A Review of the Nigerian Energy Industry

Financial market update

29 August 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Chinese construction firm China Civil Engineering Construction Company (CCECC) is to embark on a railway project in Nigeria, following the signing of an addendum for the southwestern Lagos-Ibadan double track railway line modernization, one of the west African country’s major railway projects in recent times. The contract signing on Tuesday typified consistency and commitment of the Nigerian government’s policy to the modernization of railway system in the country, Minister of Transport Idris Umar said at a ceremony organized with top managers of CCECC in Abuja. The project costs approximately 1.5 billion U.S. dollars.

EUROPE: European stocks were little changed as investors awaited U.S. growth data before this week’s speech on monetary policy from Federal Reserve Chairman Ben S. Bernanke. The Stoxx Europe 600 Index slipped less than 0.1 percent to 267.16 at 8:05 a.m. in London after yesterday closing at the lowest level since Aug. 6.

CHINA: China’s retailers from clothing to computers are reporting weaker sales growth, undermining Premier Wen Jiabao’s goal of relying more on consumer spending for expansion as the economy cools. The reports show an extra drag on the second-largest economy after export growth almost stalled in July and factory output missed forecasts.

INDIA: India may auction a third of the solar projects planned by 2017 in the current financial year to double the nation’s sun-powered capacity as it seeks additional clean-energy investments to combat power shortages. The plan provides some guidance to solar utilities and manufacturers, which have said India must demonstrate a reliable pipeline of projects to draw the investment needed to meet its targets. India is aiming for 20,000 megawatts of solar power by 2022 and most of the country’s existing capacity of 1,040 megawatts was built in the past year.

Bonds – Renewed interest across the curve pulled yields down in yesterday’s session, though still a way to go on yields as we get closer to the listing date of Nigerian bonds on the GBI-EM index.

Bills – Bullish session on traded bills on Tuesday, sustained demand across various tenors on bills due to liquidity and zero supply via OMO issuance as would be expected due to the liquidity glut in the cash market. Trend to be sustained into the new week as market absorbs new liquidity inflow at the end of the week from maturing bond and t-bill.

Money Market – Lending rates stay flat at 12.00% and 12.50% on O/N and OBB respectively.
Hi                   Low            Close          Prev.Close
USD/NGN 158.25/35   157.88/98   158.15/25   158.00/10

Interest rates
NIBOR (%)                    LIBOR (%)
O/N                12.5417      USD 1 month         0.2335
7 Day              13.6667     USD 2 month         0.3295
30 Day           15.4167      USD 3 month         0.4228
60 Day           16.0000    USD 4 month         0.5299
90 Day           16.9167      USD 6 month         0.7107
USD 12 month       1.0350
Y/Y Consumer Inflation June 2012 :               12.9%
FX Reserves: 27 August 2012 (USD bn)          36.379
MPR                                                                        12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market
Dealers Association Standard Chartered Bank Nigeria

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