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MTN suit challenging legality of AGF tax claims adjourned till May 7 OLUFIKAYO OWOEYE
A
Federal High Court sitting in Lagos has adjourned till May 7 a case between MTN and the attorney-general of the federation (AGF), Abubakar Malami. MTN Nigeria Communication Ltd had filed a suit last year challenging the legality of the AGF’s assessment of its withholding tax and value-added tax. Malami alleges that MTN owes $2 billion in back taxes over a 10-year period, relating to the importation of foreign equipment into the country as well as payments to the suppliers of the said equipment. The telco giant has denied the allegations. In its preliminary objection, the AGF argued that the plaintiff, in seeking redress to the subject matter, has just three months from the date of the cause of action arose to institute the action. He argued that the plaintiff Continues on page 38
Inside First-time governors’ biggest challenge: fixing states’ finances P. 2
L-R: Mohammed Sanusi II, the Emir of Kano; Ken Ofori-Atta, Ghanaian minister of finance, representing the president of Ghana; Oba Otudeko, chairman, FBN Holdings plc; Dolapo Osinbajo, wife of the vice president; Zainab Ahmed, minister of finance; Adesola Adeduntan, managing director, FirstBank of Nigeria Limited, and Ibukun Awosika, chairman, at the lecture to commemorate the 125th anniversary of the bank in Lagos. Pic by Pius Okeosisi
CBN’s surprise rate cut questions FGs broader reform goals A HOPE MOSES-ASHIKE, ONYINYE NWACHUKWU, LOLADE AKINMURELE & MICHAEL ANI
nalysts are scratching heads and wondering about the broader reform implications after the Central Bank of Nigeria (CBN) unexpectedly cut its monetary policy rate (MPR) by 50 basis
50bps move aimed at boosting growth
points (bps) to 13.5 percent from 14 percent, Tuesday, citing the need to boost growth. The move by the CBN to cut rates at this time creates more questions than it answers, according to Razia Khan, Africa chief economist at Standard
Chartered. “While FX stability has benefitted both from rising oil prices and rising portfolio inflows into Nigeria, the cut today raises important questions about the government’s broader reform intent,” Khan said, pointing to
two concerns. First, the MPR cut comes following Senate approval of a sizeable minimum wage increase. Second, it remains to be seen what the move suggests about Continues on page 38
2 BUSINESS DAY NEWS
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Wednesday 27 March 2019
Cracks in APC as fight for positions in 9th Assembly heightens
…We will field candidates for presiding officers’ seats – PDP OWEDE AGBAJILEKE, Abuja, & MICHEAL ANI
C
racks within the ranks of the All Progressives Congress (APC) Senate Caucus emerged on Tuesday as the immediate past Senate Majority Leader, Ali Ndume, faulted the party’s endorsement of Ahmed Lawan as Senate President in the Ninth Assembly. Ndume, the senator representing Borno South, said the right to elect presiding officers in the National Assembly rests with the senators-elect and not with a political party. The APC lawmaker who has indicated interest to run for the office of the president of the Senate in the Ninth Assembly, cited Section 50 (1) (a) of the 1999 Constitution (as amended) to buttress his argument. The section stipulates that “there shall be a President and Deputy President of the Senate who shall be elected by the members of that house from among themselves”. This is even as the main opposition People’s Democratic Party (PDP) has said it would field candidates for the positions of presiding officers in both chambers in the incoming National Assembly, arguing that its members have the constitutional right to contest such positions when the Assembly is inaugurated in June. In a statement on Tuesday, Kola Ologbondiyan, PDP national publicity secretary, cited section 50 of the 1999 Constitution (as amended), noting that the positions of the Sen-
ate president, speaker of the House of Representatives, deputy Senate president and deputy speaker are not the exclusive preserves of any political party, but a constitutional right of every elected lawmaker in both chambers. Recall that the APC was in 2015 rocked with controversies surrounding the party’s choice of both the Senate president and the speaker of the House of Representative that saw Bukola Saraki and Yakubu Dogara defy the party’s endorsements. The APC had earlier tipped Femi Gbajabiamila as the speaker of the House of Representatives and Ahmed Lawan as the president of the Senate. Saraki, however, clinched the Senate president position after he shunned a caucus meeting called by President Muhammadu Buhari to resolve the dispute in the party. Saraki was made Senate president after garnering the block support of the PDP and some APC senators who broke ranks with their party. In a similar vein, PDP members of the House of Representatives threw their block votes behind Yakubu Dogara, selecting him as speaker over the APC-endorsed Gbajabiamila. To avoid the repeat of history, APC National Working Committee (NWC) Monday met with the party’s caucus in the House of Representatives at the Yar’Adua Centre, Abuja, where it was resolved that all
Continues on page 38
PenCom to admit 69m workers into micro pension …As Buhari launches plan Thursday JOHN OSADOLOR
A
s part of the initiatives to bring all working Nigerians into the financial inclusion net, President Muhammadu Buhari will on Thursday launch the Micro Pension Plan (MPP) in Abuja. The MPP which is an initiative of the National Pension Commission (PenCom) is aimed at the provision of pension services to self-employed persons in the informal sector and employees of organisations with less than three staff. The informal sector constitutes an estimated 69 million workforce in the country and represents an estimated 88 percent of Nigerian workers that lack pensions and safety nets for their old age. The goal of the Commission is to achieve coverage of 30 million people in the informal sector by 2024. The formal launch is the official flag-off of the plan and attests to the objective of the current administration to provide ample opportunities for financial inclusion and economic stability for more Nigerians in the informal sector. This initiative gives the self-employed professionals, entertainers, lawyers, doctors, entrepreneurs, artisans, casual workers, among others opportunity to save for pension, according to a statement from Pen-
Com signed by its general manager, corporate communications. The launch signifies the commencement of activities that will culminate in the full implementation of the MPP. Accordingly, the National Pension Commission and the pension operators will continue the education and sensitisation of the public through robust campaigns across traditional, social and digital media while registration of contributors will follow in subsequent months. The statement said PenCom remained committed to good corporate governance and high ethical standards that will ensure the success of the Micro Pension Plan. Contributors to the plan must be above 18 years old with defined sources of income, resident in Nigeria, self-employed persons that belong to a trade, profession, cooperative or business association, according to PenCom guidelines seen by BusinessDay. Others who are eligible as contributors are self-employed persons with a business registration as a company, partnership or enterprise, employees operating in the informal sector who work with or without formal written employment contracts, and other self-employed individuals.
