, the reserve bidder in the
ill-fated bid for the national telecoms carrier, Nigerian Telecommunications
Limited (NITEL) and its mobile subsidiary, MTel, to take over the company.

Spokesman of the Bureau, Chukwuma Nwoko, said the company was
invited to come forward to come forward to re-validate its bid to give the
Federal Government the right to commence negotiations with its management to
take up the offer for the privatisation of the company.

Omen International Consortium had emerged the reserved bidder
during the February 16, 2010 financial bid exercise organised by the BPE and
supervised by the National Council on Privatization (NCP) with an offer price
of $956 million.

Several deadlines

Consequently, the Bureau said it has also written to New
Generation Consortium indicating that its former status as preferred bidder for
the national carrier had lapsed, following its inability to pay up 30 per cent
bid security for its $2.5 billion offer at the expiration of several deadlines.

The bid security, which involved the payment of $750 million
within ten calendar days of receiving NCP’s letter of notification of the
approval for its selection as preferred bidder, expired on December 21, 2010.

But, in the correspondence, the BPE said the invitation of the
reserve bidder was in accordance with the provision of Section 3.4.3 of the
Request for Proposal (RFP) sent to all bidders for the privatisation of the
telecommunications outfit, which give bidders a maximum of six months validity
after submission, except bid proposal is extended.

“Since your bid was submitted February 16th, 2010, it expired
August 15th, 2010. We, therefore, wish to invite you to revalidate your bid
bond of 4th April, 2010, if you are still interested in the transaction,” the
bureau said in the letter to Omen Consortium.

It was gathered that the decision by BPE to invite Omen
Consortium was sequel to the adoption of the proposal of the ad-hoc committee
constituted to review the confusion that trailed the sale, which had
recommended either the invitation of the reserve bidder to come forward and
take up the bid, or for the bid process be made to start afresh.

Not much to cheer about

But according to Lanre Opayemi, an Abuja-based finance analyst,
“there is not much to cheer about the prospects of the invitation succeeding,
as Omen Consortium was also entangled in the controversy surrounding the
involvement of Minerva Group as financial advisers to two companies involved in
the bid, in violation of the bid guidelines.”

Mr. Opayemi said he would be surprised if Omen Consortium would
still be willing to go ahead with the transaction on the same terms and
conditions prior to the cancellation of the bid, as much has happened,
particularly concerning the valuation of the assets.

The Senate will
this morning commence the third reading of the Petroleum Industry Bill
(PIB) after it deferred deliberations last week.

The postponement
last week was due to the failure of senators to form a quorum,
apparently as a result of the ongoing political campaigns. Last
Tuesday, only 23 of 109 senators, 10 short of the required minimum to
form a quorum, attended the sitting, which was presided over by the
deputy Senate president, Ike Ekwerenmadu.

Senate
spokesperson, Ayogu Eze, stated last week that the Senate would pass
the Bill today provided there is a quorum of members. Of the 23
senators in attendance, only three were running for re-election.
Truancy in the Senate has caused delays in the passage of bills.

Recently, the
Anti-Money Laundry Bill suffered a setback twice due to the absence of
Ibrahim Ida (PDP, Katsina State), who headed the committee that handled
the review of the Bill. Also, the Tobacco Control Bill, which suffered
a similar fate recently, is still pending before the Senate due to the
absence of Iyabo Obasanjo, whose committee authored the Bill.

Delaying the Bill

Since the PIB was
introduced into the two chambers of the National Assembly in December
2008, it has suffered series of delays due to disagreements on the
provisions of the Bill by various stakeholders. The memorandum
submitted by the Federal Government to both chambers of the National
Assembly identified 14 critical gaps in the draft bill and sought to
close those gaps with about 165 amendments.

After several
interactive sessions with various interest groups, a total of 56
changes were reportedly made by the petroleum industry through the Oil
Producers Trade Section (OPTS), 36 by Federal Inland Revenue Services
(FIRS), 7 by the World Bank/IMF, and 66 by other stakeholders,
including the labour unions.

Host communities,
indigenous oil companies, and federal lawmakers from the oil producing
Niger Delta had during the public hearing on the Bill, insisted that
they will not support the law unless some sections providing for the
interest of the communities were amended to accommodate their interests.

Other relevant
parties of the industry have also raised some serious concerns over the
bill through its period of legislation. It is, however, not clear if
the issues raised by the various interest groups were addressed in the
Bill.

The management of
the Nigerian National Petroleum Corporation (NNPC) at various times had
claimed that government may have been losing about $55.4 million (about
N8.31 billion) monthly as a result of the continued delay in passing
the PIB by the National Assembly.

