Airline Operators of Nigeria, AON, on Monday, accused the management of Nigerian National Petroleum Corporation (NNPC) of withholding 25,000MT of aviation fuel in disregard to the directive issued by President Muhammadu Buhari.
Speaking at a meeting with the Speaker of the House of Representatives, Hon. Femi Gbajabiamila, the airline operators stated that President Buhari directed that aviation fuel should be sold to them at landing rates with a view to ameliorate the losses they incurred over the months.
The AON Vice President and Chairman, Air Peace, Mr. Allen Onyema, disclosed that the Association was invited by management of Nigeria Midstream and Downstream Regulatory Authority (NMDRA) to notify them of the President’s gesture, and the need for them to nominate trusted and established oil marketers to take delivery of the 25,000 MT and sell to them at the landing rate.
He said having nominated 10 established oil marketers to take the product, he, in the presence of his members called the NNPC GMD, Mele Kyari informing him of the President’s gesture and that their selected marketers would be in touch regarding the product, but he(Kyari) vehemently said no.
“We were invited by the Midstream and Downstream Authority and we were told that the president approved 25,000 metric tonnes for us as a palliative to help us. We were very grateful to the president. It was not free. We were happy.
“We were told to nominate marketers that would market this product for us. We were told to have a meeting with these marketers. We called all the marketers. We held a meeting with them.
“We decided the logistics, so they would take their logistical costs and everything and at the end of the day that fuel was getting to them. They told us at N335, so we put everything together and it would be getting to less than N400 for the cost and we said even if they sell to us at N450 it would be okay.
“We were told that a week later that is when the consignment would be arriving Nigeria and when this happened, the next we got to hear from the marketers was that they had already been given the consignment that we were all jostling for. So we waited thinking that they would sell as agreed. They never are.
“I actually called the MD of NNPC, in the presence of our members. We wanted to hear from him. He answered that there was no way they would leave us to get direct products that were dangerous.
“But I said no, that the marketers you are going to give are the same marketers that would handle it for us. He (Melee Kyari) said he did not want any crash or anybody adulterating it.
“I said how could they adulterate it because they are the same marketers. We are not taking it on our own. Long and short of the story is that this product was not given to us and we noticed that it continued rising and rising,” Onyema said.
Also speaking, AON President, Abdulmanaf Yunusa who doubles as Chairman of Azman Air explained that the Airline Operators begged the NNPC GMD to give the allocation approved by the President for them to the nominated marketers.
In his response, the NNPC Group Managing Director, Mele Kyari said there are considered safety issues involved in releasing aviation fuel directly to operators, or even marketers, saying that not everyone can handle ATK.
“Rt Hon Speaker it is more complex than they say. Somebody must handle aviation fuel. We cannot surrender the safety of Nigerians to just anyone. It is not every marketing company that can handle ATK including.”
Nine Banks’ Non-performing Loans Rise, Hit N814bn – Reports
The aggregate Non-Performing Loans of nine banks increased to N814.08bn in 2021, representing a 3.16 per cent increase from the N789.14bn reported in 2020, according to findings by The PUNCH.
The nine banks are Access Holdings Plc, Zenith Bank Plc, Wema Bank Plc, FCMB Group, Union Bank of Nigeria Plc and Stanbic IBTC Holdings Plc.
Others are Guaranty Trust Holding Plc, United Bank for Africa Plc, and Ecobank Nigeria.
However, with the banking sector’s NPL ratio closing 2021 at 4.85 per cent, some of the nine banks remained within the five per cent NPL ratio stipulated by the Central Bank of Nigeria.
Further findings also show that while some of the banks recorded an increase in their NPLs during the period under review, a number of them recorded a significant decline in their NPLs.
From the banks’ audited 2021 financial statements, findings showed that Access Holdings, Zenith Bank and GTCO reported the top three highest NPL by value among the nine banks, while Stanbic IBTC Holdings reported the lowest.
Access Bank in 2021 reported N181.5bn NPL by value, representing an increase of 4.3 per cent from the N161.2bn it recorded in 2020, while Zenith Bank’s NPL hit N146.8bn in 2021 from N125.2bn recorded in 2020, an increase of 17.3 per cent.
Zenith Bank, in a presentation to investors/analysts, explained that it adopted a complete and integrated approach to risk management that was driven from the Board of Directors’ level to the operational activities of the bank.
The bank further explained that its risk management was practiced as a collective responsibility coordinated by the risk control units and is properly segregated from the market-facing units to assure independence.
“There is a regular scan of the environment for threats and opportunities to improve industry knowledge and information that drives decision making. The group maintains a proactive approach to business and ensures an appropriate balance in its risk and reward objectives,” the bank explained.
