A Review of the Nigerian Energy Industry

Financial market update

04 January 2012, Sweetcrude, Lagos – Local and international financial market update.
· EUROPE: With Germany, Portugal, Greece, Spain and Italy all expected to come into the market borrowing money this month it is kicking of a competition for finance that may determine whether the euro area leaders can preserve the 13 year old single currency.

· INDIA: Indian service industry expanded n December at the fastest pace in five months signalling price pressure may crimp scope to cut interest rates. The PMI rose to 54.2 from 53.2 in November.

· CHINA: Home prices in China fell for fourth month in December as the government prolonged a crackdown on speculation that risks deepening the slowdown in the world’s second biggest economy.

· The FG has signed an MOU with Global Biofuels Limited, an indigenous bio-fuel producer, for the construction of 15 integrated bio-fuel plants in the country. The bio-fuel plant is estimated to gulp about N414bn.The project, which is expected to create 120, 000 direct and 750,000 indirect jobs across the value chain, will link 15 states to cheap bio-fuel generated electricity at 30 megawatts per state.

· Bonds and Bills – Markets are still illiquid on the back of the slow down at year end and yet to get going in 2012.

· Money Market – OBB & unsecured rates O/N 13.00% & 14.00% respectively, the market is still quite liquid. Expectation is that the CBN will likely come out to mop up some of this liquidity.

                         Hi                  Low                Close             Prev.Close
 USD/NGN    161.10/20    159.75/85    160.06/16     159.60/70

NIBOR(%)                               LIBOR (%)
O/N                13.9583            USD 1 month            0.2953
7 Day              14.4167            USD 2 month            0.4281
30 Day           15.3333            USD 3 month            0.5825
60 Day           15.6667            USD 6 month            0.8110
90 Day           15.9583            USD 12 month          1.1301
Y/Y Consumer Inflation Nov 2011 :                          10.50%
FX Reserves: 29 December 2011               (USD bn) 32.89
MPR                                                                                 12.00%
Source: FMD and CBN

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