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Tony Elumelu Reveals How Buhari, Abba Kyari Blocked His 2017 Oil Field Acquisition

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Tony Elumelu says Buhari and Abba Kyari blocked his 2017 oil field purchase, despite raising $2.5bn for the deal.

The Chairman of Heirs Holdings, Mr. Tony Elumelu, has disclosed how former President Muhammadu Buhari and his chief of staff, the late Abba Kyari, blocked his initial move to acquire an oil field in 2017.

Elumelu, who is also the Chairman of the United Bank for Africa Plc, said this in an interview in The Financial Times. According to him, Heirs Holdings was looking to purchase an oilfield since 2017, and had raised $2.5 billion to purchase one.

But he alleged that in a twist, Buhari and the late Abba Kyari, blocked the deal.

He said he was told that Nigeria couldn’t allow something of such strategic importance to fall into the hands of a private operator. This, according to Elumelu, defied logic since he would have been purchasing it from a foreign company.

However, Elumelu’s decision to buy a 45 per cent stake in an oilfield three years ago surprised many. International oil companies such as Shell, Total and Eni were selling off their shallow water assets in Nigeria, with local companies taking charge. In 2021, his Heirs Holdings acquired OML 17, an onshore oilfield as part of a deal that included $1.1 billion in financing from a consortium of global and regional banks and investors.

Shell, Total and Eni each had sold stakes in the OML 17 field, which has production capacity of 27,000 barrels of oil equivalent per day and estimated reserves of 1.2 billion barrels of oil equivalent, Heirs said.

When asked if he felt like getting in at the end of the party by buying an oil asset in the age of energy transition and environmental, social and governance investing, Elumelu said: “We wanted to become a Fortune 500 company and we estimated what we needed. It’s not naira, it’s huge dollars.”

Energy security is crucial for a country that doesn’t produce enough electricity for its roughly 200 million citizens, he added.

He said he discovered first-hand why international oil companies were partly divesting from onshore assets, after criminal gangs began stealing crude from his pipelines.

In 2022, when things got to a point where his company had to shut down production, Elumelu vented his frustration on social media, tweeting: “How can we be losing over 95 per cent of oil production to thieves?”

Today, though, business is looking up. Elumelu, according to the newspaper, showed the status updates he received on his phone from the field: 42,000 barrels of crude pumped out daily. Theft still takes away about 18 per cent of production, he said.

When asked who was behind oil theft in the country, he said: “This is oil theft, we’re not talking about stealing a bottle of Coke you can put in your pocket. The government should know; they should tell us. Look at America — Donald Trump was shot at and quickly they knew the background of who shot him. Our security agencies should tell us who is stealing our oil. You bring vessels to our territorial waters and we don’t know?”

The proponent of Africapitalism stressed the need for Africa’s private sector to actively contribute to the continent’s growth.

“We need to run government like a business,” is his formulation of how African governments should work, with administrations held accountable by legislatures as shareholders do chief executives.

Speaking about his career trajectory, Elumelu whose father was a builder and mother a caterer said: “I had a very fast career.”

At 26, having earned a masters in economics at the University of Lagos, he became a branch manager of the bank where he began his career. “It was unheard of. I like to take my destiny in my hands.”

Elumelu was at the helm of UBA for another five years until a central bank edict that turfed out long-serving bank bosses put him out of a job.

“2010 was a pivotal year for me,” he said while speaking about his ouster as UBA boss.

“The central bank ruling was a complete surprise . .Was it fair? Look, as someone who believes in governance, it probably makes sense, but it was a shock. But it was also liberating, catalysing,” he added.

By the end of that year, he had formed Heirs Holdings, the investment engine that launched the second act of his career and turned him from a banker to a multi-sector magnate.

“I don’t live for myself or my family alone, I know people look up to me,” he said of his fame outside of the boardroom.

“I try to make sure I don’t disappoint people. Young Africans need role models, they want people they can look up to,” he added.

If Elumelu is thriving, his country decidedly is not. Nigeria is in the grip of its worst economic crisis in a generation, with growth stalling and inflation at levels not seen in almost three decades.

Elumelu’s philosophy of “Africapitalism” is based on the premise that the continent cannot grow solely through the government, and that the private sector should actively invest even when — especially when — socio-economic conditions are tough.

“We can sit here today and the easiest part of the conversation would be to talk about all the things that have gone wrong, all the things that people have failed to do.

