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South Africa to deal with high oil prices

South Africa to deal with high oil prices

Higher oil prices
are the main risk to South Africa’s inflation outlook but the Central
Bank will deal with this threat adequately, a senior Reserve Bank
official said on Wednesday.

“We are not pleased
with the current international environment where the oil price has gone
through the roof again,” Johan van den Heever, deputy chief economist
in the research department of the South African Reserve Bank, told
parliament.

“And that is
unfortunately in aAn environment where our institution fights against
inflation, a most unhappy outcome. So that is one of the negative
factors feeding into the inflation process,” Mr. Van den Heever added.

Partly due to
higher prices, the Central Bank raised its inflation forecasts at its
last policy meeting in March to an average 4.7 per cent for this year,
and 5.7 per cent in 2012, but said most risks to inflation are mainly
cost push in nature.

The bank left its
repo rate unchanged at 5.5 per cent in March, for the second time this
year, after reducing it by 650 basis points between December 2008 and
December 2010.

Industries under performing

The bank’s monetary
policy committee statement was cautious, though. It said the key
manufacturing sector was still underperfoming and said although
consumer consumption was recovering, it was unlikely to accelerate in
the near term.

Last week, deputy
governor, Daniel Mminele, said the bank will base its next policy
action on an assessment of second-round effects of oil and food prices
on inflation.

Inflation has been
inside the bank’s target of between 3 and 6 per cent since February
2010, and stood at 3.7 per cent year-on-year in February. The bank said
in its quarterly bulletin in March a sustained rise of $10 per barrel
in the price of oil added about 0.3 percentage points to inflation.

On Wednesday, Van den Heever said the bank would deal with the effect of the higher oil price.

“It is not the end
of the world. We come from a background where other factors have made
inflation slow down quite nicely and we are quite confident this
negative impact from the oil price will be dealt with adequately as
time goes on,” he said.

A relatively strong
rand currency has mainly cushioned South Africa from the impact of high
oil and food prices. The rand hit 3-month highs at 6.6310 last week and
was last trading at 6.75 to the dollar. Reuters

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Nigeria to shortlist power bidders within weeks

Nigeria to shortlist power bidders within weeks

Nigeria will draw
up a shortlist of bidders over the next three weeks for power stations
and electricity distribution firms that the government is offering as
part of a multi-billion dollar privatisation plan.

Bolanle Onagoruwa,
director general of the Bureau for Public Enterprises (BPE), said
companies would be chosen for the six power stations and 11
distribution firms on their ability to reduce transmission losses in
the network.

“Over the next
three weeks, we should have the results of who the short-listed bidders
are before we then go to the actual submission of technical and
financial proposals,” Mrs. Onagoruwa told a news conference in the
commercial capital, Lagos.

President Goodluck
Jonathan, who faces an election on Saturday, has made ending chronic
power shortages in Africa’s most populous nation one of the
cornerstones of his campaign, and his administration is keen to show
progress with the plans.

Blackouts are a
major brake on growth in sub-Saharan Africa’s second-biggest economy,
and the potential returns for investors in the country of 150 million
people are huge.

Utilities and
engineering firms from Europe, North America, India, and China are
among those that attended road shows in Dubai, London, New York, and
Johannesburg this year.

The BPE received
174 expressions of interest for the four thermal and two hydro power
stations, and 157 for the 11 distribution firms, in which investors
will be allowed to take stakes of up to 70 per cent.

Some industry
executives have said they are reluctant to make final commitments until
the outcome of the elections is clear and until they see that Nigeria
is able to implement a solid regulatory framework to govern the sector.

“We basically said
to them that the process has been designed in such a way that they
don’t have to pay their money until they have a clear idea of what the
next government will do,” Mrs. Onagoruwa said.

“So that gives them some confidence … They can start due diligence,” she told the news conference.

The ruling party
candidate has won every election in Africa’s most populous nation since
the end of military rule in 1999, and Jonathan is considered the
front-runner. But the opposition is hoping it can force a run-off.

Under the blueprint
for reform, power generation and distribution will be privatised.
Government will continue to own the national grid but its management
will be privatised.Reuters

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Global oil markets to face increased ‘scarcity’

Global oil markets to face increased ‘scarcity’

The International
Monetary Fund has said the persistent increase in oil prices over the
past decade suggests that global oil markets have entered a period of
increased scarcity.

