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Quest for affordable data pricing thickens

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In tandem with the yearnings of the over 94 million Internet users, the Nigerian Communications Commission (NCC) has commissioned a study expected to provide it with findings to accurately establish the appropriate pricing for broadband retail services in the country. KUNLE AZEEZ reports

 

Despite the observable drop in cost of telecommunications services since 2001 when the industry became liberalised, there have always been sentiments among telecoms consumers that the cost of accessing telecoms services, especially data is exorbitant.

Currently, there are over 94 million individual mobile Internet users in the country and hundreds of thousands of corporate customers

. Indeed, with voice services nearing saturation, as some experts have suggested and more clearly, the provision of broadband services is being touted as the next frontier of revenue generation for telecoms companies.

It was against this backdrop that the Nigerian Communications Commission (NNC) organised a stakeholders’ forum on a study for the determination of cost-based pricing for retail broadband and data services in Nigeria.

 

Data as next critical phase

Addressing a large gathering of industry stakeholders at the event, he noted that the Nigerian telecommunications industry has, undoubtedly, recorded significant growth over the years and the impact and benefits that come with this growth cuts across every segment of the Nigerian economy and the lives of its citizenry.

Whilst there has been a phenomenal growth recorded in the industry, especially in active voice subscriptions to the tune of over 142.3 million, stakeholders are of the view that the next critical phase is to ensure that everyone – wherever they live, and whatever their circumstances – have access to the benefits of broadband.

“But this can only happen with the pervasive deployment of broadband infrastructure and services across the country considering the potential of broadband as a key enabler of national productivity, economic growth and development, social inclusion and cultural enrichment,” Danbatta said.

 

Need for cost-based services

 

He said that ensuring that prices charged for retail broadband and data services are cost-based in line with international best practice is critical to the deployment and uptake of broadband and data services in Nigeria.

 

As such, the new move by the regulator will result in a major restructuring of the $70 billion telecoms industry, experts said.

To this end, a global consulting firm, Messrs’ KPMG, has been appointed by the telecoms regulator to carry out a comprehensive costbased study on data retail pricing.

The study starting this month is expected to be completed by KPMG latest by April, this year. “In line with the Commission’s mandate of creating an enabling environment and promoting fair competition in the telecoms industry and in line with the strategic objectives of the National Broadband Plan (NBP) of achieving 30 per cent broadband penetration this year, it has, therefore, become imperative to develop a proper pricing structure for broadband in Nigeria,” Danbatta told the gathering.

He explained that the new move will not only ensure the affordability and availability of broadband but also ensure fair competition by checking price discrimination, excessive pricing, predatory pricing, margin squeeze and price fixing amongst other things.

 

“Therefore, ensuring that prices charged for retail broadband and data services are cost-based in line with international best practice is critical to the deployment and uptake of broadband and data services in Nigeria has become critical,” he said.

 

Tacking market dominance

The chief regulator said whilst addressing market dominance issues in the upstream wholesale markets is one of the ways to facilitate competitive price levels in retail broadband access and service markets, it is possible that such action may not be a sufficient constraint on pricing in all segments of a retail broadband market, as such, some form of exante regulation of retail prices is appropriate or even necessary.

He said this has, therefore, necessitated the conduct of the study on the determination of cost-based pricing for retail broadband and data services in Nigeria.

 

Expectations from KPMG’s study

 

According to Danbatta, the NCC’s KPMG-commissioned study will set guidelines for the regulation of the pricing of retail broadband and data services in Nigeria and specifically determine price cap and floor where necessary; help to develop a regulatory pricing model based on the peculiarity of the Nigerian broadband and data services market coupled with international best practices and to design the framework for collation of data that will be used for the determination.

 

Not only these, the study is also expected to help to determine the appropriate cost modeling technique and methodology to be adopted; determine the appropriate pricing regulatory measures to be adopted and determine need for ex-ante and ex-post regulation with respect to pricing in the retail broadband and data market segments, among others.

 

KPMG’s reactions

 

In his presentation, Partner and Head of Management Consulting, KPMG, Mr. Segun Sowande, informed operators and stakeholders of the objectives of the study; provided insights on the methodology underlying the study and sought the buy-in and stakeholders and operators’ active participation in the course of carrying out the study. He said, since 2013, the industry’s competition dynamics in the broadband segment has dramatically evolved, with new challenges/ issues necessitating the need to explore new alternatives.

