A Review of the Nigerian Energy Industry

Financial market update

09 January 2012, Sweetcrude, Lagos – Local and international financial market update.
· Nigeria: Hundreds of Nigerians are to take to the streets today, launching a nationwide strike to protest against the axing of a popular fuel subsidy in Africa’s top oil producer. Shops, Banks and petrol stations were shut and the highways into the main commercial city of Lagos, usually clogged with rush hour traffic, were eerily empty.

Nigeria fuel regulator announced the end of the subsidy on January 01, 2012 as part of effort to cut government spending and encourage badly needed investment in local refining

· EURO: The Euro sank against the dollar and Asian stocks fell as renewed worries about the fallout from the European sovereign debt crisis over shadowed signs of vigor in the U.S. economy.

· SOUTH AFRICA: South Africa’s rand held steady against the dollar and was largely range- bound at the end of the week characterized by low liquidity as south African traders slowly returned to work.

· GBP: Sterling hit a fresh 16-month high and looked set to stay supported as investors concerned about the euro zone sovereign funding pressures headed for the relative safely of the UK Currency

· Bonds – Trading activity continued to pick up again today, quite a volatile session as the market struggles to establish itself in the current uncertainty brought about by the surprise removal of the fuel subsidy.

· Bills – Market opened bullish in early trading dipping 30- 40bps ahead of an uncertain week due to proposed strike action. With news of yet another OMO auction today the buying stopped as most players went in auction to fill their demand.

· Money Market – OBB & unsecured rates O/N 13.00% & 14.00% respectively, the market is still liquid and the CBN keeps issuing bills to mop up some of this liquidity through OMO

· Foreign Exchange: at today’s WDAS session, CBN has $ 250 mio on offer.

NIBOR(%)                                LIBOR (%)
O/N              13.4167             USD 1 month          0.29630
7 Day           14.3333            USD 2 month          0.42820
30 Day        15.2917             USD 3 month          0.58150
60 Day        15.2917             USD 6 month          0.81200
90 Day        16.1667             USD 12 month        1.13035
Y/Y Consumer Inflation Nov 2011 :                         10.50%
FX Reserves: 04 January 2012               (USD bn) 33.095
MPR                                                                                    12.00%
Source: FMD and CBN

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