Chairman of the
Senate panel that reviewed the Bill, Lee Maeba (PDP, Rivers State),
said the benefits of PIB to the Nigerian economy and the petroleum
industry were enormous.

“It will ensure a
strong and virile regulatory framework for overall efficiency of the
petroleum industry, maximisation of the benefits of exploitation of
Nigerian petroleum resources through increase in government take,
overcoming government’s cash call problems, and promotion of
availability of gas for electricity production,” he said.

The Petroleum Industry Bill (PIB) is conceived to repeal the
Petroleum Act of 1969, and consolidate about 16 other petroleum
industry laws into one single, transparent and coherent document. The
objective is to establish a comprehensive legal and regulatory
framework for good governance, transparency and accountability with
regard to operational and fiscal terms for revenues management, and
removal of confidentiality clauses in licences, leases and contracts in
the nation’s petroleum industry.

Egypt’s government
is reviewing a proposal to increase the size of a fund set up to help
small investors who bought shares on margin or credit before political
turmoil led to the bourse closing, a market official said.

The stock exchange
has been shut since January 27 amid a popular uprising that forced
President Hosni Mubarak out of power after 30 years. The exchange said
it would reopen before the end of the week but has not specified the
date.

Analysts say the
government has been reluctant to reopen the bourse out of concerns
about the economic repercussions of shares tumbling and capital flight
abroad. Rules have already been put in place limiting how much a share
can fall each session and many particularly small investors have
petitioned officials for support.

A fund worth 250
million Egyptian pounds has already been set up to offer loans to small
investors who were involved in margin trading or who used credit. “We
are now in the process of discussing with the Ministry of Finance
options to increase this amount but until now, we have not succeeded,”
said Mohamed Abdel Salam, chairman of the stock exchange’s Clearing
Settlement and Central Depositary.

Prime Minister
Essam Sharaf on Sunday approved changing rules to the country’s Capital
Markets Law to ease margin calls by brokerages, to limit volatility
when the bourse opens. When the client’s debt reaches 70 percent of the
shares’ value at the end of trading each day, brokerages will require
investors to pay margins or present more collateral, the Egyptian
Financial Supervisory Authority (EFSA) said on its website.

Brokers had
previously been required to make margin calls at 60 percent. Brokers
can also now sell a client’s shares when debt reaches 80 percent of
their value, instead of 70 percent. “If we open it a little bit to 80
percent, this will relieve the brokers and make them think not to sell
before they reach the 80 percent,” Abdel Salam said.

Under exchange
rules, market investors could borrow money on margin through brokers by
using shares they held as collateral. The loans were limited to 50
percent of the market value of the shares on the day the loans were
signed and could be used only to buy the 30 stocks in the benchmark
index.

The heads of EFSA
and the bourse met Finance Minister Samir Radwan on Monday to call for
him to expand the fund, Abdel Salam said, adding he expected a big fall
when the market opened. “Nothing will be enough to prohibit the numbers
of selling orders at the beginning of the market. It is my opinion –
that of course the market will lose in the first two days,” he said.

For shares in the
benchmark index, the bourse has said it will suspend trade for
half-an-hour if it declines by 3 percent and for the remainder of the
session if it falls by 6 percent.

Egypt’s economy
nearly ground to a halt during weeks of protests. Some of its main
sources of foreign exchange, including tourism and foreign investment,
have collapsed. Many factories continue to operate below capacity. MSCI
said in February Egypt would risk being excluded from its emerging
markets index if the market did not reopen before MSCI reviewed its
status in four weeks.

Experts have stated
that high oil price, which is expected to shore up the nation’s foreign
reserves, may also have harsh effects on consumers’ pockets and
companies books.

The high oil
prices, which experts foresee would last through March and April and
moderate sometime midyear at the expense of consumers’ disposable
income, would soon begin to have some indirect rippling effects.

Oil prices have
been rising especially since January, due to the unrest in the Middle
East and experts are of the view that high oil prices imply higher
Automotive Gas Oil (AGO) and Low Pour Fuel Oil (LPFO) prices.

“Our oil price
outlook suggests Automotive Gas Oil (AGO) and Low Pour Fuel Oil (LPFO)
prices will remain high. According to our economists, our base case for
the oil price is that it will stay at around $110 per barrel through
March and April 2011, before moderating to $90/bbl in the second half
of 2011,” Akintola Akinbamidele, research analyst, Renaissance Capital,
an investment bank, said.

In 2003, the
Nigerian government had deregulated the downstream segment of the
petroleum industry, with the exception of Premium Motor Spirits PMS,
permitting petroleum marketers to compete favourably and to import and
sell at market rates.

The deregulation of
the sector thereby created competitive scenery that forced down prices,
unlike when the Nigerian National Petroleum Corporation had a monopoly
on importing and selling. However, high oil prices are now implying
higher automotive gas oil and low pour fuel oil prices.

