Nigeria Content Online

Nigeria’s
effort at domiciliation of the petroleum industry operations through
the Nigerian content policy appears to be yielding the desired
dividend, as key multinational operators have started deploying locally
manufactured pipes in their fields.

American
energy giant, ExxonMobil, has pioneered the use of made-in-Nigeria
pipes in its operations, with plans to deploy Helical Submerged Arc
Welded (HSAW) pipes fabricated by SCC Pipe Mills for its Usari-Idoho
pipeline replacement project in Akwa Ibom State.

The
pipes will be used for the replacement of the 24-inch oil pipeline
connecting the Usari and Idoho platforms, located in the company’s
shallow water oil fields in water depths of 21 metres.

The
feat, which would pave the way for made-in-Nigeria pipes to be used for
an oil and gas project in the country by any international or local
operating company, is expected to unlock investments in pipe mills and
other oil industry support facilities.

Executive
Secretary, Nigerian Content Development and Monitoring Board (NCDMB),
Ernest Nwapa, said at the weekend at a meeting with representatives of
China’s major welded line pipe maker, Jiangsu Yulong Steel Pipe, led by
its director of sales, M. A. Abbas, that a number of investors have
already firmed up plans to establish pipe mills and related facilities
in Calabar in Cross River, as well as Koko and Gbaran Ubie in Delta
State.

What
is delaying the Final Investment Decisions (FID) of these investors,
Mr. Nwapa said, were concerns by SCC that products from its pipe mill
in the country was not being patronised by the industry.

He
described the use of SCC pipes by Exxon Mobil as a breakthrough in the
implementation of the Nigerian Content Act and a strong signal that
government, assuring that investments in the country’s oil and gas
industry in support facilities, would be protected and patronised.

Nwapa
urged serious investors to speed up the pace of execution of their
projects by taking advantage of the Nigerian Gas Master Plan (NGMP)
infrastructure project and the Calabar-AKK pipeline project being
promoted by the Nigerian National Petroleum Corporation (NNPC) on
behalf of the Federal Government.

Minister
of Petroleum Resources, Deziani Alison-Madueke, said two weeks ago, at
the inauguration of the NCDMB governing council by President Goodluck
Jonathan, that the steadfast implementation of the Nigerian Content Act
would lead to the establishment of three to four new pipe mills and
other ancillary manufacturing plants in the next four years to service
the demands of the industry.

According
to Mrs. Alison-Madueke, the Federal Government’s vision is to retain
over $10 billion out of an average annual oil & gas industry
expenditure of $20 billion in the Nigerian economy, compared to the
current sum of less than $4 billion.

The
Usari-Idoho pipeline replacement project is being executed by Saipem
Nigeria for ExxonMobil, with extensive tests carried out on the pipes
both locally and overseas to confirm that they met all required
technical specifications.

With
the confirmation that the pipes fabricated by SCC met all international
standards, the Executive Secretary pointed out that there was no reason
why other operating companies in Nigeria would not join in sourcing
their pipes from the company and other proposed pipe mills across the
country.

Nwapa
also noted that NCDMB had insisted that any of the proposed Nigerian
pipe mills with the capacity to meet the project schedule of the
Calabar-AKK pipeline project or any other project in the petroleum
industry would be fully utilised before any quantity could be imported.

Although
the SCC pipe mill has a capacity of producing 30,000 tons at a time and
an annual capacity of 100,000 tons, the only order placed in the
factory since it was upgraded was three years ago, with about 6,000
tons by Exxon Mobil in 2007.

Though
Shell Petroleum Development Company (SPDC) and Nigerian Agip Oil
Company (NOAC) are reportedly processing orders for supply of line
pipes from the SCC mill, Mr. Nwapa charged other operators to toe the
same line in order to encourage keen investors to progress their pipe
mill construction.

At
the meeting between NCDMB and representatives of Jiangsu Yulong Steel,
it was gathered that an agreement was reached to set up a joint
NCDMB/Julong project team that will work on the proposed movement of
the company’s 250,000 tons longitudinal submerged arc welded pipe mill
to Nigeria.