“But therein lies the philosophy of Africapitalism. For far too long, we have blamed foreign powers. We have blamed our own leaders. But what are we as the private sector doing to make things better? It’s a call on the private sector to stand up and show the way. Let us show the way through what is in our own power. We have the power to make investment decisions.”

With investments in 20 African countries and thousands of employees, he believes he is playing his own part. And through grants from his eponymous foundation, he says he is “democratising luck” for young entrepreneurs.

“I have my frustrations across the continent but I also have my wins . . . what I’m saying is we need to do something to have a better society.”

As a member of President Bola Tinubu’s presidential economic advisory committee, he is one of a handful of business leaders close to the administration. The reforms that Tinubu — whose “courage” Elumelu likes — has embarked on are necessary for long-term growth, Elumelu said, but he wonders if the sequencing of removing costly but popular fuel subsidies and a sharp devaluation of the naira currency could have been implemented better to first provide a social safety net for the most vulnerable in society.

“I support it, totally,” he says of skilled young Nigerians emigrating. “I don’t have a problem with people saying ‘I’m going to Canada, UK or US.’

“Joblessness is the betrayal of a generation. You’ve gone to school and come back with your dreams and aspirations and you don’t have the opportunity . . . People who decide to find solutions elsewhere, no one should stop them. But for those who decide to stay, they should try to create an impact and build a legacy.”

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Stop Interest Hiking, Experts Tell CBN As Apex Bank Raises Rate Again

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Stop Interest Hiking, Experts Tell CBN As Apex Bank Raises Rate Again
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By Chris UGWU, Kasarahchi ANIAGOLU Nov 27 2024

Some financial experts have said that the CBN’s 25 basis points rate hike signals a potential pause in interest rate increases starting next year, emphasizing the need for relief for small businesses facing high financing costs.

The Central Bank of Nigeria (CBN) had raised its interest rate by 25 basis points, increasing it from 27.25 per cent to 27.50 per cent, in response to the country’s rising inflation.

This decision was announced by CBN Governor Mr. Yemi Cardoso, who also chairs the Monetary Policy Committee (MPC), following their meeting in Abuja.

The MPC unanimously agreed to the hike as part of ongoing efforts to address inflationary pressures in the economy.

The analysts in an exclusive interview with THE WHISTLER noted that despite the CBN’s tightening measures, inflation remains high, with benefits mainly seen in exchange rate stability due to foreign portfolio inflows.

They agreed that the rate hike was expected due to rising inflation, warning that it will increase business financing costs, which could be passed to consumers and further strain household budgets.

Reacting to the development, Nigeria’s first Professor of Capital Market, Uche Uwaleke indicated that the move might signal an imminent pause in the CBN’s aggressive monetary tightening cycle.

Uwaleke noted that the marginal increase aligns with analysts’ expectations, suggesting a potential shift in the CBN’s strategy.

“The marginal rate increase is a signal that the CBN may completely pause or apply the brake on interest rate hikes starting from the first quarter of next year,” he explained.

The professor emphasized the necessity of a pause, citing the rising cost of funds and its adverse impact on credit access, particularly for small businesses. “This needs to happen so that small businesses can breathe,” he remarked.

Despite the CBN’s sustained tightening measures, headline inflation remains stubbornly high, reversing recent gains and rising further.

Uwaleke observed that the benefits of the rate hikes have been most apparent in the foreign exchange market, where increased foreign portfolio inflows have contributed to exchange rate stability in the official window.

However, the broader economic picture remains concerning. The Q3 2024 GDP report released by the National Bureau of Statistics (NBS) showed weak performance in the agriculture and manufacturing sectors, a development Uwaleke attributed to rising interest and exchange rates.

He stressed the need for coordinated efforts between monetary and fiscal authorities to navigate the country’s macroeconomic challenges effectively.

“The current macro-economic challenges make it imperative for a proper synergy between monetary and fiscal policies,” he advised.

Managing Director of Arthur Steven Asset Management Limited and former President of the Chartered Institute of Stockbrokers (CIS), Mr. Olatunde Amolegbe also shared his views on the Central Bank of Nigeria’s (CBN) decision to raise the Monetary Policy Rate (MPR) by 25 basis points, moving it from 27.25 per cent to 27.50 per cent.

Amolegbe noted that the rate hike was widely anticipated, particularly given the National Bureau of Statistics (NBS) report showing inflation had increased by over 100 basis points in the previous month.

“The truth is that this was somewhat expected,” Amolegbe stated, acknowledging that many analysts had predicted this adjustment, with some even anticipating a higher increase due to ongoing price instability across various sectors of the economy.