 

Speaking on the expected outcome of the study, Sowande said, “we anticipate to have a cost model providing high-level estimates of the cost of national and regional transmission capacity; outcomes from the cost model and other elements of the market assessment to feed into an overall assessment of whether retail and wholesale data pricing meets the NCC objectives while we also expected development of clear and practical regulatory measures to address any market issues identified, among others.”

 

Study’s approach

 

Also speaking, Regulatory Expert, KPMG, Dr. Roger Steele, the study will be adopting the Bottom-Up (BU) Model. According to him, “The BU methodology will be adopted in developing the cost model, which entails building up costs from many detailed components, and from the costs of each.

Steele said the BU model principles are widely used by telcos and regulators across the globe. “It is the most appropriate to reflect the real economics of Nigeria,” he said, urging “telecoms companies and other stakeholders that would be approached to supply data and other necessary information to cooperate with the consonants in order to get outcomes that present the realities of the industry.”

 

Last line

Meanwhile, stakeholders such as the Association of Telecoms Companies of Nigeria (ATCON), Internet Service Providers Association of Nigeria (ISPAN), Association of Licensed Telecoms Operators of Nigeria (ALTON) and other key players in the industry have tasked the Commission to ensure that the outcome of the study bring about effecting price restructuring and sustained industry growth

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Financials: 33 firms get N461m fines for non–disclosure

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The Nigerian Stock Exchange (NSE) has fined 33 quoted companies N460.7 million for failure to file their audited financial statements after the regulatory due date. Checks by New Telegraph showed that some of the firms were sanctioned for their inability to meet the regulatory requirements ranging between full year ended December 31, 2014 and 2017.

 

The companies include Great Nigeria Insurance Plc, Daar Communication Plc, Guinea Insurance Plc, Newrest ASL Plc, Niger Insurance Plc, Nigerian Enamelware Plc and Phama-Deko Plc.

 

 

Also included are Premier Paints Plc, Presco Plc, Royal Exchange Plc, Fortis Microfinance Bank Plc, Sovereign Trust Assurance Plc, Staco Plc, Standard Alliance Insurance Plc, Thomas Wyatt Plc and Union Diagnostic & Clinical Services Plc. Others are Unity Bank Plc, Equity Assurance Plc, A.G. Leventis Nig Plc, African Alliance Plc, Afromedia Plc, Austin Laz & Co. Plc, Capital Hotel Plc and Capital Oil Plc, among others.

 

Further checks showed that African Alliance Plc, Great Nigeria Insurance Plc, Thomas Wyatt Plc, Fortis Microfinance Bank Plc, Daar Communication Plc, Ekocorp Plc, Niger Insurance Plc, Academy Press Plc, Guinea Insurance Plc and Universal Insurance Plc shared about N362.5 million of the fines, which represents 78.76 per cent of the total figure.

 

The Exchange, in its X-Compliance report, explained that the initiative was designed to maintain market integrity and protect investors by providing compliance-related information on all listed companies.

 

The report stated: “Companies that are listed on the Exchange are required to adhere to high disclosure standards, which are prescribed in Appendix 111 of the Listing Rules.

 

“Financial information, which is periodic disclosure and on-going material events disclosure, should be released to The Exchange in a timely manner to enable it efficiently perform its function of maintaining an orderly market.”

 

The NSE, in an effort to achieve a world class capital market, had reiterated its commitment to maintaining zero tolerance posture on dealing member firms and quoted companies on violations of rules and regulations.

 

This is on the back of the exchange’s determination to shift gears to drive innovations cantered on increasing global visibility for the Nigerian capital market in the current year. Chief Executive Officer, NSE, Mr. Oscar Onyema, said recently that the Exchange will sustain a zero-tolerance stance on dealing member firms and listed companies’ violations to help boost confidence in the market.

 

 

Managing Director, Crane Securities, Mr. Mike Eze, reacting to the development, said the action of the NSE will boost investors’ confidence in the market because it is sending a signal that the NSE’s management understands the need for investors to get companies’ financial reports as and when due.

 

Eze said sanctioning erring companies is a way the Exchange is using to tell the investing public that they really want to revive confidence in the market. He added that investors need to take informed decisions before choosing which stock to buy, which, he said, could only be achieved if there is adherence of good corporate governance by the quoted companies.

 

A founding member of Nigeria Shareholders Solidarity Association (NSSA) and one of the leading shareholders’ activists, Alhaji Gbadebo Olatokunbo, said penalizing erring companies is a signal that it is no longer business as usual.

 

“The action is great and it shows that the NSE management is becoming alive to its responsibilities.

