A Review of the Nigerian Energy Industry

Financial market update

20 February 2013, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Consumer Price Inflation for January comes out better than expected at 9% y/y in January from 12.1% in December. Much of this is a result of the base effect. Anticipation is that inflationary pressures will return, and the y/y numbers will pick up towards the middle of the year.

EUROPE: European Central Bank President Mario Draghi said he urged finance chiefs from the Group of 20 nations to be prudent when talking about currency movements. The G-20 sharpened their stance against governments trying to influence exchange rates as they sought to tame speculation of a global currency war without singling out Japan for criticism. The yen is near its lowest level against the dollar and the euro since 2010 after the Bank of Japan signaled further monetary easing to fight deflation.

INDIA: Coal India Ltd., which failed to use any of its $12 billion cash to buy mines overseas in the past five years, is renewing efforts as demand soars from power producers, said two people familiar with the plan. The state-owned company was unable to overcome bureaucratic hurdles to clinch as many as four deals abroad two years ago. It now plans to open a unit in South Africa next month to study asset prospects, the people said. Coal India, which fires more than half of India’s power generation capacity, faces government pressure to ensure uninterrupted supplies to utilities and cut blackouts that impede economic growth.

CHINA: China’s stocks fell the most in a month after valuations for the benchmark index climbed to the highest level in 17 months and on concern the government may introduce measures to curb property prices next month. The Shanghai Composite Index fell 1.2 percent to 2,393.18 at 1:05 p.m. local time, heading for the biggest loss since Jan. 11.

Bonds – A rally in the markets on Monday on the back of the release of the January inflation number which came out lower than expectation on the back of the base effects. Yields will likely dip further with strong demand still in markets.

Bills – Bullish also in the markets yesterday with rates coming off across board also in reaction to the inflation news. Rally still expected to continue.

Money Market – OBB and unsecured O/N rates opening the week at 13.25% and 13.50% yesterday.

CBN WDAS AUCTION- CBN offered and sold $120mio. Marginal rate at 155.74 naira, unchanged from previous sale on Feb. 13.

Indicative Currency Exchange Rates
Bid                Offer

EURUSD          1.3341                1.3351
GBPUSD           1.5476               1.5486
USDJPY            93.46                 93.86
USDCHF          0.9235              0.9255
GBPEUR          1.1600               1.1610
USDZAR          8.9242              9.0242
USDNGN         157.00              157.75
JPYNGN          1.6799               1.7299
CHFNGN         170.01               174.01
EURNGN        209.45               213.45
GBPNGN        242.97               246.97
ZARNGN        17.59                  19.59

West Texas Intermediate crude fell for a second day, extending the biggest drop in two weeks. WTI for March delivery, which expires tomorrow, slid as much as 61 cents to $95.25 a barrel in electronic trading on the Nymex and was at $95.41 at 2:40 p.m. Singapore time.

Interest rates
NIBOR (%)                      LIBOR (%)

O/N              14.4583         USD 1 month         0.2007
7 Day            14.5417          USD 2 month        0.2455
30 Day         14.8333         USD 3 month        0.2891
60 Day         15.2083         USD 4 month        0.3446
90 Day         15.5417          USD 6 month        0.4629
USD 12 month       0.7600
Y/Y Consumer Inflation December 2012 :   12.00%
FX Reserves: 02 February 2013 (USD bn)   46.219
MPR                                                                     12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market Dealers Association Standard Chartered Bank Nigeria.

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