Tag Archives: Business

Over hundred firms bid to buy 14 cargoes of Nigerian crude monthly

One hundred and thirty-two local and international companies yesterday offered to buy 14 cargoes of Nigerian crude oil monthly in the Nigerian National Petroleum Corporation (NNPC) 2019/2020 Direct Sale and Direct Purchase (DSDP) bid opening in Abuja.

Group Managing Director Dr. Maikanti Baru, who presided over the opening, said that the corporation would receive about 14 billion litres in a year as exchange for the crude.

“Well, we are looking at about 14 cargoes a month kind of situation and about 14billion litres in a year of products,” he said.

Baru described the occasion as a landmark event in the bid to miximise value and guarantee energy security for the nation.

The DSDP scheme was introduced in 2016 “with efficient and cost systems and processes to plug the value eroding loopholes of the January 2015 Offshore Processing Agreement (OPA) contracts”.

The NNPC said: ”Since the inception of the DSDP scheme in 2016 to March 2019, 29.5million meteoric tons (39.6 billion liters) of petroleum products have been supplied under the scheme, representing over 90 per cent of the national requirement.”

Baru explained that through a transparent competitive bidding and evaluation process, the scheme had enlisted a robust supplier mix comprising the big international players and strong Nigerian downstream companies for supply flexibility and local capacity development.

According to him, “the scheme prides itself with a competitive pricing framework (lower than the Petroleum Product Pricing Regulatory Agency (PPPRA) benchmark) which over the years has ensured significant reduction in product demurrage cost in the range of 84 per cent and cost savings of about $2.2 billion.”

He explained that the 2019-2020 DSDP tender objectives were to engage reputable companies for the Direct Sales of Nigerian crude oil and Direct Purchase of petroleum products.

The objectives are also to ensure that the selection of off-takers is aligned with tested, transparent and accountable procedures in compliance with the Public Procurement & Nigerian Content Acts.

The scheme is also to sustain transparency in all the nation’s processes and establish the best partners through a robust mix of big international players and strong Nigerian downstream companies to ensure supply reliability and local capacity development.

According to Baru, the scheme was also initiated to encourage local downstream companies while leveraging on the capacity and expertise of foreign partners.
He said the DSDP had been delivering value optimisation to the federation.

Agents of the Bureau of Public Procurement (BPP) and the Nigerian Extractive Industries Transparency Initiatives (NEITI) monitored the bid opening.

There was, however, a mild drama when the GMD expressed fears over the commencement of the opening after 12:00 noon.

He attributed the late opening of to the failure to invite the media to air the exercise before he insisted on inviting and waiting for their arrival.

Baru, who asked whether the lateness marred the transparency of the exercise was told by the agent of the BPP that it was immaterial as far as no company was allowed to submit any bid after noon.

Speaking, the Group General Manager, Crude Oil Marketing Division, Mele Kyari, spoke of certain criteria that the bidding firms must comply with.

“Capacity is everything”, he said, adding: “As you are aware today, a cargo of crude oil today cost close to $72 million. So, nobody who cannot raise a Letter of Credit for $72 million can do this business. It is impossible. At times you are supposed to pay for more than a cargo. It means that you are supposed to raise a letter of credit of $170 million. It means you must have a clear net worth that when we take away your asset and liability, you still have some money that you can fall on.”

India’s richest man put his brother out of business. Now he’s bailing him out

source: cnn

The gesture by Mukesh Ambani to bail out his brother, Anil, is the latest twist in a sibling saga that has gripped India’s telecommunications industry. A price war started by Mukesh in 2016 nearly put Anil out of business a year later.

Last month, India’s top court ordered Anil Ambani and his company, Reliance Communications, to pay a 5.5 billion rupees ($80 million) debt to Swedish mobile firm Ericsson (ERIC) by Wednesday or face three months in jail.

By Monday, the deadline was looming and the debt remained unpaid. Then Mukesh Ambani, who’s estimated to be worth more than $50 billion, stepped in.

Reliance Communications said in a statement late Monday that it had made the payment to Ericsson in full, with Anil Ambani thanking his brother and sister-in-law for their help.