 

 

Besides, it is a signal to the companies in particular and the capital market in general that it is no longer business as usual. We must always abide by the rules,” he said.

 

Olatokunbo noted that the sanction would make other companies sit up and post their results as and when due, thereby providing investors, analyst and stockbrokers the platform to predict the real value of the companies.

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BOFIA: Proposed amendments to boost financial system stability

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With proposals such as tougher sanctions for defaulters and more powers for the Central Bank of Nigeria (CBN), the House of Representatives bill to amend the Banking and Other Financial Institutions Act (BOFIA) seems to boost prospects of a safer banking system for the country. TONY CHUKWUNYEM writes

 

With the BOFIA regulating banking and other financial institutions as well as related matters in the country, there were often calls for it to be amended to accommodate the dynamics and challenges in regulation in the industry.

 

So given that the Seventh House of Representatives had made efforts but failed to amend the Act, it perhaps did not really come as a surprise to industry watchers that the current members of Nigeria’s lower House will decide to continue from where their predecessors.

 

Indeed, if the statement made by the Chairman of the House Committee on Banking and Currency, Mr. Jones Onyereri, while unveiling plans to pass a bill which: “seeks to amend the Banks and Other Financial Institutions Act, 2004 and to re-enact the Banks and Other Financial Institutions Act, 2017, and for matters connected therewith,” in March last year, is anything to go by, the country could have a new, tougher BOFIA before elections next year.

 

He had said at the time : “I’m worried to the extent that if you look at the BOFI Act amendment bill, you will agree with me that most banks create unnecessary infractions. How will you ask a bank to pay N100,000 for an infraction, that is why the bank can afford to give themselves billions of credit facility at the expense of the depositors.

 

“With respect to the regulator’s, there’s nothing weighty about the consequences of not doing your job as it were because why would you have the banking supervision department and you know that the law provides that no shareholder or bank director will give credit to himself or anybody whosoever related to him or her in excess of N50,000 but you are giving billions of naira.

 

“Central Bank of Nigeria (CBN), you know that no bank has the authority to give any loan whatsoever without the express approval of the CBN and you allow that to happen. So the time has come to take critical look at the BOFI Act and trust me, in the next two to three months, we will come out with the amendment, enough is enough,” he said.

 

Proposed amendments

 

Also, giving details of the proposed BOFIA amendments while briefing the House during a plenary session in last December, Onyereri said: “Section 44 makes provision for disqualification and exclusion of certain individuals from management of banks. It further provides that the Chief Executive Officer (CEO) of a bank appointed by the Board of Directors under such terms and conditions approved at the Annual General Meeting (AGM) shall not serve as a CEO for a cumulative period of more than 10 years.

 

“Section 44 (6) imposes a fine not less than N50 million on any bank that contravenes the provisions of this section and a fine of not less than N50 million or imprisonment for a term not less than three years or both on any director, manager or any other officer of the bank who contravenes the provisions of this section.”

 

According to him, section 47 of the bill also proposed a fine of not less than N50 million on any bank that contravenes any provisions of the Act, which an offence or penalty is not expressly provided for.

 

Specifically, he stated: “Section 2(2) of the bill imposes a penalty of not less than N50 million and imprisonment for a term of not less than 10 years or both against any person that transacts a banking business without a banking license.
“Section 5(4) provides for a fine of not less than N20 million against any director, manager or officer of the bank that fails to take reasonable steps to ensure compliance with any of the conditions of the licence.

 

“Section 16(2) imposes a fine of N20 million against any manager or officer of a bank who fails to disclose any personal interest in any advance loan or credit.

 

“Section 16(11) imposes a fine of N50 million against any director that fails to disclose any property whether directly or indirectly owned that conflicts with his duties or interests as a director of a bank. Section 18(8) provides for a fine of N50 million and five years imprisonment or both fine and imprisonment upon conviction on any bank officer that grants facilities exceeding 20% of the banks paid up capital to persons/organizations without authority of the board.

 

“Section 22(2) provides for a fine of N10 million against any director, manager, or officer of a bank who fails to take reasonable steps to ensure that the bank keeps proper books of account with respect to all transactions of the bank and imposes a fine of N20 million on any director, manager or officer of a bank that willfully caused a default by the bank in respect of the provisions if this section.

 

“Section 25(6) imposes fine of N2 million for every day a bank fails to publish on two daily newspapers its detailed financial statements.

 

“Section 27 also provides for the appointment, power and report of auditors. It further imposes a fine of N50 million against any auditor approved under this section that contravenes the provisions of this section and a term of imprisonment not exceeding five years in the partners if the auditor is a firm.

