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Federation Account: How FG, States, LGs shared N7.23trn in 2020



Federation Account: How FG, States, LGs shared N7.23trn in 2020

The Federal Government of Nigeria, States and Local Government Councils shared N7.23trillion from the Federation Account in 2020.

The fund comprises collections by revenue generators, including Nigeria Customs Service (NCS) Department of Petroleum Resources (DPR) and Federal Inland Revenue Service (FIRS).

Every month, the Federation Account Allocation Committee (FAAC), chaired by the Minister of State for Finance, meets with State Commissioners of Finance for disbursement.

In 2020, while the Federal Government and its agencies received N3.04trillion, States and LGs got N4.18trillion.

The N4.18trillion is N232billion lesser than the N4.4trillion the two tiers received in 2019.

In a report by Economic Confidential, Lagos is ranked the highest recipient with a sum of N299billion in twelve months.

Delta received N247billion, Akwa Ibom N212billion, Rivers N198billion and Kano N174billion. The five states got 25 percent of total allocation.

Other states in top 10 were Bayelsa N152billion, Katsina N130billion, Oyo N127billion, Kaduna N124billion and Borno N115billion.

The lowest recipients were Gombe N72billion, Ebonyi N73billion, Nasarawa N73billion, Ekiti N74billion and Kwara N77billion.

Edo, Ondo, Cross River, all oil-producing states, got N99billion, N97billion and N86billion respectively.

Factors that influence allocations to states and local councils include population, derivation, land mass, revenue generation drive, school enrolments, health facilities, water supply, among others.

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Court Orders Olusola Anthony Adejugbe To Pay Zenith Bank N6.3 Billion



A court in Lagos has requested a client to pay Zenith Bank the amount of N6,382,334,421.04.

The request was given by Federal High Court in Lagos against a Zenith bank client, Olusola Anthony Adejugbe and his organization Tonique Oil Services Limited to pay Zenith Bank Plc.

A court in Lagos has requested a client to pay Zenith Bank the amount of N6,382,334,421.04.

The request was given by Federal High Court in Lagos against a Zenith bank client, Olusola Anthony Adejugbe and his organization Tonique Oil Services Limited to pay Zenith Bank Plc.

Equity Ayokunle Faji maintained the bank’s counter-guarantee in a suit by the offended parties – Adejugbe and Tonique Oil Services.

In the suit numbered FHC/L/CS/1584/2012, they had asked the court for an affirmation that the bank can’t charge revenue on any offices allowed to them past the authority supported strategy pace of the Central Bank of Nigeria.

They looked for an announcement that any implied revenue charged past the CBN formally supported arrangement rate by any bank is invalid and void.

The offended parties additionally looked for an assertion that Zenith Bank isn’t qualified for differ financing cost singularly, besides as in any case concurred, which in itself should be predictable with CBN strategy of each progressive year with impact from when the exchange was placed into.

They additionally asked the court to hold that they were not obliged to the bank in any amount of cash or whatsoever.

The plaintiffs looked for a request for unending order controlling the bank or its representatives from selling or managing the properties utilized as insurance by the offended parties without first accommodating the organization’s records.

The plaintiffs likewise looked for a request convincing the bank to discount to them the amount of N1,842,471,801.99, purportedly being the complete overabundance charges charged from the subsequent offended party’s record, as well as N3,212,825,223.64 being the premium because of Tonique Oil.

They likewise looked for revenue on the complete amount of N6,441,369,617.73 because of the organization at the pace of 21% per annum from the date of the judgment until conclusive liquidation.

Apex Bank Plc, on being presented with the offended parties’ starting cycle, recorded its safeguard and counter-guarantee.

The litigant, addressed by Mr Sylva Ogwemoh (SAN), a Senior Partner at a business law office Kevin Martin Ogwemoh Legal, said the offended parties’ indicated master calculation didn’t mirror the concurred financing cost on the offices conceded to the organization for the acquisition of oil based goods and procurement of two hectares of land in Port Harcourt.

Additionally, Zenith Bank said the offended parties conceded their obligation to the tune of N6,383,911,204.26.

The bank said it had at first taken out the amount of N2,501,270,000.00 from the offended parties’ obligation before the offended parties consented to owing N6.3billion.

The respondent said it was shocked when the offended parties, in a July 6, 2015 letter, mentioned for a waiver of the N3.6billion and a rebuilding of the equilibrium amount of N2.7billion for a new advance payable north of 10 years without interest.

As per the bank, the solicitation and the suit were important for the offended parties’ ploys not to reimburse the obligation.

The bank asserted that the offended parties’ obligation as of January 31, 2013, was N8,464,176,356.52.

Apex Bank, hence, made a counter-guarantee, imploring the court to arrange the offended parties to pay the obligation.

Equity Faji concurred with the bank and entered judgment requesting the offended parties to pay their conceded obligation.

