West Africa
Nigeria: funding oil cash calls from debt key for economy
Nigeria must get out of paying socalled cash calls to joint ventures with oil and gas companies to stand a chance of pulling its ailing economy out of recession, according to Finance Minister Kemi Adeosun.
The minister said the Nigerian National Petroleum Corporation( NNPC) had spent 110 billion naira($ 360 million) on cash calls this month, which dwarfed the country ' s 41 billion naira income from oil production over the same period. NNPC also owes several billion in back debt to oil companies from unpaid cash calls, which oil worker unions say is stalling the creation of jobs and investment. " We are already working to see how we can get out of the cash calls. And that is very fundamental to the economy," Adeosun told a press conference.
" We are working with the Ministry of Petroleum Resources and NNPC... that ' s a long-term plan: To allow those joint ventures to borrow money that they need rather than taking money out of the federation account."
Sub-Saharan Africa ' s largest economy is trying to boost tax revenues and the non-oil income to fund a record $ 30 billion 2016 budget aimed at reviving the West African country that has been hit by lower oil prices.
Adeosun told Reuters in April the government was thinking of forcing the cash calls, which are for international and local joint venture partners, out of budget funding and into so-called modified carrier arrangements.
Modified carry agreements are loans provided by large international oil companies to the NNPC for investing in oil exploration and production projects.- Rtr
Seth Terkper, Minister for Finance, Ghana
Ghana to issue first domestic dollar bond
Ghana plans to issue its first domestic investor only dollar bond this October in efforts to deepen the government ' s financing streams and bolster the local bond market.
The two-year bond with a target of about $ 50 million, would be issued through a book-building system to be arranged by Barclays Bank, Stanbic Bank and brokerage firm Strategic African Securities, according to Finance Minister Seth Terkper.
" The goal is to issue a dollar bond to meet some of our dollar commitments in the budget, most of which are related to capital expenditure," Terkper said, adding that the overall objective was to rationalise the local dollar market.
" Our target sources include retention by( dollar-earning) companies whose expenditures are in cedis. There may also be dollars in commercial bank accounts which may not be yielding much and we want to provide a window for the depositors to invest," he said.
The finance ministry is yet to announce a pricing guide for the bond but a source close to the deal said it could be around 5 percent. Government is also considering the issue of a Diaspora bond that targets Ghanaians abroad, Terkper said.
The West African cocoa, gold and oil producer signed a three-year assistance programme with the International Monetary Fund in April 2015 to restore fiscal balance to an economy dogged by deficits, public debt and high interest rates. Public debt stood at $ 27.8 billion representing 65.9 percent of gross domestic product as of July. Ghana issued its fifth Eurobond of $ 750 million due 2022 this month at a yield of 9.25 percent.
The central bank ' s monetary policy committee is due to announce a rates decision and analysts polled by Reuters said they expected the bank to hold its benchmark rate at 26 percent.- Rtr
10 Business Times Africa 2016