Fitch Rates Kaduna State ‘B’; Outlook Stable

Fitch Rates Kaduna State 'B'; Outlook Stable Fitch Ratings has assigned Kaduna state long-term foreign and local currency Issuer Default Ratings (IDR) of ‘B’ and a National Long-Term Rating of ‘A+(NGA)’.

The outlooks are stable. The ‘B’ ratings reflect Kaduna’s dwindling revenue prospects in line with declining statutory allocations from the federal government as a result of weak oil prices.

The ratings also reflect the region’s fast growing debt, although servicing requirements will be moderated by government subsidies, concessionary terms and a long grace period.

Fitch also took into account the state’s developing economy focused on agricultural activities and low per capita revenue by international standards.

Nigeria, World Bank Sign Gas Supply Guarantee Deal

oil_pipelinesThe Nigerian government and the World Bank have signed a Partial Risk Guarantee agreement for the supply of gas to the Calabar Gas Plant to boost energy supply by 500 megawatts.

Vice President Yemi Osinbajo, who supervised the signing of the agreement at the Presidential Villa on Thursday, said the event was very significant for the country, as it would encourage investment in gas infrastructure.

He pointed out that going by the current power situation, the investment was worth celebrating.

The agreement for a Partial Risk Guarantee (PRG) between Niger Delta Power Holding Company (NDPHC) and the World Bank was signed to secure the supply of about 130 million cubic feet per day of gas to NIPP Calabar Plant by Seven Energy, an integrated gas company in Nigeria.

The company is investing about $500 million in the construction of gas processing facility at the Uquo Field in Akwa Ibom State.

“It will encourage investment in the gas infrastructure and we are certainly looking forward to the multiplier effects that will come from this.

“This is a very significant event for us and as we all know this is the first PRG for gas that we are signing

“Given the current power situation, we expect that this gas that will go into the Calabar plant will provide about 500 megawatts of power which is very significant given our current situation.

“The gas pipeline itself is a feat of some sort. I am told that it traverses five rivers. So, that by itself is worth celebrating. Even if all we get from social media this evening is an engineering feat, we will be quite pleased with that,” Professor Osinbajo stated.

The Vice President then commended the World Bank and other partners for the confidence in the present administration, especially in guaranteeing investment worth about $500 million.

The Minister of Finance, Mrs Kemi Adeosun, signed the agreement for the Nigerian government while the World Bank was represented by its Country Director, Rachid Benmessaoud.

The Managing Director of the NDPHC, Mr Chiedu Ugbo, told reporters that the development was significant in the development of Nigeria’s gas to power programme.

He expressed optimism that the guarantee would go a long way in addressing liquidity challenges experienced by the gas supplier for the Calabar Power Plant.

“We have had gas supply issues in the Calabar plant. But now the gas supplier is supplying the gas molecules there and they just concluded a pipeline from their field in Akwa Ibom State to the Calabar power plant,” he stated.

Explaining the role of the World Bank in the agreement, Mr Ugbo said, the Bank would back NDPHC up to make the payment “in the event that we are unable to pay and as we have time, we pay back.”

Also commenting, the Chief Executive Officer of Seven Energy, Mr Philip Iheanacho, stated that the signing of the agreement was very significant because “it is the first gas to power guarantee that the World Bank has provided for, encouraging investment in the gas sector in Nigeria”.

Fitch Downgrades Seven Energy

Fitch Ratings, First Bank, seven energyFitch Ratings has downgraded Nigeria-based Seven Energy International Limited’s Issuer Default Rating (IDR) to ‘CC’ from ‘B-‘.

Seven Energy Finance Limited’s 10.25 percent 300 million dollar secured notes due in 2021 has also been downgraded to ‘C’ from ‘CCC’.

The IDR downgrade reflects the ratings agency re-assessment of the significant ongoing liquidity, security and execution risks that Seven Energy continues to face.

The company said that it has taken serious hits from the shutdowns of forcados and Qua Iboe terminals but they hope the force majeure declared by shell in February will be lifted before the end of this quarter.

The energy firm complained it did not lift any oil from its OMLs under strategic alliance agreement between seven energy and the Nigerian petroleum development company.