The appointed authority excused the offended parties’ suit completely and allowed Zenith Bank’s first alleviation in the amount of N6,382,334,421.04.

The court likewise granted revenue on the judgment total at the pace of 15% from July 6, 2015 until January 24, 2022 and afterward at the pace of 10% until the judgment-obligation total is completely paid.

The court additionally conceded Zenith Bank leave to uphold the individual assurance against Adejugbe and to dispossess the offended parties’ evenhanded right to recover their property vowed as security for remarkable obligation.

The plaintiffs parties, addressed by Lanre Ogunlesi (SAN), have pursued the judgment.q

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Dangote’s Ethiopian plant at risk amidst country’s crisis



Image of Dangote Cement Ethiopia

Dangote Cement’s brand new $500 million Cement Plant in Ethiopia risks being ensnared in the civil war stirring in the country as rebels opened a new front against Federal forces in Oromia region where the cement plant is located, MoneyCentral’s analysis shows.

Ethiopian operations are the largest by revenues for Dangote Cement in its Pan African segment of operations and second largest after Nigeria.

A leader from the Oromo Liberation Army (OLA), an ethnic Oromo armed group fighting the Ethiopian government alongside Tigray rebels was reported by AFP to have said “its fighters were near the capital and preparing a new attack, promising an end to the conflict ‘very soon”.

“What I am sure of is that it will end very soon,” OLA military chief Jaal Marroo told AFP on Sunday, adding: “We are preparing to launch another attack.”

The Dangote cement plant, the largest in Ethiopia, is located in the Oromia regional state, less than 90km from the capital, Addis Ababa.

The armed group (OLA) which are based there, announced in August that they had formed an alliance with the Tigray People’s Liberation Front (TPLF), which has been fighting government forces in the north of the country since November 2020.

Oromia region is the largest in Ethiopia and completely encloses Addis Ababa.

Dangote Cement Ethiopia

The Dangote Cement plant Ethiopia built at a cost of $500million was commissioned in May 2015. With rich limestone reserves of about 223 million tons, it is the largest cement plant in Ethiopia capable of producing high-quality 32.5 and 42.5-grade cements to meet market needs, and at competitive costs.

It has a production capacity of 5,000 tons per day and 2.5million metric tons per annum, while its crushers for minerals such as limestone, coal and gypsum have a capacity of 1,400 tons, 200 tons and 200 tons each per hour.

The plant which is 99.97 percent owned by the Dangote Group has 2 cement mills with 150 tons capacity per hour and 6 packers with 120 tons’ capacity per hour per line.

The plant has two conveyor belts covering a distance of 5km from the crusher with capacity of 1600 tons per hour while the Clinker has storage capacity of 80,000 tones

Before the war Ethiopia’s strong economy which expanded a record 7.4% in 2019 and its flourishing construction industry as the country builds houses and major infrastructure projects under its Growth & Transformation Plan was a major attraction for Dangote Cement and other foreign investors.

Although Ethiopia’s market is estimated at more than 9 million tons, per-capita consumption lags behind many African countries at about 84 kg/person, suggesting growth potential as the country modernizes.

Ethiopia’s total installed capacity as at 2019 was 15 million tons per annum capacity, of which Dangote had a 26 percent market share. The company derives its power supply (40mega megawatts) from the national grid which the plant runs strictly on, although the kiln runs on coal.

The company has a 132KV transmission line that is dedicated to the plant. Major risks to the plant include disconnection from the grid due to damage to power lines from the fighting, inability to get coal supplies through to power the Kiln, actual damage to the plant itself from firefights or sabotage from either side of the war, and inability to securely supply the rest of Ethiopia due to blockades and inability of the worker to get to and from work in a safe manner, among others.

Revenue from Ethiopian operations for Dangote Cement came in at N53.9 billion as at Full Year (January – December) 2019.

Insecurity flares up again in Oromia

This is not the first time that Dangote Cement’s Ethiopia operations will be affected by insecurity in its region of operations, Oromia.

In 2018, the country manager of Dangote cement, Deep Kamara was killed along with two other individuals in an attack by unknown assailants.

Also during the 2016 – 2017 protests by the Oromo people, protesters attacked and vandalized Dangote’s cement factory along with several vehicles and machinery. There have also been a series of other attacks from the local community on Dangote’s assets over some unresolved labor issues related to the private employment agencies hired by the company.

A reconciliation ceremony was however organised in September 2017, which was attended by hundreds of locals.

In 2017, Dangote threatened to shut its operations in Ethiopia if the authorities in Oromia did not reverse an order to cement makers to deliver control of some parts of their businesses to local young people.

Tony Watima, a Kenyan economist who studies Ethiopian politics said then that the Dangote Group failed to properly investigate the socio-political dynamics of Ethiopia before venturing there.