He further pointed out that the government’s fiscal and structural measures, aimed at curbing inflation, have yet to yield immediate results.

“These measures typically take time to have the desired impact,” he said, adding that as a result, monetary policy has remained the primary tool available to the CBN in its efforts to stabilize the economy.

“This leaves us with monetary policy as the only effective tool to prevent the economy from spiraling out of control,” he explained.

However, Amolegbe also warned of the potential negative consequences of the rate hike on businesses and consumers.

“The likely impact of this move will be a further increase in financing costs for businesses,” he stated.

These higher costs are expected to be passed on to consumers, potentially raising prices on goods and services and putting additional strain on household budgets.

Amolegbe concluded by emphasizing the delicate balance the CBN faces in managing inflation and ensuring that the economy does not overheat, while acknowledging the challenges that persist in the broader economic landscape.

Managing Director of Highcap Securities Limited, Mr. David Adonri also weighed in on the Central Bank of Nigeria’s continued use of interest rate hikes as a tool to manage inflation, noting that while effective in the short term, it remains insufficient in addressing the underlying economic issues.

In an exclusive interview, Adonri explained that interest rate adjustments are a critical component of monetary policy designed to curb inflation until more sustainable fiscal measures can be implemented to address the structural causes of economic imbalance.

“Interest rates are a potent tool for managing inflation in the short term,” Adonri stated.

“However, their effectiveness is often limited when coupled with expansionary fiscal policies,” he added.

He further emphasized that the ongoing fiscal expansion, alongside factors such as insecurity and currency depreciation, continues to fuel inflation.

These persistent challenges leave the CBN’s Monetary Policy Committee (MPC) with few options but to maintain its contractionary monetary stance.

“As long as fiscal policies remain expansionary and the factors driving inflation persist, the MPC will have no choice but to continue raising interest rates,” he explained.

Adonri also cautioned that allowing inflation to spiral out of control would have devastating consequences for both consumers and producers. “The impact of unchecked inflation would be far more harmful than the effects of higher interest rates,” he warned, underlining the importance of the MPC’s approach in preventing further economic instability.

Despite the negative effects on certain sectors of the economy, Adonri acknowledged that the interest rate hikes provide a silver lining for investors in debt instruments.

“The bonanza for investors in debt assets will continue as the rates rise,” he noted, as higher interest rates typically make fixed-income investments more attractive.

In conclusion, while the CBN’s monetary policy actions are necessary to address the current inflationary pressures, Adonri stressed the need for a coordinated effort between monetary and fiscal policies to tackle the structural issues contributing to inflation and ensure sustainable economic growth in the long term.

Meanwhile, Cardoso called for critical synergy between the monetary and fiscal sectors of the economy to achieve price stability and curtail inflationary pressures on food and other commodities.

According to Cardoso, food prices remain a key driver of inflation, compounded by rising energy costs that affect production factors.

“The recent increase in the price of Premium Motor Spirit (PMS) has also impacted the cost of production and distribution of food items and manufactured goods.

“The Committee was optimistic that the full deregulation of the downstream sub-sector of the petroleum industry would eliminate scarcity and stabilize price levels in the short to medium term.

“Members, thus, reiterated the need to deepen collaboration between the monetary and fiscal authorities to ensure the achievement of our synchronized objectives of price stability and sustainable growth.”

Cardoso highlighted members’ concerns over persistent exchange rate pressures, driven by continued high demand in the market.

Cardoso expressed satisfaction with the resilience and stability of the banking sector despite significant external and internal challenges.

He outlined key financial soundness indicators, stating that the “Capital Adequacy Ratio (CAR), Non-Performing Loan (NPL) ratio, and Liquidity Ratio (LR), among others, remain strong.”

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News flash : CBN raises monetary policy rate by 25 basis points to 27.50 %

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News flash : CBN raises monetary policy rate by 25 basis points to 27.50 %

* MPC expresses concern about persistent exchange rate pressure urges banks to explore measures to boost market liquidity

* Monetary and fiscal authorities urged to deepen collaboration to achieve price stability – Cardoso

* Cost of pms has continued to impact on cost of production – MPC

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Port Harcourt Refinery Commences Crude Oil Processing

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Port Harcourt Refinery Commences Crude Oil Processing

The Port Harcourt Refinery in Rivers State has commenced crude oil processing.

This is according to the Chief Corporate Communications Officer of the Nigeria National Petroluem Company Limited (NNPCL) Femi Soneye.

More to follow…

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