“My sincere and heartfelt thanks to my respected elder brother, Mukesh, and Nita, for standing by me during these trying times, and demonstrating the importance of staying true to our strong family values by extending this timely support,” he said.

Shares in Reliance Communications spiked 10% in Mumbai on Tuesday. A spokesperson for Mukesh Ambani’s company declined to comment on how much of the 5.5 billion rupees he provided, but local media reported it was around 4.8 billion ($70 million).

A spokesperson for Reliance Communications didn’t immediately respond to a request for comment.

Sibling rivalry

The brotherly bailout is striking because Mukesh Ambani played a part in bringing his younger brother’s business to the brink of collapse.

The Mumbai billionaire stunned India in September 2016 when he launched a new mobile network called Reliance Jio that offered customers six months of free high-speed internet. The move triggered a brutal price war, forcing some companies to quit the market altogether, including Reliance Communications.

Anil Ambani’s company, once one of India’s biggest mobile players, announced in late 2017 that it would sell its main consumer mobile business to Reliance Jio in order to focus on providing data services to corporate clients.

That deal has now been abandoned, the two companies said Monday. An Indian bankruptcy court will instead auction off Reliance Communications’ mobile assets to pay off the company’s $7 billion debt.

The Ambani brothers have had a tumultuous and often acrimonious relationship. After the death of their father in 2002, they waged a bitter succession battle for control of the vast Reliance business empire that he had spent decades building.

In the end, they divided up Reliance’s array of businesses that cover industries such as energy, retail and financial services. But their fortunes have gone in vastly different directions since then. Mukesh Ambani’s fortune tops $54 billion, while his younger brother has dropped out of the billionaires club and is now worth only $300 million, according to Bloomberg.

In his statement on Monday, Anil Ambani said the siblings have now put their differences behind them.

“I and my family are grateful we have moved beyond the past, and are deeply grateful and touched with this gesture,” he said.

PZ Cussons Nigeria PLC: “we may leave amid “extremely challenging” Conditions”

Image Credit: Leadership Newspaper Nigeria

A few days ago, the management of PZ Cussons Nigeria hinted that the company is considering limiting the depth of its exposure to the Nigerian market in the midts of what they describe as “extremely challenging” trading conditions.

PZ Cusson’s shares were down 11% in early trade in London on Tuesday at a price of 187.58 pence each. PZ Cussons is a the consumer products firm with a wide range of products that have become household names in Nigeria feor decades.

This is, in addition, to the fact that they had registered a 23% fall in revenue to GBP111.3 million in Africa for the six months leading to November. At constant currency, revenue slipped 13% and the like-for-like decline was also 13%.

PZ Cusson’s Group revenue fell by 10%, or 4.6% constant currency, to GBP335.1 million. Like-for-like revenue also slid 4.6%. Adjusted operating profit fell 3.8%, or 1.1% constant currency, to GBP35.4 million, while statutory pretax profit sank 20% to GBP26.7 million. PZ Cussons declared an interim dividend of 2.67 pence per share, flat year-on-year

While awaiting further details on thier recent disclosure, in an interview reported by Leadership Newspapers Nigeria, the company’s managementz addded the follopwing:

“The group continues to make pleasing progress in Europe and Asia, with new product development and increased support across our key brands delivering positive momentum,” said Chair Caroline Silver.

“Disappointingly, however, the macroeconomic conditions in Nigeria remain extremely challenging and continue to have a significant negative impact on overall group performance. Reflecting this, we now expect group adjusted profit before tax for the year to be towards GBP70 million.”

PZ Cussons posted adjusted pretax profit of GBP80.1 million in its year ended May 2018.

“We anticipate consumer demand in all our key markets will remain subdued,” Silver continued.

“Whilst these conditions prevail, we will maintain our strong market shares in key product categories in Nigeria until growth returns to the market.”

To help streamline its activities and focus on Personal Care and Beauty operations in Europe and Asia, the company has begun some strategic initiatives, it said, which include “limiting exposure to Nigerian volatility”.

ABA Gets a Massive Break!

