I have had time to review the loan the Nigerian Govt took as a forward sales agreement of $3.4bn, & I have the following observations that I think if not considered, will set a dangerous precedent for the economy:
• the daily allocation of crude is 90,000 at $65 per barrel
or $5,850,000 per day
• the total repayment period is 581 days for principal with another $591m in interest payment at 11% per annum with a prorata of 6.4% in the second year of the facility
• the SPV (even if it is a standard structure for DCM transactions) that will receive
Nov 18, 2023 • 9 tweets • 2 min read
LONG THREAD: In order for me to give some perspective on the reason intl pharma companies are exiting the Nigerian markets, I had to go back to consult a financial model I built for a proposed pharmaceutical industrial park project:
1. Diluent or Fillers:
-Baking Soda
-Corn Starch (No NGN Company today produces Corn Starch)
-Talcum Powder
-Flour (Made from mostly Wheat with a little blend of HQCF)
2. Binders:
- Sucrose
- Gelatin
- Starch Based Adhesive (a secondary derivative)
Sep 8, 2023 • 9 tweets • 2 min read
Long Thread: Lets run numbers:
Commercial banks are holding $29bn for customers across banks in Nigeria,
CBN comes & executes a foreign currency swap where,
CBN collects the USD marked to market rate with a haircut (interest that is typically prorated at USD eurobond yield)
Tenor is usually within a Year. The CBN swaps $10bn across banks for naira equivalent at the former official rate at 443 or 4.4 trillion naira,
The banks hold the naira, the CBN uses the USD. All the sources for FX
• Govt owned enterprises (NLNG, NNPC)
• Net export proceeds
Sep 8, 2023 • 4 tweets • 1 min read
"Fitch estimates, partly based on our survey data, that CBN swaps with domestic banks were USD10 billion-12 billion at end-2022, and are likely to remain close to that level, but there is less visibility on swaps it may have with international counterparties."- Fitch Ratings
$10-12bn from Domestic Banks is basically the CBN using USD from Dorm Accounts to settle Balance of Payments and FCY obligations at an interest,
This means around $11bn of $21bn in swaps are from domestic banks and FCY account holders
Aug 11, 2023 • 6 tweets • 1 min read
3weeks ago on Channels TV Business morning, I said it was time to go to the IMF,
Now that the audited financial statements of the CBN shows that they lied about their FX reserves status, the actual numbers are 50% of what was stated, the former Governor had gone to use private
sector loans from two US banks, pledging Nigeria's foreign reserves as collateral without informing the Senate or getting their approval, and we have unmet FX forwards that are sizable,
It is time to call in the calvary. I wouldn't advise the government to hurriedly sell off
Jul 21, 2023 • 5 tweets • 1 min read
The 1.9trillion naira the federating units is sharing is actually:
• statutory revenue
• exchange difference
Both from corporate income taxes, withholding taxes of $699.3m and $256m & other taxes from NLNG paid to FIRS,
It is a one time tax at the end of the FY of NLNG
What is interesting is that in 23 and half years, NLNG has generated a total of $131bn and paid a total of:
• Dividends to NNPC that holds FGN 49%: $20.1bn
• Taxes: $8.5bn
This means 2 things:
1. FAAC will not see 1.9trillion naira next month, and this record has nothing
Jun 14, 2023 • 12 tweets • 3 min read
THREAD: What will be the impact of a FX unification on petrol subsidy?
The current stock of petrol in Nigeria will not last beyond the end of July. If Dangote doesn't start delivering through distributors by the first week in August, Petrol prices will go up to at least 750
Exchange rate unification means that the Central Bank has collapsed all the windows for your Form A to Q. No more PTA/BTA, form M at government subsidized rates. Here are the benefits:
• Revenues to the FG from Government Owned Enterprises (GoE) will go up by at least 39%
Jun 2, 2023 • 4 tweets • 1 min read
Here is my advise for the Nigeria Labor Congress. A better alternative to strike action like a repeat of 2012, will be to demand for the following:
• Ask for the govt to index wages to inflation
• Ask for the govt to pass an accelerated
Employee casualisation bill that will criminalize 3rd party hiring above 15% & refusal to pay standard wages with benefits after 6months
• Ask for the govt to review the national minimum wage within 12 months of signing an MoU
• Ask for the Govt to implement the
Jun 1, 2023 • 6 tweets • 1 min read
OPEC meeting is coming up on Monday and Tuesday next week, and consensus is that the bloc wants to raise its daily production cuts from 1.1m barrels to raise prices on the ICE above $80.
OPEC production quota and the issues Nigeria has had around crude oil theft is the reason
NURPC in line with PIA 2021 has updated its grip on:
• Technical allowable rates
• Maximum efficiency rates
from a well in line with sections 109 of the PIA.
I honestly think that the production curtailment and domestic crude oil supply obligations regulation needs a
May 31, 2023 • 7 tweets • 2 min read
6 things NNPC needs to do to prepare itself for the future:
1. It has done the first one already- remove its hands from pms subsidy
2. Sell off the government owned refineries
3. Go to the capital markets to raise either through an IPO (Equity) or Corporate Bond (Debt)
4. Invest in BUA refineries in Akwa Ibom and work with NPA, NMDPRA, Concessionaires to fast track the development of the Ibaka Deep Sea port needed to build the refinery. The reason this is important is because
May 8, 2023 • 6 tweets • 1 min read
Nigeria's black market premium is 61.8% today (461:745)
A good way to think about it is like whenever there's an abundance of pms supply, prices stay uniform.