In its April
edition of World Economic Outlook, the Fund says given the expected
rapid growth in oil demand in emerging market economies and a downshift
in the trend growth of oil supply, a return to abundance is unlikely in
the near term.

According to the
reports, “Adverse effects could be much larger, depending on the extent
and evolution of oil scarcity and the ability of the world economy to
cope with increased scarcity. Sudden surges in oil prices could trigger
large global output losses, redistribution, and sectoral shifts.”

After about two
years of gradual global recovery, natural resources are again in the
headlines. Consumption levels of many natural resources, including
crude oil, have already risen above pre crisis peaks, largely
reflecting robust demand in emerging and developing economies.

The price of a
barrel of Brent crude oil crossed the US$100 portal in January 2011.
The prices of many other commodities have also risen to either meet or
surpass their pre crisis peaks, and commodity futures markets point to
further price increases in the next year or two, according to experts.

Oil is said to be
scarce when its supply falls short of a particular level of demand. If
supply cannot meet demand at the prevailing price, prices must rise to
persuade more supply and to ration demand. In this instance, IMF says
oil scarcity is reflected in the market price.

Recommended policy action

The Fund says there
are two broad areas for policy action that economies must consider for
the looming oil scarcity to be tackled.

According to the
report, “At current high levels, commodity price developments and
prospects can have important global economic repercussions. The
increases in the trend component of oil prices suggest that the global
oil market has entered a period of increased scarcity.”

“First, given the
potential for unexpected increases in the scarcity of oil and other
resources, policy makers should review whether the current policy
frameworks facilitate adjustment to unexpected changes in oil scarcity.

“Second,
consideration should be given to policies aimed at lowering the risk of
oil scarcity. If the tension intensifies, whether from stronger demand,
traditional supply disruptions, or setbacks to capacity growth, market
clearing could force price spikes, as in 2007-08,” the report further
said.

It urged policy
makers to strengthen measures to reduce the risks from oil scarcity as
a precautionary step and to facilitate adjustment, if such shifts are
larger than expected.

A persistent
decline in oil supply levels could have sizable negative effects on
output, even if there is greater substitutability between oil and other
primary energy sources.

At the same time,
in the medium term, the oil-induced wealth transfer from oil importers
to exporters can increase capital flows, reduce the real interest rate,
and widen current account imbalances.

The IMF in its
report added that oil scarcity will not inevitably be a strong
constraint on the global economy. However, the risks it poses should
not be underestimated either, as the implications could be important
and far-reaching.

Bismarck Rewane,
managing director, Financial Derivatives Company, a finance research
and analysis firm, said average oil price has increased by 11.6 per
cent to $117.8 per barrel in March.

“The spread between
spot and budgeted oil price has increased by 9 per cent to $44.8 per
barrel. It is expected to trade at an average above $100 per barrel in
April. Oil production remains above two million barrel per day but
declined by 4.2 per cent to 2.08.

“Fear remains about
the sustainability of oil production at over two million barrel per day
due to elections, which might provoke unrest. The turmoil in North
Africa and Middle East is sending oil markets into a frenzy,” Mr.
Rewane said.

“High oil prices
could pose the most significant threat to demand in 2011. Global oil
demand is estimated at 87.7 million barrels per day (mbpd). Growth in
demand is forecast at 1.4 mbpd in 2011. Global oil supply in March is
approximately 88.1 mbpd,” he added.

The Organisation of
Petroleum Exporting Countries (OPEC) has said crude oil output fell by
363,000 barrels per day in March to 29.02 (mbpd), representing a 33 per
cent of global oil supply.

According to him,
increased output of 300, 000 (bpd) from Saudi Arabia is inadequate to
plug the gap, as Libyan oil production dropped by 995, 000 (bpd) in
March.

The uncertainties
surrounding the Libyan situation and political turmoil in the Middle
East has pushed oil prices significantly higher since January.

The Bonny light
increased by 3.4 per cent in March to close at $119.77 per barrel while
the Year to Date (YTD) gain of 23 per cent Nigeria’s oil output
averaged 2.13 mbpd in January and February 2011.

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Naira sheds further weight

Naira sheds further weight

As
the Central Bank of Nigeria (CBN) struggles to defend the naira, the
currency is gradually shedding weight at the currency market.