Consumer inflation
rose to 13.7 percent year-on-year in August from 13.0 percent the
previous month, the National Bureau of Statistics said on Friday.

Growth in food
prices, which form the bulk of the inflation index basket, also rose to
15.1 percent year-on-year from 14.0 percent in July. The Monetary
Policy Committee (MPC), which has repeatedly voiced concern about
inflation, is due to meet on Tuesday to review the country’s benchmark
interest rate, which has been on hold at 6.0 percent for more than a
year.

Central Bank Governor, Lamido Sanusi, told Reuters, on Thursday,
that weak bank lending was a “major worry,” and that although he wants
single-digit inflation by the end of the year, the central bank will do
nothing to jeopardise economic growth. He noted, however, that higher
government spending, with elections due next January, and the
establishment of the Asset Management Company to soak up bad bank loans
should help put more money into the system, meaning the inflation risk
was not zero.

Professionals in
the telecommunication sector have frowned at the killing of six staff
of MTN Nigeria at the firm’s Base Transceiver Station (BTS) site in
Aba, Abia State.

A project manager
of MTN in Aba, one Valentine, explained that the incident took place
last week while the staff went to work at the site.

“This is to inform
you that our team of engineers went out to work at Gabby Oil, Aba Road,
Aba, Abia State, and while working on the generator, four gunmen walked
into the BTS site while the team of engineers were waiting for the RBS
to load after bringing up the generator and held them at gunpoint,” Mr.
Valentine said in a report to the company’s head office.

“One Petrolseal
engineer, two Mopol men, the rigger, and the security man were killed
outright while the second Petrolseal engineer died on arrival at the
hospital,” he said.

Titi Omo-Ettu, the
president of the Association of Telecommunication Companies of Nigeria
(ATCON), said in an email message that the murders are shocking.

“Nobody living in
Nigeria can pretend that this is a new development, but this certainly
is one murder too callous to be regarded as one of the usual stories.
We commiserate with MTN and with the families of the murdered persons,”
he said.

Government must act now

Mr. Omo-Ettu,
however, said the increase in criminal activities in the country shows
that the government is helpless and must act now before it loses its
relevance.

“We invite
attention of the Federal Government to these murders and kidnappings,
which is now blatantly portraying government as helpless. The essence
of governance is now appearing to be meaningless while living and
investing in our country may be becoming anathema to all peoples of the
world,” he said.

“Our association
pledges to do all things possible to assist the police in investigating
this incident and we invite the attention of the new Inspector General
of Police to the need to see this as one case which requires speedy
investigation and prosecution of those found culpable, as this will
determine where we go from here. Criminal acts of this nature have been
encouraged because perpetrators are hardly ever caught and prosecuted,”
Mr. Omo-Ettu said.

Enough is Enough

Telecom operators
have reported that security is a major challenge to them, as their BTS
sites are constantly vandalised by hoodlums.

In a press
conference last week, Gbenga Adebayo, the president of the Association
of Licensed Telecommunication Operators of Nigeria (ALTON) said apart
from the recent shutdown of some BTS sites around the country, some
equipment at the sites are constantly vandalised and stolen. He said
this affects national security as well.

“Peace, investment,
life, and living, have now been threatened to a level that makes it
necessary to invite the president, Goodluck Jonathan, to please
intervene urgently,” Mr. Omo -Ettu said.

“Enough is enough, and a country that seeks the loftiest theme of vision 20-2020 cannot continue to go on like this,” he said.

Only two personnel
survived the armed attack at the BTS; one Ericssion engineer and his
driver hid behind the RBS units in the site, so the fired bullets
missed them.

Mobil Producing
Nigeria (MPN) has dragged some members of its host communities to an
Eket High Court for failure to meet repayment obligations under a micro
credit scheme initiated in 2002.