Wema Bank, in 2021, reported N21.3bn NPL, an increase of 19.3 per cent from N19.3bn in 2020, while FCMB Group’s NPL rose to N45.93bn, representing a 61 per cent increase from N28.57bn it reported in 2020.
Others are Union Bank of Nigeria with N38.66bn NPL in 2021 from N29.45bn reported in 2020, as Stanbic IBTC Holdings reported 23.4 per cent drop in its NPL to N20.3bn in 2021 from N25.5bn in 2020.
Furthermore, GTCO’s NPL value rose by 2.3 per cent to N113.94bn in 2021 from N111.43bn reported in 2020, while UBA closed 2021 with N96.5bn NPL value from N120.08bn reported in 2020, indicating a significant reduction in its NPL.
In addition, ETI Nigeria reported N149.15bn NPL by value in 2021 from N167.41bn in 2020, a decline of 11 per cent.
Ecobank Nigeria reported NPL ratio of 16.6 per cent in 2021 from 19.6 per cent in 2020. Access Holdings closed 2021 with NPL ratio of 4.3 per cent as against four per cent in 2020, as Zenith Bank NPL ratio dropped to 4.2 per cent in 2021 from 4.3 per cent in 2020.
According to analysts, the NPL ratios in the banking sector remained stable in 2021, following the CBN’s forbearance for restructuring loan exposure to critical sectors.
Extract from the banks’ performance revealed that GTCO reported a drop in its NPL to 6.04 per cent in 2021 from 6.39per cent in 2020, while ETI Nigeria reported 16.30 NPL ratio in 2021 from 19.90 per cent in 2020.
GTCO in a presentation to investors/ analysts explained, “The Group improved its asset quality with IFRS 9 Stage 3 loans closing at 6.04 per cent in 2021 from 6.39 per cent in 2020.
“The marginal increase in prudential NPLs from 6.86 per cent to 6.92 per cent was as a result of stress noted with certain exposures within the hospitality, individuals, clubs, co-operative societies and unions as the obligors within these sectors were severely impacted by Covid-19.
“Downstream sector benefited from the N7.2bn write-off in FY 2021 as its NPLs improved to 8.6 per cent in 2021 from 11 per cent in 2020.
“IFRS 9 Stage 3 loans closed at N113.9bn as of FY 2021 increasing by 2.2 per cent from N111.5bn in 2020. Balance Sheet Impairment Allowance for Stage 3/Lifetime Credit Impaired exposures closed at N57.5bn representing 50.5 per cent coverage of loans in this classification.
“In aggregate terms (including Regulatory Risk Reserves of N87.6billion), the Group has adequate coverage of 150.4per cent for its Stage 3 names/NPLs, this position is consistent with the group’s plan to maintain 100 per cent coverage for its NPLs.”
UBA, Access Bank, and Zenith Bank, among other banks, reported NPL ratio below five per cent in the 2021 financial year.
For instance, UBA’s NPL dropped to 3.60 per cent from 4.70 per cent in 2020.
Speaking on its NPL decline performance, UBA’s Group Chief Financial Official, Ugo Nwaghodoh said, “This testifies to the quality of UBA’s loan portfolio even as the bank remains relentless in its resolve to drive down the Cost-to-Income ratio, which stood at 63.0 per cent at the end of the year.”
Access Bank reported 4.00 per cent NPL ratio in 2021 from 4.30 per cent, while Zenith Bank reported 4.20 per cent NPL ratio in 2021 from 4.30 per cent in 2020.
Stanbic IBTC Holdings reported 2.10 per cent NPL in 2021 from 4.00 per cent reported in 2020.
The Chief Executive, Stanbic IBTC, Dr Demola Sogunle in a statement said the NPLs ratio moderated to 2.1 per cent, well within the acceptable limit of five per cent, as the total NPLs decreased in value by 23 per cent coupled with the responsible loan growth in line with the management conservative credit risk management practices.
In addition, Wema Bank reported NPL ratio declined from 4.9 per cent in 2020 to 4.5 per cent in 2021, as Union Bank of Nigeria’s NPL ratio moved from 4.00 per cent to 4.30per cent in 2021.
FCMB group closed 2021 with 4.10 per cent NPL ratio from 3.3 per cent in 2020.
Members of the Monetary Policy Committee of the CBN, thus, applauded the management’s efforts in ensuring the continued downward trend of NPLs ratio, signifying improving conditions in the banking system
The MPC members also noted the sustained resilience of the banking system, following the progressive improvement in the NPLs ratio from 5.10 per cent in November 2021 to 4.85 per cent in December 2021- a first in a long time.