The
naira, which opened 2011 at N149.50 to the dollar, closed yesterday at
the bi-weekly Wholesale Dutch Auction System (WDAS) at N152.58, a
decline of 2.1 per cent.

The CBN has always maintained that the naira would be kept within the +/-3 per cent band.

CBN
governor, Lamido Sanusi, at the last Monetary Policy Committee (MPC)
meeting held in Abuja emphasised stable foreign exchange to curtailing
inflation.

“The
committee urged the CBN to continue to pursue the strategy of
maintaining exchange rate stability to contain inflation,” Mr. Sanusi
said in his statement at the end of the bi-monthly meeting.

Not meeting demand

At
the previous auction on Monday, the CBN was only able to meet about 71
per cent of demand, supplying $250 million out of the $351.12 million
demanded.

At
yesterday’s auction, the CBN sold $300 million, just 67.6 per cent of
actual demand. Dollar demand at the WDAS declined by 9.3 per cent last
week compared to an increase of 11.3 per cent the previous week,
fuelling concerns that apprehension over the general elections
triggered speculative demand for the green back. At yesterday’s
auction, the CBN sold $300 million.

The
naira closed last week at N151.91, its lowest level this year before
firming up at Monday’s auction, due to complementary supplies from
major oil marketers. The value remained unchanged yesterday. The CBN
has sold $1.25 billion in the two weeks in April, compared to $750
million sold in the comparable period of last year.

“It is the elections,” said Suleyman Ghali, a currency dealer in Lagos.

He said the demand for dollar has dropped this week compared to the period before the elections.

“The
politicians are concentrating on the elections now, so demand has
reduced. We do not know what will happen after the election but we are
watching. The naira is a bit stable,” Mr. Ghali said.

He said the naira is fluctuating between N156 and N157 at the parallel market.

Analysts
at Afrinvest West Africa Limited, a Lagos based investment banking
firm, had forecast that the demand will fizzle out this week.

“As
the liquidity continues to tighten in the money market, we do not
expect strong demand for the dollar in the coming week,” it reported in
its weekly report.

Tightening liquidity

The CBN based its decision to tighten liquidity on the need to rein in the expected huge election spending.

“The
members specifically pointed out the rising international food and
energy prices, the impact of import costs on domestic prices, the
challenges that fiscal stance posed to the external value of the naira,
and the likely front-loading of public expenditure in the election
period,” Mr. Sanusi said.

Analysts
at Sterling Capital Market Limited, an investment banking firm,
however, said the ability to continue to defend the naira would depend
on build-up in the foreign reserves.

“Increase
in foreign reserves will further help CBN to defend the naira, while
the sale of $200 million by NNPC will boost supply in the inter-bank
market during the week,” it stated.

Nigeria’s foreign reserves dropped to $34.5 billion on Tuesday from $34.9 billion last week.

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I am going into retirement, says Daniel

I am going into retirement, says Daniel

The governor of
Ogun State, Gbenga Daniel, yesterday said he is retiring from public
service after the expiration of his term on May 29, 2011.

Mr. Daniel said he will join the Ogun State Chapter of the Nigerian Union of Pensioners immediately he leaves office.

“I am going to
become a pensioner effective from May 29 when our tenure expires,” the
governor said during his administration’s valedictory meeting with
pensioners held at June 12 Cultural Centre, Kuto, Abeokuta.

Mr Daniel, who
bagged the award of the ‘Pensioners Friendly Governor’ at the event,
said he had not found the past eight years as governor of the state an
easy job.

He, however, said he is satisfied his government did not make life difficult for pensioners.

“By the special
grace of God, till I handover May 29, whatever will make you happy I
will do. You have served the state, what left is for the state to serve
you, and since my assumption I paid pension regularly,’ Mr Daniel said.

The governor
pledged a new bus to pensioners’ union and assured members that he will
not leave any unpaid debt of pensioners when he leaves office next
month.

“I have said it, I
will not go leaving debt behind,” he said. “I want you elders to pray
for me to accomplish this. It is not easy to rule for eight years
without violence. I didn’t lie to you for eight years, so there is no
reason lying to you while leaving office.”

The Secretary of
the pensioners’ union, Bola Lawal, appealed to the governor to offset
the gratuity payments owed pensioners since October last year.