Media investigation
revealed that N132 million was advanced to 50 cooperative societies and
19 individuals by Mobil in its area of operation.

The investigation also revealed that N92.6 million remained outstanding in the 73 loan applications approved.

The micro credit
scheme funded by Mobil was aimed at stimulating economic development in
agriculture-related fields like fishery, poultry, and animal husbandry.

The benefitting communities included Eket, Esit Eket, Ibeno, and Onna council areas in Akwa Ibom.

Libya’s two
state-owned airlines, which have been spending millions of dollars
expanding their fleets, hope to win government approval next month to
merge, the head of the carriers’ parent company told Reuters.

Libyan Airlines and
Afriqiyah Airways have been in negotiations about a merger for several
years, but the plan has been repeatedly delayed.

“The decision will
be announced by around mid-October … Afriqiyah and Libyan Airlines
will be one company,” Sabri Shadi, chairman of the Libyan African
Aviation Holding Company (LAAHC), told Reuters in an interview.

Egyptian garment
maker, El Nasr Clothing & Textile Co. (Kabo), is targeting sales of
180 million Egyptian pounds in the fiscal year 2010-11, the firm said
in a statement to the bourse on Sunday.

The statement
reiterated that the sales target for the new fiscal year, which begins
on July 1, is a 15 percent increase on the company’s sales in fiscal
year 2009-10. Chairman, Amr El Sharnoubi, had previously told Reuters
sales were expected to rise by that amount, but he did not provide a
specific sales figure at that time.

Kabo, one of the
earliest Egyptian companies to be privatised, makes underwear,
nightwear, and outerwear for men, women, and children in the middle-end
market.

Kabo reported a net
loss for the year to the end of June of 13.3 million Egyptian pounds.
The firm’s shares were trading 3 percent lower by 0956 GMT.

Zambia will make
fuel prices uniform across the country, to cut the cost of doing
business in remote areas and boost rural development in Africa’s
largest producer of copper.

The southern
African nation’s energy regulator said on Saturday that petrol will
cost 7,639 kwacha per litre, regardless of where it is sold.

Previously, the
price of petrol and other fuel was higher in remote areas, due to the
distance from the country’s only petroleum refinery.

The changes, which
go into effect at midnight, will mean an 8.9 percent decrease in the
price of petrol in the regional capital furthest from the refinery, the
regulator said.

Zambia in May
raised the price of fuel by an average 13 percent following another
increase of 15 percent in January, which the ERB attributed to higher
global prices.

Although the market
attempted a recovery during the week, the bear still ran off with good
portion of what it snatched from the market. The index opened the week
on a bearish note and continued through the second trading day while a
weak recovery of the bull returned 0.22% back to the market on
Wednesday. The bear strongly returned on Thursday taking another 1.39%
and went flat on the last trading day of the week. Putting the week’s
opening and closing figures side by side, NSE ASI closed in the red by
3.44% or 809.02 points from 23,802.79 points to 22,993.77.

The market
capitalisation of the listed equities equally closed low at N5.634
trillion. NSE-30 Index shed point equivalent to 3.20% from 994.19 to
962.77 points. All the four sectoral indexes depreciated.
NSE-Food/Beverages moved from 770.54 to 719.45 losing 6.81%.
NSE-Banking dropped 4.30% of the opening figures of 344.50 and wrapped
the week’s transactions up at 329.89. NSE-Insurance closed in the red
by 6.25% at 161.25 points against the opening 171.74 points.
NSE-Oil/Gas closed at 337.90, having dropped 6.96% from the opening
337.90 points.

Technical view

On 9/17/2010, NSE
closed below the lower band by 5.8%. Although prices have broken the
lower band and a downside breakout is possible, the most likely
scenario is for the current trading range that NSE is in to continue.
Bollinger Bands are 62.00% narrower than normal. NSE is currently
experiencing very low volatility as compared to its normal range. The
probability of volatility increasing with a sharp price move is likely
in the near future. The current trough of R-squared is greater than the
previous trough. This indicates strength of the long term trend. NSE
closed down by 809.0195 at 22,993.7695 on volume of 24.48% below
average.