Whenever there's an interruption to that supply a black market is created, and people do not want to stay in queues
Endlessly for petrol because they need it now (so they buy in kegs)
A good way to close the gap between the official & black markets is to increase the supply of USD. What are the 4 sources:
Inspite of the security challenges in Cabo del Gado province that prompted the President of Mozambique to ask for the intervention of Rwandan Defense Forces to stabilize the onslaught against workers of Total Energies,
Mozambique is reporting that their LNG production output
will rise to 5.8 million metric tonnes in 2023 and 9.1m metric tonnes in 2024,
Before long, the Joint Venture Partners in Mozambique LNG will be exporting LNG to South Africa for Eskom to plug the 4,000 MW of shortage in power generation,
Meanwhile Nigeria LNG is struggling
May 3, 2023 • 7 tweets • 2 min read
Rinu,
Thank you for your question. So in 2007, Soludo and OBJ created a provision in the CBN Act, that allows for the Federal Government to borrow from the Central Bank as a lender of last resort, in case they have a budget shortfall (and there's nowhere else to go)
And capped the limit at 5% of the total revenues the government gets from the previous year.
Between 2007 and 2015, President Yar'adua and GEJ took only a combined total of #869bn from this window.
Whereas, in the last 8 Years, President Buhari has collected 23.7 trillion naira
Apr 30, 2023 • 6 tweets • 1 min read
TCN as market operator has shut down supply to the DISCOs supplying Kaduna & Kano,
As the state governors begin to navigate the murky waters of the transfer of power (bill 33) from the exclusive to concurrent legislative lists, the Nigeria Governors Forum will need to sit down
in meetings with GENCOs & help them work through issues like:
• Cost of servicing their turbines/FX for spare parts
• Cost of LPFO & what will happen when NGMC deregulates the prices of Gas (Dec 2023)
• Increase in transmission pipes to supply more gas needed by GENCOs
Apr 28, 2023 • 4 tweets • 1 min read
The Federal Government is one of three members of the Federating Unit:
• Federal
• State
• Local Governments
An AGF is Attorney General of the Federation (Federating units) not Attorney General of the Federal Government (One unit). There's a difference.
Example was when the Supreme Court ruled against the Federal Government and the FG refused to comply,
It was the work of the AGF to file contempt charges (form 48) against the FG & the CBN (As an agent of the FG)
Apr 28, 2023 • 5 tweets • 1 min read
No one is talking about the constitutional crises from the violation of sections 205(1) of the PIA that was signed on August 16 2021
"Subject to the provisions of this sections, wholesale & retail prices of all petroleum prices will be based on unrestricted free market pricing
conditions"
The imperative of compliance with the law is the reason NASS proposed in 5th alteration that the office of the Attorney General of the Federation be separated from Minister of Justice, and that funding for AGF come from National Judicial Council & not MoJ to avoid
Apr 25, 2023 • 8 tweets • 2 min read
I am building the financial model for a client & these numbers from NBET for January 2023 is very revealing:
EGBIN that does 1,320 megawatts (1.32 GW) gave the NBET capacity load worth 14,485,059,213 billion naira in its final settlement statement (FSS) for January 2023
The total remittance collections from end users and excess remittance collections came out at 58%.
The Govt thru:
• Payment Assurance Facility
• World Bank PSRO Loan
• FG grants
= 11.85%
Follow me, I am going somewhere,
This means there's an impairment of 30.25% that has
Apr 24, 2023 • 4 tweets • 1 min read
I still believe Trump made a horrible diplomatic mistake asking the Canadian Government to detain Meng Wanzhou (the CFO of Huawei, and daughter to founder).
That decision led to Huawei exiting the use of android and fast-tracking the development of its own OS- Harmony.
It fast-tracked the stand-off for semi-conductor chips, and the enforcement of the Chinese National Security plan for tech that is making it attempt to annex Taiwan,
That decision showed China that the US Government will use the economy as leverage for territorial control
Apr 23, 2023 • 8 tweets • 2 min read
If Hong Kong is the financial capital Shanghai always hoped to be, Taiwan is the semi-conductor capital Shenzen is working hard to become,
Picks for decoupling:
• China wants to annex Taiwan 🇹🇼 like it did to Hong Kong🇭🇰(violating the 50-Year agreement it signed with the UK
to keep HK as a special administrative zone until 2047). It wants Taiwan because of how strategic its semi-conductor industry is to its STEM
• China & Russia are developing an alternative to SWIFT (SPFY) by getting more Countries into AIIB framework
• China & Russia are deve
Apr 6, 2023 • 5 tweets • 1 min read
The government is struggling to cover the 11.5trillion in deficits for the 2023 budget,
Yet it's collecting $800m from the World Bank to fund palliative for removal of subsidy through conditional cash transfer to
10m households. The 2 most important items that determines growth in any budget are:
• Education
• Healthcare
In the 2023 appropriation act,
Education:
• allocation- 4.98%
• capex to allocation- 28%
• Personnel to allocation- 66%
• Overhead for ministry- 6%
Apr 3, 2023 • 5 tweets • 1 min read
One part of the debt stock that constitutes 2.37% of total domestic debts (that is 73% of total debts) is what is called promissory notes.
Currently, the FG has issued notes worth #530bn in EEG (2.37% of the total domestic debt stock as certificates that can be redeemed through
purchase of government securities, used as tax deductions) under the Export Incentives & Miscellanous Act of 2003. As the 10th Senate, Ministry of Finance, Budget Office look for revenues in 2023 and block leakages to the current fiscal position, I will recommend they do the