In her personal statement, a member, CBN Deputy Governor, Aishah Ahmad, said NPLs dropped to its lowest level in over a decade despite the increased lending by banks.
She noted that total credit had increased by N4.09tn between the end of December 2020 and December 2021 with significant growth in credit to manufacturing, general commerce, and oil and gas sectors.
She said, “Key industry aggregates also continued their year-on-year upward trajectory with total assets rising to N59.24tn in December 2021 from N50.99tn in December 2020, while total deposits rose to N38.42tn from N32.21tn over the same period.
“Total credit also increased by N4.09tn between end- December 2020 and end-December 2021 with significant growth in credit to manufacturing, general commerce, and oil & gas sectors.
“This impressive increase was achieved amidst continued decline in non-performing loans ratio from 5.10 per cent in November 2021 to 4.94 per cent in December 2021, 6 basis points below the regulatory benchmark for the first time in over a decade.”
Why Commodity Prices’ll Remain High In Nigeria, Others – World Bank
The World Bank has said that the war in Ukraine has dealt a major shock to commodity markets, altering global patterns of trade, production, and consumption in ways that will keep prices at historically high levels through the end of 2024.
The World Bank said this in its latest Commodity Markets Outlook report.
According to a new report by the Washington-based bank titled, “Food and energy price shocks from Ukraine war could last for years,” the increase in energy prices over the past two years had been the largest since the 1973 oil crisis. Price increases for food commodities—of which Russia and Ukraine are large producers—and fertilizers, which relied on natural gas as a production input, had been the largest since 2008.
“Overall, this amounts to the largest commodity shock we’ve experienced since the 1970s. As was the case then, the shock is being aggravated by a surge in restrictions in the trade of food, fuel and fertilizers,” said the World Bank’s Vice President for Equitable Growth, Finance, and Institutions, Indemit Gill
“These developments have started to raise the spectre of stagflation. Policymakers should take every opportunity to increase economic growth at home and avoid actions that will bring harm to the global economy.”
According to the report, energy prices were expected to rise more than 50 per cent in 2022 before easing in 2023 and 2024. Non-energy prices, including agriculture and metals, are projected to increase almost 20 per cent in 2022 and will also moderate in the following years.
Nevertheless, commodity prices are expected to remain well above the most recent five-year average. In the event of a prolonged war or additional sanctions on Russia, prices could be even higher and more volatile than currently projected.
Because of war-related trade and production disruptions, the World Bank predicts the price of Brent crude oil at an average of $100 a barrel in 2022, its highest level since 2013 and an increase of more than 40 per cent compared to 2021. Prices are expected to moderate to $92 in 2023—well above the five-year average of $60 a barrel. Natural gas prices (European) are expected to be twice as high in 2022 as they were in 2021, while coal prices are expected to be 80 per cent higher, with both prices at all-time highs.
“Commodity markets are experiencing one of the largest supply shocks in decades because of the war in Ukraine,” said Director of the World Bank’s Prospects Group, Ayhan Jose, which produces the Outlook report.
“The resulting increase in food and energy prices is taking a significant human and economic toll—and it will likely stall progress in reducing poverty. Higher commodity prices exacerbate already elevated inflationary pressures around the world.”
The report said wheat prices were forecast to increase more than 40 per cent, reaching an all-time high in nominal terms this year. That will put pressure on developing economies that rely on wheat imports, especially from Russia and Ukraine. Metal prices are projected to increase by 16 per cent in 2022 before easing in 2023 but will remain at elevated levels.
“Commodity markets are under tremendous pressure, with some commodity prices reaching all-time highs in nominal terms,” said Senior Economist in the World Bank’s Prospects Group, John Baffes.
“This will have lasting knock-on effects. The sharp rise in input prices, such as energy and fertilizers, could lead to a reduction in food production particularly in developing economies. Lower input use will weigh on food production and quality, affecting food availability, rural incomes, and the livelihoods of the poor.”
Again, Naira Depreciates Against Dollar
The naira, on Thursday, depreciated further at the Investors and Exporters Window, exchanging at N420 to the dollar, a 0.30 per cent depreciation, weaker than N418.75 traded on Wednesday.
The open indicative rate closed at N416.50 to the dollar on Thursday.
An exchange rate of N444.00 to the dollar was the highest rate recorded within the day’s trading before it settled at N420.
The Naira sold for as low as 412.38 to the dollar within the day’s trading.
A total of 160 million dollars was traded in foreign exchange at the official Investors and Exporters Window on Thursday.
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