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Sunday, 20th May 2018
3:38:54pm

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Unidentified gunmen killed the manager of a plant owned by Nigeria’s Dangote Industries Limited in Ethiopia on Wednesday after he was attacked in the restive Oromiya region while returning to the capital from the factory, officials said.

Oromiya, which surrounds the capital Addis Ababa, was plagued by violence for over two years, largely fueled by a sense of political and economic marginalisation among its young population.

Hundreds died in the violence that was triggered in 2015 by demonstrations over land rights, before they broadened into rallies over freedoms that spread to other regions.

“The company’s director died following an attack by unknown gunmen that took place while he was returning to Addis Ababa from the factory alongside two company employees,” a government statement said.

“Security forces are currently pursuing the assailants,” it added. The statement called on residents in the area to help gather details.

Representatives of the company in Nigeria were not immediately available for comment.

It was not immediately clear whether it was the company’s country representative or the plant manager who died in the attack. 

During the unrest, some vehicles belonging to the firm were torched by protesters.

Company heads have been in discussions with the region’s authorities to boost employment opportunities.

The plant - Ethiopia’s largest cement producer - was inaugurated in May 2015.

The country remains under a state of emergency imposed in February, a day after prime minister Hailemariam Desalegn resigned. Former army officer Abiy Ahmed has since replaced him.

Since taking over amid the unrest that threatened the ruling coalition’s tight grip, Abiy has vowed “a new political beginning” including more democratic rights. 

Thousands have been released since January, including journalists and dissidents who have been jailed for a variety of charges including terrorism.

-Reuters

Tanzania’s central bank said on Wednesday it has approved the merger of two small state banks, Twiga Bancorp and TPB Bank PLC, as part of a plan to improve financial stability and reduce the number of state-run lenders.

The decision is part of a drive to counteract a spike in bad loans since 2015 that has hit bank profits and stifled private sector lending, in turn undermining economic growth.

“We will see more mergers of government-owned banks until we remain with one or just a few banks owned by the government,” deputy Bank of Tanzania governor Bernard Kibesse told a news conference. All “clients, employees, assets and liabilities of Twiga Bancorp will now be transferred to TPB Bank PLC.”

The central bank took control of Twiga Bancorp in October, saying the majority state-owned bank was severely undercapitalised. The decision followed a call by President John Magufuli for action against failing state institutions.

Magufuli ordered the central bank in March not to bail out struggling banks as the government tries to control rising non-performing loans.

Bad debts as a proportion of the total banking industry loan portfolio rose to 11.7 percent in December 2017, more than twice the maximum target of 5 percent, up from 10.6 percent in June 2017, according to central bank data. 

The International Monetary Fund said in January the growth of credit to the private sector had stagnated, partly due to the deteriorating quality of the loans.

It urged the government to tackle bad debts to reduce financial sector vulnerabilities and revive credit growth.

Tanzania has about 40 banks but its financial services sector is dominated by lenders such as CRDB Bank and NMB Bank.

Netherlands-based Rabobank Group is NMB’s biggest shareholder with a 34.9 percent stake, while the Tanzanian government owns 31.9 percent. 

“We would like more mergers and acquisitions to take place between the existing banks in Tanzania, including those that are privately owned, so that we remain with a few efficient banks,” he said.

The central bank revoked the licenses of five “critically undercapitalised” community banks in January to safeguard the sector’s stability.

-Reuters

South Africa has promised another 5 billion rand ($400 million) capital injection to help its struggling state airline meet urgent financial obligations, the CEO of South African Airways (SAA) said on Thursday. 

SAA has not generated a profit since 2011 and has already received state guarantees totalling nearly 20 billion rand. It needs the money to help pay debts and prop up the business as it implements a turnaround plan.

The promise of more government cash comes after SAA Chief Executive Vuyani Jarana told parliament in April that the firm needed the capital injection “now”.

“Government has committed to inject another 5 billion rand into SAA. Part of that 5 billion rand we will repay some of the creditors, suppliers, then the balance will support us for working capital until around October/November,” Jarana told Reuters in an interview.

The Treasury said it would follow its normal budgetary process, which entails seeking cabinet approval.

“The outcome of this process is expected to be finalised in time for the 2018 MTBPS (Medium Term Budget Policy Statement),” the Treasury said.

The MTBPS is usually presented to parliament in October.

Jarana said that while waiting for the funds, the company would negotiate for some breathing space with lenders.

“If Treasury needs a certain period of time to do this, lets say up to September, between now and then, we are negotiating with lenders to give us a bridging facility on the back of that commitment,” he said.

SAA is regularly cited by ratings agencies as a drain on the government purse, but the Treasury is hopeful that new executive leadership led by Jarana, a former executive at telecoms company Vodacom, would return the airline to profitability.

The government has said that SAA needs an equity partner to pump money into the company to address its liquidity crisis and to help with the implementation of a turnaround plan.

The airline was looking at several measures to cut costs and Jurana said reducing the current workforce of about 10,000 people was “inevitable”.

“Whether it’s pilots, cabin crew, administration, we are going to rationalise the workforce. It’s an unavoidable thing. We have been talking to trade unions about how we work together,” Jarana said.

“The first priority for me is job preservation, how do you find alternative jobs for people as a starting point before you go into the hard issues of retrenchments.” 

Jarana said the company hopes to break even in three years time and “there onwards, everything else equal, it will be able to start paying for its own operations in terms of positive cash flows.”