•Continues online at www.businessday.ng
L-R: Kalyana Sundaram, CEO, Transcorp Power Limited; Helen Iwuchukwu, group company secretary, Transcorp plc; Oscar Onyema, CEO, Nigerian Stock Exchange (NSE); Valentine Ozigbo, president/CEO, Transcorp plc; Owen Omogiafo, MD/CEO, Transcorp Hotels plc, and Chris Ezeafulukwe, executive director, Transcorp plc, at the closing gong ceremony by the management of Transcorp plc, as part of their fact behind the figure presentation at the NSE in Lagos, yesterday. Pic by Olawale Amoo
First-time governors’ biggest challenge: fixing states’ finances MICHEAL ANI
I
t may turn out that winning the March 9 election was just the easy part for governors-elect in many of Nigeria’s states who will be sworn in for the first time on May 29 this year. The bigger task will be fixing the finances of their states which are currently in a precarious state. Amid declining allocations from the Federation Account as well as meagre Internally Generated Revenue in many of the states, the newlyelected governors will need financial ingenuity to match revenue shortfall against ballooning debts incurred by their predecessors. The task may have just got more
herculean with the National Assembly’s approval of N30,000 as the new national minimum wage, a 67 percent hike from the current N18,000. Many of Nigeria’s states have been unable to pay the N18,000 wage promptly. From the election results declared by the Independent National Electoral Commission (INEC), BusinessDay can confirm that a total of 11 current governors will be handing over to new governors come May 29. These include the governors of Lagos, Borno, Gombe, Imo, Kwara, Nasarawa, Ogun, Oyo, Yobe, Zamfara and Bauchi. Of these states, only Yobe State recorded total debt-to-revenue ratio of less than 100 percent despite turn-
ing out the least IGR (N2.9 billion) as of nine-months 2018, according to data obtained from the National Bureau of Statistics (NBS). A debt-to-revenue ratio of less than 100 percent means that a state can conveniently offset its debts from its current income stream. This means Yobe State during the period under review was able to contain its debt profile below its revenue. The remaining states have their debt-to-revenue ratios well above 100 percent. Consequently, analysts say the incoming governors in these states have to look inward and deploy other means to grow their revenue base while cutting down on their
Continues on page 38
Gas emerges world’s favourite fuel, but Nigeria plays catch-up ISAAC ANYAOGU
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atural gas emerged as the world’s fuel of choice, posting the biggest gains and accounting for 45 percent of the rise in energy consumption in 2018, according to a new report by Paris-based energy think tank, International Energy Association (IEA), but poor policy and weak market rules constrain growth in Nigeria. The IEA in its latest assessment of global energy consumption and energy-related CO2 emissions for 2018, which provides a high-level and up-to-date view of energy markets, including latest available data for oil, natural gas, coal, wind, solar, nuclear power, electricity, and energy efficiency, the organisation said global energy demand rose 2.3 percent with gas accounting for most of the growth. “We have seen an extraordinary increase in global energy demand in 2018, growing at its fastest pace this decade,” Fatih Birol, IEA’s executive director, said. “Last year can also be considered another golden year for gas, which
accounted for almost half the growth in global energy demand,” Birol said. Led by United States and China, global gas demand expanded at its fastest rate since 2010, with year-onyear growth of 4.6 percent, the second consecutive year of strong growth, driven by higher demand and substitution from coal, the IEA said. Electricity demand grew by 4 percent with renewables responsible for half of it; oil demand grew 1.3 percent; coal consumption rose 0.7 percent, and nuclear energy rose by 3.3 percent in 2018. Though Nigeria has the world’s ninth-largest volume of proven gas reservesof187TrillionCubicFeet(TCF) and also ranked fourth among LiquefiedNaturalGas(LNG)exportingcountries, according to the International Gas Union (IGU), supply to the local market hovers around 1.3BSCFD, one of the lowest among its OPEC peers. Yet, the country has a huge need for gas to drive industrialisation and deliver energy to over 80 million Nigerians without access to power. Absence of legally binding, bankable long-term gas supply agreements, inadequate gas transpor-
tation infrastructure, absence of guarantees, credit enhancement for gas payments and absence of commercial pricing are key constraints in the Nigerian gas market, analysts say. The roadmap for the gas sector created under the Nigerian Gas Policy has not delivered on expectations, operators say. The National Gas Policy created by the Petroleum Ministry is yet to have an impact as it has not been operationalised, limiting investment into the sector. However, a rash of new gas deals – including $500 million Greenville LNG project in Rumuji, Rivers State, the final investment decision on Assah North/Ohaji South gas project, and the newly commissioned Egbaoma gas processing plant in Delta State – suggests Nigeria is turning the corner from treating gas as irritant in the search for fuel. “To some extent, Nigeria, which is a gas province with a drop of oil, is slowly beginning to realise the potential of natural gas,” said Olufola Wusu, energy lawyer at Megathos Law Practice.
•Continues online at www.businessday.ng
Wednesday 27 March 2019
BUSINESS DAY
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