“It is on record
that you approved land for our secretariat, but I want to use this
opportunity to tell you that the last time gratuity paid was last year
September, so we appeal to you on this,’ Mr Lawal said.

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Six presidential candidates step down for Jonathan

Six presidential candidates step down for Jonathan

Ahead of Saturday’s
presidential election, six presidential candidates on Wednesday
withdrew from the race and threw their weight behind President Goodluck
Jonathan, who is the candidate of the People’s Democratic Party (PDP).

The candidates who
stepped down for Mr Jonathan are Peter Nwagu of the African Democratic
Congress (ADC), Godwill Nnaji of the Better Nigeria progressive Party
(BNPP), Solomon Akpona of the Nigerian Mandate Progressive Party (NMDP)
and Batos Nwadike of the Peoples Mandate Party (PMP).

The others are
Lawson Igboanugo of the People’s Progressive Party (PPP) and the
candidate of the United National Party for Development (UNPD) who was
represented by his running mate, Galadima Samari.

At a joint news
conference at Legacy House, the campaign headquarters of Mr Jonathan in
Abuja, the six candidates said they were stepping down for the PDP
presidential flag bearer because he represents the vision of a strong
and united nation.

They also commended
Mr Jonathan for delivering on his promise to give Nigerians transparent
and credible polls as witnessed in last Saturday’s parliamentary
election, adding that they were sacrificing their ambitions for the
interest of the country, which they said is bigger than any individual.

Winning opinion poll

The announcement came as an SMS opinion poll put Mr Jonathan ahead of other candidates.

In the poll,
conducted by HALA Global Services Nigeria Limited, in collaboration
with N&D, Nigeria Union of Journalists (NUJ), FRCN, and Radio1, has
Mr Jonathan receiving the endorsement of 78 percent of Nigerians who
sent in messages. Muhammadu Buhari of the Congress for Progressive
Change (CPC), Nuhu Ribadu of the Action Congress of Nigeria (ACN) and
Ibrahim Shekarau of the All Nigeria Peoples Party (ANPP) shared the
remaining 22% among themselves.

The general manager
and head of marketing of HALA Global Services Nigeria Limited, Usman
Ahmed, said in Abuja that poll was conducted from 15th March, 2011 to
12th April, 2011.

Mr Ahmed, who did
not give the breakdown of the percentages, urged Nigerians who want to
know the facts and figures recorded in the SMS Opinion Poll to visit
the website: www.nextpresidentng.com.

No odd man

The presidential
candidates said they were impressed that Mr Jonathan has so far avoided
using abusive and inciting language all through the electioneering
campaign.

According to Mr
Igboanugo, Mr Jonathan is an embodiment of great ideas and “the
consequences of all he has been doing in the past month have been
marvellous for the unity of Nigerian.” He added that he is “keeping his
ambition in the cooler until Jonathan completes his tenure.” In his
withdrawal declaration, Mr Nwadike said he heeded the call of his
people that initially asked him to run for the presidency and that of
“Ohaneze Ndigbo” that every bonafide Igbo person should support the
presidential ambition of Jonathan.

“I cannot afford to
be an odd man out.” Mr Samari, who spoke on behalf of his principal,
called on northerners to jettison regional and divisive politics which
he alleged some candidates have been propagating and advised them to
cast their votes for the Jonathan/Sambo ticket on Saturday.

The chairman of the
Inter Party Relations Committee of the Presidential Campaign council of
the PDP, Ebenezer Babatope denied insinuations that the presidential
aspirants were induced with the sum of N5million each to withdraw from
the race.

Mr Babatope
insisted that the PDP has always tried to maintain close ties with
other political parties through an all inclusive government of national
unity, adding that the ruling party will continue to collaborate with
other parties and their candidates.

Group of 45

Meanwhile, 45 registered political parties, on Wednesday, endorsed Mr Jonathan.

Announcing their
decision at a joint press conference, the coalition of the political
parties led by the National Chairman of the Advanced Congress of
Democrats (ACD), Yusuf Yakubu, said their decision was based on their
“faith in President Jonathan and belief that he is the most capable of
all the candidates in the field.”

They said their
faith in the PDP candidate was strengthened by the conduct of the
National Assembly election, which they claim was free and fair.