Performance for the week

The market recorded
a turnover of 1.334 billion shares valued at N16.01 billion in 29,656
transactions for the week. The banking sector emerged the most active
during the week with 867.40 million units of shares that was chiefly
boosted by volume on the shares of Guaranty Trust Bank Plc, First Bank
of Nigeria Plc, First City Monument Bank Plc, and Zenith Bank Plc.
Volume in the sector accounted for 65.01% of the volume on all equities
through the whole week. The insurance sector’s volume was boosted by
trading on the shares of AIICO Insurance Plc, Intercontinental Wapic
Insurance Plc, and it followed on the week’s performance with 86.61
million shares in 1,006 deals. Recall that volume in the insurance
sector was topped by AIICO Insurance in the previous week.

Percentage gainers and losers for the week

A total of 70
stocks shed from their opening prices while only 19 equities gained and
112 closed on a flat note. Rating in terms of percentage gain/loss,
Afromedia Plc, tops the gainers’ chart with 15.69%, followed by Vono
Products with 13.64%. Ashaka Cement closed at N25.26 having gained
8.88%, Lafarge Wapco, Ikeja Hotel, and Berger Paints followed with
8.57%, 6.19%, and 4.99% respectively.

Due to price
adjustment for dividend and bonuses (as applicable), Academy Press and
7-Up top the losers’ chart with 26.00% and 22.65% respectively. Profit
taking activities further dipped the price of Intercontinental Bank by
21.51%, while Spring Bank, Oceanic Bank, and Dangote Flour followed
with 20.83%, 19.15%, and 18.44% respectively.

Corporate action for the week report on the over-the-counter market for fgn bonds

A total of 193.3
million units of bonds worth N186.61 billion exchanged in 1,801 deals
were transacted in the concluded week in contrast to 141.71 million
units valued at N129.01 billion crossed in 1,257 deals during the week
ended Tuesday, September 7, 2010.

Measured by
volume/turnover, the 10% FGN July 2030 series was the most active with
a traded volume of 44.1 million units worth N39.185 billion and
exchanged in 387 deals. It was followed by 4% FGN April 2015 series
with a traded volume of 421 million units valued at N35.98 billion in
275 deals. Eleven (11) of the available thirty-seven (37) FGN Bonds
were traded in the week covered against ten (10) recorded in the
previous week.

Dangote flour mills plc

The milling heavy
weight, Dangote Flour last week reported its belated Q4 ‘09, Q1 ‘10 and
Q2 ‘10 results to the market. Indicators revealed improved performance
over comparable periods in 2008 and 2009. Lead measurable indexes
recorded double digit growth (see below table). For Q4 ‘09,
profitability index grew by 26.96% resulting in FY EPS growth of 85% at
111k. Latest Q2 ‘10 results show a low PE multiple of 15.9 at market
price of N14.60 last week Friday.

The board of
Dangflour are recommending dividend of 50k per share to shareholders
resulting to a dividend yield of 3.42%. Recall that an interim dividend
of 30 kobo was paid earlier in the year. The company book closes on
September 20, 2010 while payment date is fixed on October 25, 2010. The
Annual General Meeting (AGM) is scheduled to hold at Tahir Hotel, Kano,
on Wednesday, October 6, 2010.

Conoil PLC

The directors of
Conoil Plc reported its overdue FY 2009 results to the market last
week. The performances index showed mixed growths. Sales revenue within
the period plunged by 18% while PBT and PAT grew by 15.3% and 26.96%
respectively. Shareholders funds equally went up by 13.6%.

Despite the fact
that the company faced challenged business environment in 2009,
performance ratios showed appreciable improvement against 2008 figures.
EPS and net profit margin grew moderately at 27.1% and 2.3%.

A dividend of 150 kobo per share has been recommended to
shareholders. Shareholders’ register closes on October 4, 2010 while
payment date is November 2, 2010.