A venture capitalist firm, Platform Capital, has announced it would be commencing work on the record-breaking Leather City Park (“Leather City”) and a state-of-the-art foot-wear design facility, the NIBRA Designs Limited (“NIBRA”) in Ariara market, Aba, Abia. The shoe factory is said to become the largest in sub-Saharan Africa so far. Its will be leveraging world-class Brazilian technology, a member of the private equity firm announced on LinkedIn.

The NIBRA facility will start operations with an initial capacity of 10,000 pairs per day, and it’s expected to grow to 100,000 in 5 years. Fourth Quarter 2019 is the lasted time for the commissioning of the project. About 1,000 persons will be employed directly in the first year by NIBRA after which this will grow to 5,000 in the medium term. If things go as planned, the  project will serve both domestic and the international markets. The Leather City is expected to provide wide-ranging opportunities that improve not only productivity but the quality of products for the good part of the over 120,000 individuals currently operating in Ariaria market.

The team at the Platform Venture Capital consider the project a huge transformational initiative for the Abia State, the entire South-East geopolitical zone, and a testament to Nigeria’s tested entrepreneurial spirit. The team considers Aba as having the potentials to compete with similar foot-wear industries in Brazil China and Italy that have evolved in its production technologies and the reach of its market in the past few decades. While the Aba foot-wear industry has been praised for the resilience of its operators, much was still missing in terms of quality and capacity.

The project is to be delivered in partnership with the Nigerian Export Import Bank (NEXIM) and Abia State Government.

It is important to note that the a number of attempts have been made in the past on revitalizing the Aba industrial area with effort from both public and private sector players. This current effort is, however, the most ambitious and largest amongst them all. It is hoped that this will break the jinx of constraints that has held that industrial giant in the past at least two decades.  

Watch documentary video below:

https://dms.licdn.com/playback/C4D05AQG4n7yPhTU7xQ/51cb30c2349247d3991ae2753c6c70c0/feedshare-mp4_3300-captions-thumbnails/1507940147251-drlcss?e=1548842400&v=beta&t=08HLwUUnO2PiZH1pL0q0MZ6IwEX7Hlu9mOM08K12rfM

Meeting Needs Through Proper Product Integration Strategy

It is a common practice amongst many small businesses in Nigeria to pursue expansive product mix. This is due, in the main part, to the massive fragmentation that exists in the consumer goods market where a mass of small enterprises offer largely similar services. In the market, these products portend little or no features to differentiate them significantly enough to elicit brand loyalty. So, firms, particularly in the vast and mostly unregulated service sector, simply opt to offer a wide variety of services supposedly related to a particular main product, hoping that they will attract existing or new customers of the main service to become consumers of the related service or product. 

However, what I found in my interaction with many service providers (especially those in the personal services and food & beverage market), reveal that this strategy has not led to better sales. Probing deeper it turned out that nearly all of these service providers undertook some product integration strategy simply on their own assumptions of what the customer would want alongside their main offerings. For example, I found that a particular owner of a hairdressing salon had introduced magazine sales to her main service offering (i.e hair-making) since, she insinuated, women would like to while away their free time reading lifestyle magazines and celebrity news while being attended to or waiting for their turns. She provided this new product for nearly a year only to end up with ridiculous sales. Unfortunately, it turned out that most customers preferred to gossip or call friends and family while being attended to or waiting to be attended to. This scenario exists in many other similar service-oriented businesses in Nigeria. Businesses need to rethink their product integration strategy.

To realize a successful product integration one must pose the following questions: when customers want for a service or product, what need are they looking to meet? And when meeting this need with an offered service or product, are there other needs they need to meet at the same time and place, that the customer is willing to pay a price for? In the case of the hair-making salon, though customers obviously read newspapers, the demand for newspapers does not come up at the same time as the demand to fix hair. Therefore, these customers were simply not willing to pay for newspapers while waiting to fix their hair or while fixing their hair

In all, what exists on a day-to-day basis is that needs show up at different points in time and place, therefore product integration around the customer simply does not lead to the certainty that sales will follow. Instead, service providers need to think of their integration strategy around the needs that need to be met. This needs to be met principle obviously supersedes other integration strategies because it will lead to consistency in customers’ willingness to pay for product or service, and therefore eliminates uncertainties. 

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