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PIA: IoD Points at Ways to Facilitate Successful Implementation

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The Institute of Directors (IoD) on Monday highlighted important areas to be reviewed by the authorities to engender the successful implementation of the Petroleum  Industry Act (PIA).
Dr Ije Jidenma, President, IoD, gave the advice in a policy paper titled: “Making the Petroleum Industry Act work: A Position Paper,” on Monday in Lagos.


Jidenma said that while there was no such thing as a perfect piece of legislation, recent events pointed to implementation ‘headwinds.


She stressed that Nigeria in its implementation of the PIA must send the right signals consistent with the outlined noble objectives.


Jidenma outlined the institute’s concern with its implementation to include stalled downstream deregulation, implementation complexities, need for gas investment incentivising, and Environmental, Social and Governance (ESG) issues.


According to her, the Federal Government’s decision to stall the Act raised further questions on section 53 (7) which requires “NNPC Ltd and any of its subsidiaries to conduct their affairs on a commercial basis in a profitable and efficient manner without recourse to government funds.”


This, she said, was highlighted in view of the sum of $341 billion (or N1.43 trillion) which was reported to had been spent in 2021 on petroleum subsidy.
Jidenma tasked government to create an enabling environment that would make implementation of deregulation easier and readily acceptable.
“Pending their full privatisation, government must fast-track the ongoing full rehabilitation of refineries to ensure that the import freight element in the price of product is minimised;
“Government should review the current fuel pricing mechanism and must as a matter of urgency, work on removing all the inefficiencies and distortions that are negatively impacting the landing costs of products,” she said.


She noted that feedback from the business community suggested that some aspects of the Act might prove difficult to implement in practice because of inherent complications.
Jidenma cited two examples that would suffice as: the hydrocarbon tax and Company Income Tax (CIT) overlap and conversion from existing Oil Prospecting License (OPLs) to the new Petroleum Prospecting License (PPLs).
She noted that while section 302 (1) states that CIT shall apply to companies engaged in petroleum operations (upstream, midstream and downstream), section 260 (1) states that Hydrocarbon Tax shall apply to companies upstream: onshore, shallow water and deep offshore.
“Hence, upstream firms would be subject to both Hydrocarbon Tax and CIT.
“Section 92 (1) allows for the voluntary conversion of existing oil prospecting license (OPL) to a petroleum prospecting license (PPL).
“However, the OPLs cover a larger size of 2,950 square kilometres while the new PPLs depending on terrain cover 300 square kilometres (onshore and shallow offshore) and 1,000 square kilometres (deep offshore).


“Conversion may not be as straight- forward as anticipated by the Act.
“To reduce the pain from implementation complexity, IoD Nigeria is putting forward the need to develop a uniform template for dealing with overlaps; and provide greater clarity on voluntary lease conversion and a clear timeline,” she said.
She recommended the exemption of non-associated gas producers and developers from disallowing borrowing cost for the purpose of CIT computations.
“State an objective basis for determining the length of the transition from a regulated regime to a ‘willing-buyer, willing-seller’ gas market.
“Except where it is strictly in the public interest, undue price regulation should be avoided,” she said.


The IoD President noted that while there was evidence that the PIA attempted to incorporate ESG principles, there were many ‘missing links.
She said that the Act failed to encourage or mandate sustainability reporting.
Jidenma added that the NNPC Ltd Board reflected a degree of gender diversity but that might not be true of the Commission and Authority.
According to her, a review reveals that only one in six appointees in the boards of NNPC and the two regulatory authorities, put together, are women.
She said that there were no prescription on the matter for other boards of companies in the petroleum operations space.


“In view of Nigeria’s declared commitment to Net-Zero 2060 at the CoP26 held in Glasgow, UK – three months after the Act was signed – it is important that urgency implied by the commitment is reflected in the speed and implementation of the  PIA.
“The  Act ought  to include a specific penalty for failure to comply with section 103 and for environmental damages.


“While it is commendable to have in place trusts and plans that cater for host communities, it is important to ensure related funds are well-managed and properly accounted for, if the desired socio- economic growth will result.
“Equally important is for all players, as a matter of good practice, to incorporate sustainability reporting as part of applying ESG principles.
“The Act should prescribe what companies engaged in petroleum operations (upstream, midstream and downstream) should consider adequate gender balance,” she said. (NAN)

BUSINESS

My Vision to Simplify Payments in Nigeria with Innovative Solutions – Shema

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By Raphael Atuu,  Abuja
The Chief Executive Officer of  Wireless Pay,  Chonedu Shema Emmanuel has said  his vision is to simplify payments in Nigeria with innovative solutions through  his wireless banking platform.
Mr Sharma stated this during an interview with Daily Assets correspondent in his office in Abuja recently.


“I have launched one of Nigeria’s Leading payment platforms, ensuring seamless and efficient financial transactions online, the app is a subsidiary of Wired Banking Africa and collaborates with Asset Matrix MFB to deliver secure and efficient payment solutions.

