The Assets Management Company of Nigeria (AMCON) declared yesterday that it is set for a new stage that has to do with complete take-over of the N5.4 trillion assets belonging to debtors, saying the debts have lingered for too long.
The company said there would be no more room for negotiation with debtors because it is tired of obligors (debtors) coming to its office and telling lies about wanting to embark on a staggered payment, which they end up never paying.
Managing director and chief executive officer of AMCON, Mr Ahmed Kuru, who announced the position of the company in an interview with the News Agency of Nigeria (NAN) in Abuja regretted that in the seven years of its operation, the company has only been able to recover N700 billion.
Noting that there was still a debt portfolio of N5.4 trillion pending with chronic debtors, he said most part of the N5.4 trillion has been with the banks for five years before AMCON bought them over.
Kuru noted that after 7 years of the companies operation, the obligors are yet to pay.
He said, “Resolutions through staggered plans have never worked. Let us not forget that before those loans were transferred to AMCON they have been with the banks for over 5 years. Now, AMCON is almost 7 years, so the facility has been running bad for 12 years. It is not easy to recover those kinds of facilities.
“So now we have changed our strategy from sitting down and drinking tea and the obligors telling us lies and we pretend that we don’t know you are telling us lies. There is no more time for lies because we have a sunset period. So, now our focus is on recovery.
“We do not want to hear anything, you cannot come and tell me you are going to pay me in the next six years, I do not have that time. If you cannot pay me the money now then give me my assets because the assets belong to AMCON so that we can sell it”.
Kuru added that in the case where the registered assets of a company that is in debt is not enough to clear their obligation, AMCON would also go after the directors and their private companies.
He stressed that as part of the new strategy of AMCON, directors of companies would not be sought after so they take part in repaying the loans.
The MD continued: “We are training our people more to see that they become more efficient. Most fundamentally we have changed our strategy. Before our strategy had been only resolution: you come, you give us a payment plan and we respect it.
“But we have realized that more than 80 per cent of the recoveries by AMCON are as a result of either forfeiture or taking over of businesses or outright cash payment.
“My law allows me to not only go after the assets that are served as collateral but I can also go after the directors of companies: I can go after the assets that have not been served as collateral. This is where we are now heading to because the law had anticipated this situation that we are now in”.
On the way forward for AMCON, Kuru said that there is need for some sections of the law to be amended, adding that the company is working with the National Assembly to amend relevant laws.
He acknowledged that the National Assembly had been very good so far and had been working hard to close the gaps.
Equities Investors Gain N257bn In 6 Months
Meanwhile, despite the volatility witnessed in the Nigerian equities market, investors’ investment in the Nigerian capital market rose by N257 billion in the first half of this year.
The volatility in the stocks market, according to analysts, was largely hinged on investors’ negative sentiments as well as the rise in US Treasury yields, which averted foreign inflows from risky assets in emerging markets, including Nigeria to the more attractive risk-less US treasuries.
They noted that this led investors to ignore the notable positives in the Nigerian economy which includes: continued GDP growth, though at a slower pace, accretion to the foreign reserves and stability of the naira, supported by increased oil prices and stable production, continued decline in monthly inflation, 15th consecutive decline to 12.48 per cent in April and expansion of the Nigerian PMI (Manufacturing and non-Manufacturing sectors).
The Nigerian Stock Exchange All Share Index (NSEASI), which measures the performance of the equity market, appreciated by 0.09 points to close at 38,278.55 on June 29, from 38,243.19 at which it opened for the year.
Similarly, market capitalisation gained N257 billion, from N13.609 trillion at which it opened trading on January 2, 2017 to close at N13.866 trillion for the half year.
The stocks market, which started the year on a strong bid with 15.95 per cent growth, took a reverse from the month of February to May with 2.28 per cent, 9.55 per cent, 0.57 per cent and 7.67 per cent loss respectively, while the market gained 0.46 per cent in June.
The last week in the month of June gain pushed the first half of the year back to positive, with a year-to-date gain of 0.09 per cent.
Sectoral analysis showed mixed performance, while the NSE Pension index recorded the highest half-year return of eight per cent.
The NSE Insurance index followed with a return of 7.94 per cent, Premium index rose by 6.10 per cent, while the NSE Lotus 11 rallied average gain of 2.59 per cent.
The NSE Industrial Goods index appreciated by 1.68 per cent, while NSE Banking up by 0.13 per cent. On the other side, the NSE ASeM declined the most by 12.67 per cent, with NSE Consumer Goods index declining by 4.96 per cent, while NSE Oil and Gas depreciated by 2.26 per cent. Also, the NSE 30 Index, which tracks the 30 most capitalised companies at the stock market, posted a six-month return loss 0.44 per cent.
The Central Bank of Nigeria (CBN) recently released the Purchasing Managers’ Index (PMI) report for May 2018, which showed that private sector economic activity in Nigeria further accelerated in May.
According to the survey report, Manufacturing PMI rose for the 14th consecutive month to 56.5 points from 56.9 points, amid faster growth in production level, supplier delivery time and employment level.
Similarly, Non-manufacturing PMI improved for the 13th consecutive month, rising to 57.3 points from 57.5 points as employment grew at a faster rate in May 2018.
Also, in June, President Muhammadu Buhari signed the 2018 Appropriation Act into law, seven months after it was first presented to the National Assembly for deliberations.