“We salute President Jonathan for keeping his promise to ensure
free and credible elections in Nigeria, for creating the enabling
environment and providing all necessary support to INEC,” Mr Yakubu
said. “The tremendous success achieved last Saturday convinces us that
President Jonathan is the man to lead Nigeria to the promised land.”

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Hearing on Oyo governorship candidates continues April 19

Hearing on Oyo governorship candidates continues April 19

The Court of Appeal
in Ibadan, on Wednesday, fixed April 19 for its ruling on an
application filed by the Peoples Democratic Party (PDP) in a case that
will determine who is the governorship candidate of the party in the
state.

A former Minister
of Power and Steel, Wole Oyelese, Yekinni Adeojo, and a former deputy
governor of the state, Hazeem Gbolarunmi along with 38 others, had
challenged the selection of the state governor, Adebayo Alao-Akala and
others as candidates of the party in the ongoing general election.

They based their
objection on the allegation that the candidates were not properly
selected and so should not be allowed to fly the flags of the party
during the election.

The plaintiffs
prayed the court to restrain the party from presenting the names of the
candidates to the electoral body and also sought the order of court to
restrain the body from receiving the names.

Justice Jonathan
Shakarho of the Federal High Court granted the order, but later vacated
it. The vacation has also being challenged at the appeal court.

Now at the appellate court, the PDP filed an application, seeking a relief of the court to amend the records of the lower court.

Lateef Fagbemi,
lead counsel to the party, told the court on Wednesday that the record
provided by the lower court on what transpired during the proceedings
was incomplete, adding that the appeal could not be based on important
omission in the record.

Time for reckoning

He made reference
to an affidavit deposed to by Humphrey Orlu, the Director of Litigation
of the lower court, on behalf of Mr Shakharo where he said the judge
only recorded the arguments he considered relevant to the case while
the case lasted.

Mr Fagbemi faulted
the decision of the judge to consider his application for discharge of
the interim injunction relevant but not to add it in his record.

Consequently, he sought the relief of the court to use his own record to complement to the one provided by the lower court.

The governor’s lead
counsel, Richard Akinjide, aligned with Mr Fagbemi’s submission and
asked the court to grant the application.

In his submission,
however, Oluwarotimi Akeredolu, lead counsel to the aggrieved PDP
members, said Mr Fagbemi was no longer a party to the appeal since his
notice of discontinuance had been filed and allowed in the lower court.

He noted that it is
not possible to have all things that transpired in court recorded by a
judge, saying the court was right to record only the relevant
submissions.

“The judge does not
also have to record argument or submission of a counsel that is no
longer a party to the case by virtue of Order 50, Rule 2,” he said.

Mr. Akeredolu said the supplementary record provided by Mr, Fagbemi could not be taken to mean a true record of the court.

The presiding justices – Stanley Alagoa, Sidi Bage and Joseph Ikyegh – adjourned till Tuesday to give their ruling.

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Kwara ACN alleges plans to arrest its members

Kwara ACN alleges plans to arrest its members

The governorship
aspirant of the Action Congress of Nigeria in Kwara State, Dele
Belgore, has alleged a plot by the PDP-led state government to arrest
some of his supporters.

In a statement
issued by the media aide to the politician, Rafiu Ajakaiye, he said the
plot is to “get the police to keep key ACN leaders out of circulation
ahead of the next elections.”

Meanwhile, Mr.
Belgore has urged the residents of the state to fast and pray on
Thursdays preceding the remaining elections, calling for the aversion
of violence and rigging plans.

Mr. Belgore, in a
media broadcast, said that “If Kwarans can do this for Nigeria and the
state, the election will be peaceful and the will of the voters shall
be ensured.”

The support group
of the party aspirant campaign, called MDB Support Group, through its
chairman, Saliu Ajibola Ajia, said in a statemen that the special
adviser on security to the state governor, Bukola Saraki, has written a
letter calling on the police to round up ACN leaders, especially those
from Asa, where the PDP alleges plan to also rig in the coming
elections.

“We are aware of
the grand design to railroad the police to arrest and detain our men in
Asa, whom the PDP fears could stand in the way of any rigging tactics
in the coming elections. For the avoidance of doubt, on April 4, 2011,
yesterday, the new SA Security to Governor Bukola, Usman Abdulkareem,
wrote the Commissioner of Police in Kwara State demanding that he
invites the following ACN chieftains for questioning.

