A Review of the Nigerian Energy Industry

Financial market update

29 January 2013, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: President Goodluck Jonathan said Saturday that Nigeria has appropriated the sum of $400 million in the 2013 budget for the Calabar- Ajaokota-Kano pipeline in order to commence construction activity that would ensure the speedy completion of the Trans- Saharan Gas Pipeline Project (TSGP). According to the president, who was represented at the summit of NEPAD Heads of State and Government Orientation Committee (HSGOC) by Minister of Foreign Affairs, Ambassador Olugbenga Ashiru, the Calabar-Ajaokota-Kano pipeline will be the first direct activity to bring gas through the up-country that will feed into the TSGP project.

EUROPE: European Central Bank President Mario Draghi’s success in driving down borrowing costs for the most indebted euro nations risks lowering their incentives to tackle budget deficits, revive growth and reduce unemployment. “Having taken away the breakup risk for Europe, what they’ve got now is a crisis that is chronic rather than acute,” said Stuart Thomson, who helps oversee $109 billion at Ignis Asset Management in Glasgow. “Europe is doing exactly what Japan has done. When there is a crisis, there will be a response, improvement and then complacency. Europe is in a complacency period now.”

INDIA: India lowered interest rates for the first time since April and cut the amount of deposits lenders must set aside as reserves, easing policy to aid growth as inflation cools and the government curbs the budget deficit. The Reserve Bank of India reduced the repurchase rate to 7.75 percent from 8 percent, it said in Mumbai today

CHINA: China’s stocks rose, sending the benchmark index into a bull market, on optimism over the outlook for the nation’s economy. Financial and energy shares led gains. The Shanghai Composite Index climbed 0.5 percent to 2,358.98 at the close

Bonds – Quiet session yesterday, yields inching downward across board though facing light resistance. Yields expected to continue the downward trend over the next few weeks.

Bills – Volatile markets yesterday with the CBN offering short dated bills at OMO. The CBN offered 100billion split evenly between 59 and 66day bills selling N143.94nillion at 12.25 and 12.41 respectively. the short end went up about 100bps in the secondary market on the back of this fresh supply while the long end went down about 90bps as it becomes clear that the Central bank is keeping its OMO issuance short dated.

Money Market – OBB and unsecured O/N rates still moving upward closing yesterday at 11.75% and 12.00% as the Central Bank came out to mop up liquidity.

Indicative Currency Exchange Rates
Bid             Offer

EURUSD         1.3436           1.3446
GBPUSD         1.5703            1.5713
USDJPY          90.66             91.06
USDCHF         0.9255          0.9275
GBPEUR         1.1691            1.1701
USDZAR         9.0958          9.1958
USDNGN         156.75          157.50
JPYNGN         1.7290          1.7790
CHFNGN        169.37          173.37
EURNGN        210.61          214.61
GBPNGN         246.14         250.14
ZARNGN         17.23            19.23

Oil in New York rose for a second day after the U.S. showed signs of economic growth and OPEC Secretary General Abdalla El-Badri said prices are unlikely to drop this year. Crude for March delivery rose as much as 53 cents to $96.97 a barrel in electronic trading on the New York Mercantile Exchange and was at $96.92 at 3:21 p.m. Singapore time.

Interest rates
NIBOR (%)                        LIBOR (%)
O/N              11.5417             USD 1 month         0.2027
7 Day            11.9167             USD 2 month         0.2475
30 Day         12.2917             USD 3 month         0.3015
60 Day         12.6250            USD 4 month         0.3511
90 Day         12.9833            USD 6 month         0.4758
USD 12 month       0.7975
Y/Y Consumer Inflation December 2012 :       12.00%
FX Reserves: 23 January 2013 (USD bn)         45.425
MPR                                                                          12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market Dealers Association Standard Chartered Bank Nigeria.

                             Hi              Low          Close      Prev.Close
USD/NGN  157.45/55   157.05/15   157.05/15   157.20/30

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