Analysts at United Capital said that in the months following the introduction of the Investors and Exporters Foreign Exchange Window in April 2017, large-cap stocks rallied hard, particularly in Financial and FMCG tickers, being the immediate beneficiaries of foreign portfolio inflows to Nigeria.
They said that further along the line, mid-caps took the center stage as investors hunted for more bargains amid positive economic readings.
They noted further that entering 2018, tagged as a period of consolidation, micro-cap stocks finally decided to join the party and this asset class has quietly outperformed the market at a staggering 29.1 per cent year-to-date, compared to large-caps and mid-caps of 4.7 per cent and 1.6 per cent growth.
According to them, amendments to the NSE pricing methodology and par value rules have been partly responsible for creating liquidity for players in that space.
“Nevertheless, we note that a bulk of the gains were reaped in January, a period of stratospheric euphoria across financial markets in the world. With investors already attaching much weight to fears of monetary tightening in the U.S. amid rising treasury yields and a stronger dollar, amplified by the build-up to the 2018 presidential election, “flight-to-quality” would be the prime hymn and small may not remain big”, they stated.
Capital market analysts expected bargain hunting activities in the month of July as investors maintain interest amid expectations of better half year results coupled with the kick off of the Pension multi-fund structure in July 2018.
Head, equities of FBNQuest Capital, Bunmi Asaolu said, “Our view is that the macro outlook is still supportive, with oil prices remaining firm, and that this should offset potential uncertainty stemming from political risk going into H2 2018.
“Although we do not expect consensus earnings estimates to see significant upwards revisions through the rest of the year, valuations are yet to fully capture earnings outlook expectations, especially among the tier 1 banks. As such, we expect the index to recover lost ground, with a minimum of 10 per cent gain by the end of the year.”
The former president, Chartered Institute of Stockbrokers (CIS), Mr Oluwaseyi Abe, who appraised the current state of the market, reassured both individuals and institutional investors to take advantage of the current low share prices to beef up their portfolios.
Abe explained that the market had always been a barometer that gauges the mood of the economy, adding that the Nigerian economy would pick up soon as indices of prior uncertainties were fizzling out.
He however noted that market fundamentals remained strong and share prices of many blue chip companies were trading below their intrinsic values, urging investors to take advantage of the cheap prices to increase their stakes in the quoted companies.
Also, the chief operating officer of InvestDate Consulting Limited, Mr Ambrose Omordion called on domestic investors in the nation’s capital market to leverage on the current low prices of stocks of companies quoted on the floor of the Nigerian Stock Exchange for future gains.
Nigeria To Earn $6.9bn From New Oil Deal
Meanwhile, Nigeria is expected to generate $5.60billion in taxes and royalties and $1.32billion in net cash flows after cost recovery and compensation from the Anyalu and Madu fields under Oil Mining Licence, OML 83 and OML 85, offshore.
This followed the signing of the final contractual agreement for the execution of the tripartite term financing and technical services arrangement between NNPC/FIRST E&P JV and Schlumberger for the Anyalu and Madu fields under Oil Mining Licence, OML 83 and OML 85, offshore in London during the weekend.
The Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, who disclosed this said under the agreement, global oil services giant, Schlumberger would provide $724.14m out of the required project cost of $1.082bn, while the balance of $358.79m is to be funded with cash flows generated by the project.
The Anyala and Madu fields are projected to have 193 million barrels of crude oil and 0.637 trillion cubic feet of proven gas reserves, with production of 50, 000 barrels of oil per day and 120 million standard cubic feet of gas per day.
A statement issued by the spokesman of NNPC, Ndu Ughamadu, noted that Baru disclosed this at the signing ceremony, which was also attended by chief executives of the other parties to the deal.
Baru said in arriving at the innovative alternative funding package, the corporation is guided by the need to instill transparent and accountable processes.
He further added that NNPC also followed strict compliance with all extant laws, regulations and established governance protocols as well as overriding national interest and drive to achieve competitive market pricing for such a Greenfield project.
Baru explained that the NNPC/FIRST E&P JV project financing formula came as a creative approach to funding JV operations in response to the realities of the prevailing operating environment.
“apart from aligning wholly with government’s aspiration of increased crude oil and gas production, reserves growth and monetization of the nation’s enormous gas resources, the model is in tandem with one of the corporation’s 12 Business Focus Areas (BUFAs); ramping up crude oil & gas reserves & production which also supports Government’s 7 Big Wins aspirations’’, he stated.
He said the Schlumberger financing package covers pre-Final Investment Decision (FID) funding, 100 per cent of capital expenditure for three years and pre-production operating expenses.
He added that the package would enable the country to generate $5.60billion in taxes and royalties and $1.32billion in net cash flows after Schlumberger’s cost recovery & compensation in line with the terms of the agreement.
NNPC holds 60 per cent interest in the licences in the OMLs 83 & 85, which are in shallow waters 40km offshore in the Niger Delta, while, FIRST E&P, the operator of the JV, holds the remaining 40 per cent interest.
Apart from providing funding for the development of the fields, Schlumberger would also provide other oilfield services to the JV on a limited exclusive basis.
A joint project team would drive technology transfer, whilst leveraging on the global technical expertise of Schlumberger and the extensive local knowledge of the JV partners.
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