“Dangote’s Ethiopian troubles are a pointer to what happens when you use a top-down approach of inducing senior government officials to initiate a project and fail to properly engage the community. Everyone knows the Oromia region is an anti-government region. Dangote should have done better due diligence,” he says.

Some foreign investors flee

There were Press reports on Tuesday said that Safaricom had evacuated some of its staff from Ethiopia. Other counties including the United States, Denmark and Italy have also advised their citizens to evacuate the country.

READ ALSO: Dangote Seeks More Loans To Salvage Refinery Project

The Safaricom-led consortium won the only telecom license that has been issued in Ethiopia this year after it bid $850mn. A few months ago, the Ethiopian authority confirmed that the telco will be able to offer mobile money services in the country.

Following the initial announcement, the Safaricom-led consortium signaled that the plan was to spend $8bn in capex over the next ten years.

“Some of the risks and uncertainties we highlighted previously included the aggressive capital expenditure plan, political unrest in Ethiopia, competitive intensity, and the local purchasing power in Ethiopia,” analysts at Tellimer Research said in a note to clients.

Reputation risk

Dangote Cement may also find itself facing reputation risk as well as possibility of offending the eventual winners of the war, similar to cement firm LafargeHolcim’s embarrassing situation in Syria.

In 2018, French authorities began formal investigations of a LafargeHolcim subsidiary over claims it funded a terrorist group in Syria.

The subsidiary was also accused of complicity in crimes against humanity and endangering lives in Syria. Lafarge had admitted paying groups in the country in order to keep a cement factory operating in Northern Syria as violence mounted after 2011.

An internal investigation in 2017, found evidence the factory provided funding to local armed groups in order to stay open. The investigation concluded that those in charge of the Jalabiya plant had taken “unacceptable” measures in order to keep the plant open and protect employees.

Various armed factions “controlled or sought to control” the area, it said.

At the time, Syria was subject to EU sanctions imposed on President Bashar al-Assad’s government, which lost control of large swathes of the country to various armed groups.

Shares hold up for now

Dangote Cement shares are holding up well for now, despite the risk the firm faces in Ethiopia which is its second-largest market by Revenues (as at 2019).

Dangote Cement shares are up 14.33 percent year to date, outperforming the NGX all share index which has risen by 8.59 percent in the same time period.

This is probably because Nigerian operations for Dangote Cement are still the major drivers of growth and profitability.

For the nine months period that ended in September 2021, Dangote Cement revenues came in at N1.022 trillion, led by Nigerian operations at N729.6 billion or 71.3 percent of the total and revenues from Pan Africa operations at N297.86 billion, making up just 28.7 percent.

Contributions to Earnings before interest, taxes, depreciation, amortisation & impairment (EBITDA), from Nigerian operations was even more concentrated at N459.22 billion or 89.2 percent of the total, while Pan African operations EBITDA was N66.96 billion, data from the firm’s latest financial statement seen by MoneyCentral shows.


Source: Moneycentral

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Fuel Subsidy Replaced by Fed-Grants




The Nations minister of finance, budget, and national planning Zainab Ahmed, has stated that the FG will remove fuel subsidies by 2022 and replace them with N5000 monthly transportation grants to the poorest Nigerians. this is a means of fixing the issue of fuel scarcity as Fuel Subsidy is Replaced by Fed-Grants.

Also, she made known while speaking on Tuesday, Nov. 23, at the launch of the World Bank Nigeria Development Update (NDU), she said the grant will go to about 30 to 40 million Nigerians who are the poorest in the country. She added that the final number of beneficiaries will depend on the resources available after the removal of the fuel subsidy. She explained “The subsidies regime in the oil sector remains unsustainable and economically disingenuous,” she said.

Furthermore, “Ahead of the target date of mid-2022 for the complete elimination of fuel subsidies, we are working with our partners on measures to cushion the potential negative impact of the removal of the subsidies on the most vulnerable at the bottom 40% of the population.
“One of such measures would be to institute a monthly transport subsidy in the form of cash transfer of N5,000 to between 30 – 40 million deserving Nigerians.”

Read Also: Petrol Scarcity Hits Umuahia, Aba

Min. Ahmed continued: “We are very optimistic that the recent developments in the oil sector, such as the Petroleum Industry Act (PIA) 2021, hopefully, the full reactivation of the 4 public refineries in the country, and the completion and coming on stream of the 3 private refineries under construction in 2022, would significantly boost contribution from the sector to our economic growth efforts.”

However, she added: “I agree with the Report that with the expansion of social protection policies during the pandemic, the government has an opportunity to phase out subsidies such as the PMS subsidy while utilizing cash transfers to safeguard the welfare of poor and middle-class households,” as fuel subsidy is replaced by Fed-Grants.

Finally, Min. Zainab Ahmed said this move is set for June 2022, but the federal government hopes to do this before June in line with the Petroleum Industry Act (PIA).


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