“My company has  an app with key features like NFC tap-to-pay for softPOS, enabling merchants to effortlessly receive card payments, and an alternative USSD option for customers who prefer to pay with USSD codes.
Virtual accounts are also available for those who prefer transfers, and merchants can request physical cards for transactions with an impressive 99.9% uptime.”
Mr Shena added that his vision for the future of Wireless Pay includes sustained growth, expanded services, and becoming a trusted industry leader in payment processing, contributing to financial inclusion across different regions.
 While advising the public to take advantage of  wireless pay ‘s high  features, secure infrastructure, and global accessibility, to transact business, the company is set to capture the business market.
 The CEO maintained that the company is  registered as Wireless Pay Technologies Limited in Nigeria, the US, and the UK,  with a physical office in Abuja, and an entity under WOBILO Africa Limited, Wired Banking Africa, and Corporate Permit and Consultants Limited, further establishing its credibility and commitment to providing reliable payment solutions.
“It has  a collaboration with Asset Matrix MFB to ensure seamless integration and efficient services, the founder stressed that the platform offers transparent pricing, with card transactions capped at 0.5% up to 100 naira and USSD collections capped at 1.3% up to 1,300 naira. Withdrawals and bank transfers incur a flat fee ranging between 15-20 naira.”

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Afreximbank Closes $282m India-Focused Club Deal

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By Tony Obiechina, Abuja
The African Export-Import Bank (Afreximbank) has announced the successful completion of a first-of-its-kind India-focussed club deal for US$282.00 million.
Initiated for the exclusive participation of Indian lenders, and arranged by Bank of Africa UK PLC, the primary syndicated club deal saw participation from Indian lenders through their overseas branches and subsidiaries in the Dubai International Financial Centre in the United Arab Emirates, Singapore and Mauritius.


The facility, which was backed by six participating banks and financial institutions, including five that joined as first-time lenders to Afreximbank, helping the Bank achieve its objective of diversifying its funding sources, carries a three-year tenor.

At a commemorative event held in Dubai, U.A.E., to mark the conclusion of the deal, Haytham ElMaayergi, Executive Vice President at Afreximbank, said that the conclusion of the initiative represented a major milestone for the Bank as it sought to fulfil the key objectives of its funding programme.
Highlighting the importance of investing in, and for, Africa, Mr. ElMaayergi said: “this facility will help Afreximbank to continue to play a major role in the development of intra-African trade and trade between Africa and the rest of the world, particularly with India.
It is a testament to the rapid growth in Africa’s economic relationship with India and is evidence of Afreximbank’s growing ability to harness resources into Africa and to fund trade finance related investments that would have a positive impact on trade between Africa and India.”
Chandi Mwenebungu, Director and Group Treasurer of Afreximbank, reviewing the Bank’s vision for Africa, said that its funding objectives included achieving the diversification of its liability book by geography, investor type and tenor.
Also addressing guests at the event were Said Adren, CEO of Bank of Africa UK PLC, who thanked the lenders for their participation, and Zineb Tamtaoui, General Manager of Bank of Africa, Dubai Branch, who expressed appreciation for the opportunity to put together “a landmark deal that would be a stepping stone to many India-focused club deals going forward.”

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CBN Unveils New Minimum Capital Requirements For Banks

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Gives Them 24 months To Recapitalise

By Tony Obiechina, Abuja 

 Days after urging Nigerian banks to expedite action on the recapitalisation of their capital base in order to strengthen the financial system, the Central Bank of Nigeria (CBN) on Thursday, March 28, 2024, unveiled new minimum capital requirements for banks, pegging the minimum capital base for commercial banks with international authorisation at N500 Billion.

 

Confirming this in Abuja, on Thursday, March 28, 2024, the Acting Director, Corporate Communications Department, Mrs.

Hakama Sidi Ali said the new minimum capital base for commercial banks with national authorisation is now N200 Billion, while the new requirement for those with regional authorization is N50 Billion.
 

Mrs. Sidi Ali also disclosed that the new minimum capital for merchant banks would be N50 Billion, while the new requirements for non-interest banks with national and regional authorisations are N20 Billion and N10 Billion, respectively. 

A circular signed by the Director, Financial Policy and Regulation Department, Mr. Haruna Mustafa, to all commercial, merchant, and non-interest banks and promoters of proposed banks emphasized that all banks are required to meet the minimum capital requirement within 24 months commencing from April 1, 2024, and terminating on March 31, 2026

According to the circular, the move, initially disclosed by the CBN Governor, Olayemi Cardoso, in his address to the Annual Bankers’ Dinner in November 2023, was to enhance banks’ resilience, solvency, and capacity to continue supporting the growth of the Nigerian economy.   

To enable them to meet the minimum capital requirements, the CBN urged banks to consider inject fresh equity capital through private placements, rights issues and/or offers for subscription; Mergers and Acquisitions (M&As); and/or upgrade or downgrade of license authorisation.

Furthermore, the circular disclosed that the minimum capital shall comprise paid-up capital and share premium only. 

It stressed that the new capital requirement shall not be based on the Shareholders’ Fund.

“Additional Tier 1 (AT1) Capital shall not be eligible for meeting the new requirement. Notwithstanding the capital increase, banks are to ensure strict compliance with the minimum capital adequacy ratio (CAR) requirement applicable to their license authorisation.  

“In line with extant regulations, banks that breach the CAR requirement shall be required to inject fresh capital to regularise their position,” it added.

The CBN circular said the minimum capital requirement for proposed banks shall be paid-up capital, adding that the new minimum capital requirement shall apply to all new applications for banking licenses submitted after April 1, 2024. 

It noted that the CBN would continue to process all pending applications for banking licenses for which a capital deposit had been made and/or an Approval-in-Principle (AIP) had been granted. 

However, it said that the promoters of such proposed banks would make up the difference between the capital deposited with the CBN and the new capital requirement no later than March 31, 2026.

Meanwhile, the CBN said all banks are required to submit an implementation plan (clearly indicating the chosen option(s) for meeting the new capital requirement and various activities involved with their timelines) no later than April 30, 2024. 

The CBN also disclosed that it would l monitor and ensure compliance with the new requirements within the specified timeline.  

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