-Reuters

Ugandan power distributor Umeme Ltd plans to spend $1.2 billion in the next seven years to revamp and expand the grid and has hired an adviser to explore options for raising the money, the company’s chief executive said on Wednesday.

The investments will be used to prepare for an expected rise in power expected to come online by 2020, CEO Selestino Babungi told Reuters in an interview.

The East African country is developing two new hydropower plants on the Nile - Karuma and Isimba - and when completed, they are expected to add a combined 780 megawatts (MW) of power to the grid.

When the two China-financed and constructed plants come online, they will roughly double the country’s existing generation capacity which currently stands at about 700 MW.

“We need to invest in new infrastructure to uptake the new generation: extending lines, building new substations, connecting more customers,” Babungi said.

Uganda’s energy market is largely seen as underexploited and holding significant potential for growth.

The grid reaches just 23 percent of the country’s 40 million people and power consumption, according Umeme, stands at 85 kilowatt hours per capita annually.

That’s below the average per capita consumption rate of 150 kilowatt hours for sub-Saharan Africa, excluding South Africa, according to a 2015 report by consultancy McKinsey. 

Babungi said economic activities toward beginning crude oil production and an industrialisation drive by the government of President Yoweri Museveni was expected to expand consumption by 8 percent annually over the next five years.

Uganda discovered crude reserves estimated at 6.5 billion barrels in 2006 and has targeted production in 2020.

“We see better prospects ...with all these oil activities-the pipeline, the refinery, activities are starting to pick up. We believe this will have spill over effects on the electricity sector,” he said.

Last year Uganda signed a deal with neighbouring Tanzania to develop a crude export pipeline from oilfields in landlocked Uganda’s west to Tanzania’s Indian Ocean port of Tanga.

At 1,445 km, it will be the world’s longest electrically heated pipeline.

Last year Umeme, Uganda’s sole electricity distributor, saw its pre-tax profit plunge 77 percent, hammered by debt servicing costs. 

Babungi said he was “expecting 2018 to be better” citing brighter economic growth forecasts by the central bank.

Uganda’s state-controlled pensions fund NSSF is Umeme’s largest single shareholder. South African funds including Allan Gray, Kimberlite Frontier Africa Master Fund and Investec Asset Management Africa Fund also owning major stakes.

-Reuters 

Equatorial Guinea is in talks to sell liquefied natural gas (LNG) supply from its Punta Europa project to independent and state-backed oil companies and traders from 2020 as it winds down an exclusive deal with Royal Dutch Shell.

Gabriel Obiang Lima, Minister for Mines and Hydrocarbons, told Reuters he is seeking to lift royalties from future LNG deals close to 50 percent, compared with 12.5 percent under existing arrangements with Shell.

Shell’s deal, inherited after it acquired BG Group in 2015, was amended in 2009 under government pressure to include a 12.5 percent share of profits, but it is still among the most lucrative contracts for any LNG exporter.

“We invited possible LNG buyers, so they are aware of the opportunities,” Lima said, adding that talks are progressing with China National Offshore Oil Corporation (CNOOC), Russia’s Lukoil, France’s Total, trader Vitol, Shell and a joint venture between Lukoil and NewAge.

Supply deals will be offered for 3-5 years from 2020, Lima said.

Equatorial Guinea’s LNG plant, operated by Marathon Oil Corporation, is currently fed by the depleting Alba gas field, which faces a cliff-edge dip in output from 2019/2020, he said.

Future production will be underpinned by pooling supply from stranded gas fields in Equatorial Guinea and the wider region, raising the prospect of eventually boosting LNG output and state energy revenue.

Lima’s sales pitch shows how producers from fully paid-up projects can afford to release supply to unconventional buyers, such as trade houses, under short tenors, stimulating global LNG market liquidity.

Brunei, Qatar, Malaysia, Algeria and Nigeria all have long-term LNG contracts expiring in coming years.

LEGACY DEAL

In signing up to buy all of Equatorial Guinea’s 3.4 million tonnes of annual LNG output for 17 years, BG Group - later acquired by Shell - sealed one of the industry’s most lucrative LNG deals. 

It paid a fixed discount to U.S. Henry Hub gas prices - now one of the cheapest gas benchmarks in the world - as it initially planned to sell supply into that market.

As the shale gas revolution killed demand for LNG imports, BG Group benefited from paying U.S.-linked prices for the LNG as it diverted supply to Asia, where prices were up to five times higher.

The original contract made no provision for profit sharing on cargo diversions with the government, highlighting how America’s transformation from gas importer to exporter blindsided LNG players.

NEW GAS SUPPLIES

Alba gas field reserves of three trillion cubic feet for LNG only provided for the first 12.5 years of the plant’s output, leaving the later part of BG’s 17-year off-take contract uncovered.

This may have allowed the government to exit the deal early in 2020, an industry source said.

But new gas supplies are being lined up.

In a statement on Thursday, Noble Energy announced a pact with Equatorial Guinea to make available 600-billion-cubic-feet of gas from its offshore Alen field for the LNG plant.

The proposal envisages a platform and 65-kilometre pipeline (40 miles) to Punta Europa big enough to carry gas from other nearby fields, in a concession to Lima’s vision for Equatorial Guinea to be a regional gas export hub. 

A parallel statement by LNG plant operator Marathon said it would open the facility to third-party gas suppliers.

-Reuters

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