“They are: Rahimi
Gidado of Adangba area; Hanafi Omo-Owo of Oloje; Memudu Turawa of Ile
Lanigan, Ipate Oloje; Jimoh Salami of Eyenkorin; Alhaji Issa Kewu
Repete of Alore Area; Obalowu Toyin of Oloje; Olaitan Oladimeji, also
of Oloje area; Wahab Yusuf Tode of Ode Alausa Area; and Bashir Gidado
of Adangba Area.

“We urge the police
and indeed all security agencies not to be wiling tools in the hands of
the PDP because that would not augur well for our democracy and
collective drive to change Nigeria for good,” Mr. Ajia said in the
statement.

Mr. Ajia also
warned the PDP to stop what he called the harassment and intimidation
of the party’s governorship flag bearer by spreading unsubstantiated
rumours against him and his team.

He alleged that PDP
wants to use the claims that the party is introducing violence into
Kwara politics through the peaceful protests it introduced last Monday.

When contacted on
the allegation, Dabo Ezekiel, the police spokesperson in the state,
said that he was not responding to whatever it was that they are doing,
claiming that they could say whatever they liked.

When he was asked
whether the police had anything against the party’s protest and
possibly want to take any issue on it, he said, “ours is just to
provide the security, that is all that I can tell you.”

The chief press secretary to the governor, Ma’mud Adebimpe, however, in an interview denounced any plan against the party.

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Oyo government shuts schools over violent clash

Oyo government shuts schools over violent clash

Following Tuesday’s
deadly clash between students of Ibadan City Academy and Community
Grammar School, both in Ibadan, in which a life was lost and property
worth millions of naira vandalised, the Oyo State government has
ordered the closure of the two schools until normalcy returns to the
area.

The state
commissioner for education, Nureni Aderemi, made this known in Ibadan
on Wednesday through a press release from his press officer, Babatunde
Ajibike.

According to him,
the government was saddened by the development and had to order the
immediate closure of the schools “to safeguard the lives of students
and teachers, to forestall further destruction of properties and with a
view to ensure maintenance of peace in the state”.

Mr Adeniran also
conveyed the sympathy of the state government to the family of the
bereaved and wished the injured speedy recovery.

He said the
security operatives in the state have already been put on red alert to
take over the premises of the schools to allow peace reign in the
vicinity.

The commissioner
said the government will take punitive actions against the culprits in
the incident, adding that it “frowns at attempt by anyone to ferment
trouble and disrupt academic activities in our schools”.

Clashes between students of the two schools turned bloody on Tuesday
when thugs were mobilised by one side to seek reprisal against the
other. One person was reportedly killed, one other put in a coma, and
many others injured in the fracas. Many cars and several properties
were also destroyed.

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Governorship candidate on trial for attempting to disrupt poll

Governorship candidate on trial for attempting to disrupt poll

Okey Ezea, the
governorship candidate of the Labour Party (LP) in Enugu State and 35
others were yesterday arraigned before an Enugu State Magistrate Court
for allegedly attempting to disrupt last Saturday’s National Assembly
election.

The suspects were
accused of threatening to cause violence and disrupt the parliamentary
election at Ibagwa Aka in Igbo Eze local government area of the state
when the result of the election was being collated. But they pleaded
not guilty to the charge brought by the police.

Mr Ezea and the
party’s House of Assembly candidate in the area were subsequently
granted bail on self recognition by the presiding magistrate, Emma
Ezema, after taking their plea.

However, the others
were granted bail under in the sum of N500,000 each and four sureties
who must be residing within the area where the offence was allegedly
committed.

Mr Ezea, who was
earlier on Monday invited by the Criminal Investigation Department
(CID), explained that he visited the office of the Independent National
Electoral Commission (INEC) at Ibagwa Aka with some of his supporters
at about 10pm on the election day to report cases of malpractices to
officials.

According to him,
the state commissioner for information, Chuks Ugwoke and the chairman
of Igbo-Eze South Local Government Area, Chris Omeje, both of whom hail
from Alor Agu Community snatched some ballot boxes during the election.

Mr Ezea said that
rather than institute an investigation into the allegation, some
officials of the state government instructed soldiers to arrest him and
his supporters.

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