This, Mr. Akinbamidele said, has translated into an average 35 per cent increase in AGO prices in the local Nigerian market.

“The depot price of
AGO from an independent retailer averaged at N90-95/litre in 2010. We
have seen an uptick in prices, with the average price of AGO sold by
independent retailers now at N145-155/litre,” Mr. Akinbamidele said.

The gainers and losers

Many fast moving
consumer goods (FMCG) companies, like other industrial users in the
Nigerian space, depend totally on self-generated power, which can be
fuelled by AGO, LPFO, coal or, more recently, natural gas. Compared
with the cheap cost of power from the national grid, which remains
unreliable, experts say the cost of running a generator averages at
30-45 per cent of an FMCG company’s production costs.

Experts say these
fast, moving consumer goods companies that have invested in the
generation of power through the use of gas turbines are in a better
position to protect themselves from the price shocks expected for AGO
and LPFO and therefore, are in a better position to reduce the net
impact of the increase in AGO prices (assuming any attacks in the Niger
Delta do not interrupt the gas supply).

Mr. Akinbamidele said consumers are also going to feel the pinch.

“We expect higher
energy costs to eat into the disposable income of the average Nigerian,
especially as a sizeable proportion of the population use kerosene
(which is deregulated and is currently priced at about N105/litre, up
from an average of N70-80/litre in 2010) for its cooking needs, rather
than more expensive cooking gas. PMS is a regulated product segment, so
we do not expect any direct impact on its price, which we expect to
remain flat at N65/litre.

“We are of the view
that the ability of FMCG companies to pass on increases in the cost of
raw materials and commodities to their customers, in absolute terms, is
minimal, as any significant price increase would result in consumers
shifting to cheaper alternatives,” he said.

“These are
short-term setbacks, in our view, and we maintain our positive outlook
on the FMCG segment over the medium to long term,” he added.

The National
Pension Commission (PENCOM) said the recent review of its investment
guidelines for pension fund assets was done in order to allow for
investible funds to be channeled to critical sectors of the economy.

The revised
guidelines, which were released on December 16 last year, were designed
to enable pension funds to be used to intervene in correcting the
infrastructure deficit in the country.

According to the
review guidelines, the list of assets in which the funds can be
invested include bonds, debentures, redeemable/ convertible preference
shares, and other debt instruments issued by corporate entities,
including asset backed securities and infrastructure bonds.

Section five of the
reviewed guidelines states that pension fund assets can be invested in
infrastructure projects through eligible bonds or debt securities,
subject to the infrastructure project being “awarded to a
concessionaire through an open and transparent bidding process, is not
less than N5 billion in value, and managed by concessionaire with good
track record.”

According to
PENCOM, such projects must be in accordance with and meet due process
requirements of the Public Private Partnership (PPP) Policy, as
certified by the Infrastructure Concession and Regulatory Commission
(ICRC), and approved by the Federal Executive Council (FEC).

Investment in critical sectors

The Central Bank of
Nigeria (CBN) governor, Sanusi Lamido Sanusi, disclosed recently that
it was collaborating with PENCOM on ways to unlockthe huge pension fund
for investment in critical sectors of the economy. He said rather than
expose the Nigerian economy to cheap dollar loans, which could prove
costly in the long run, it was better to access cheap funds locally.

“Part of it has
been working with the Pension Commission to see how we can unlock some
of the N2 trillion we have in pension funds into infrastructure and
power in a manner that works.

“If we put up
guarantee worth N400 billion and the pension funds puts down N400
billion 20 year money into power and infrastructure, the maximum risk
it will take on the Central Bank balance sheet is N20 billion bond, and
N400 billion generates 4,000 megawatts,” Mr. Sanusi said.

The reviewed
investment guidelines said such funds can only be invested in
infrastructure bonds, subject to a maximum portfolio limit of 35 per
cent of the pension assets under management, with a maximum of 15 per
cent being in infrastructure bonds.

Such investment
shall have a maturity date that is prior to the expiration of the
concession and have a redemption procedure, in the event of project
suspension or cancellation.

The commission said
the review was done in order to give backing to any institution that
wants to invest in the infrastructure development.

“We do not have the
power to direct the PFAs on areas to invest. What we have only done is
to review the guidelines so that those who want to invest in the sector
can do so.”

A statement from
the commission said the emphasis of the review was to allow PFAs to
invest in bonds which would be floated by the CBN targeted at power and
infrastructure development.

“PENCOM did not sign any understanding directly with the CBN. What
we just told them is if you want to raise money for power sector, issue
bonds, and if it makes sense to the PFAs, they will invest in them.”