 

 

 

“Section 28(5) imposes a fine of not less than N20 million on a bank that fails to provide the required books, documents or information required by a CBN appointed examiner and an additional fine of N2 million for everyday the offence continues,” Onyereri said.

 

Significantly, the bill received widespread support from members leading to Speaker Yakubu Dogara who presided over the plenary, to direct Onyereri’ s Committee to continue with further legislative action on it.

 

Public Hearing

 

Thus, last week, the Committee held a two-day public hearing on the proposed amendments to the Act, which ended in Abuja last Wednesday.

 

 

 

Attended by key stakeholders such as the CBN, the Nigeria Deposit Insurance Corporation (NDIC) and several Deposit Money Banks (DMBs), the hearing saw the lawmakers and the regulators brainstorming on the way forward for the country’s banking industry.

 

Interestingly, while the CBN Governor, Mr. Godwin Emefiele, and the Managing Director/Chief Executive, NDIC, Alhaji Umaru Ibrahim, both welcomed the proposed amendments to BOFIA, especially as regards to incremental sanctions  directed mainly at individuals rather than the institutions, they, however, disagreed on the amount defaulters should pay.

 

For instance, Emefiele who was represented by CBN Director, Legal Services, Mr. Johnson Akinkunmi, said while increases in fines may not necessarily deter banks from breaching regulatory guidelines, he was optimistic that the significant increment in money penalties in the proposed amendment would help to address the problem.

 

However, the NDIC boss, who was represented by the Corporation’s Director of Legal/board secretary, , Mr. Belema Taribo, opposed the proposed fines saying they were too high.

 

“The NDIC, as a deposit insurer supports the passage of the bill into law as the current fine of N1000 does not meet contemporary realities. However, it is our submission that the proposed penalty of N200,000 is above 100 per cent increment from the current penalty. In view of the above, we propose a fine of N5000.”

 

 

Also, while the CBN Governor asked that the Apex Bank be granted reserved powers to revoke licences of non-compliant financial institutions where necessary, the NDIC proposed that the CBN should seek its consent before granting any application for banking licence.

 

“This is to enable the corporation have a prior evaluation of the applicants with regard to insurance of deposits,” the NDIC stated, adding that the power of banks to reverse revoked licences should be removed from the Act as the case is in other jurisdictions.

 

It said banks could, however, challenge the revocation if done in bad faith- where only damages could be sought.

 

The CBN had argued that the reserve power would enable it to revoke licences of non-compliant financial institutions where necessary, while any challenge of such powers by affected banks in a law court will be penalised.

 

Citing the case of Savannah Bank, the CBN said such legal  tussles were not in the best interest of bank customers and investors, noting that though Savannah Bank’s licence had been restored as directed by the Courts, depositors were yet to get their deposits as the lender has not been able to resume operations.

 

However, the lawmakers expressed concern that granting such extensive powers to the CBN could lead to abuses, a claim, which Emefiele strongly denied, citing instances where the regulator could have taken harsh measures against some banks, but restrained itself in order not to send the wrong signal to bank customers.

 

 

Other notable requests by the banking watchdog include its call for the abolition of Shell banks in the country on the grounds that they serve as institutions for money laundering and, “power to inject funds into a falling bank by way of equity participation up to a level that guarantees control by CBN.”

 

Last line
Although it is still not certain at this stage when and if the bill will be passed and eventually signed into law, the consensus among financial experts is that it is likely to result in a safer, stronger banking system.

 

As a financial analyst, Mike Ogugua, put it: “An amendment of BOFIA is clearly overdue so I believe the lawmakers have consulted widely with stakeholders. From what I have read, the bill will generally make banks to embrace good corporate governance, which will be make the banking system safer.

 

 

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Nigeria exports N97.24bn liquefied gas to Asia

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Five vessels laden with 308,000 tons of liquefied natural gas valued at N97.24 billion ($270.1 million) have left Nigeria through Onne Port this month as demand for gas by China, Pakistan and India soars.

 

 

 

It was learnt that global liquefied natural gas shipments have risen 40 per cent since 2015 to almost 40 billion cubic meters (bcm) a month since last January. It was also gathered that the strong economic growth and cold winter across the Asian countries has pushed up the demand to a doubling of LNG prices from mid-2017 till February, this year. Last January, ex-plant LNG prices were quoted at $877 (5,700 yuan) per ton at China.

 

 

Among the vessels laden with 308,000 tons of the products are LNG Bonny II with 70,000 tons, LNG Golar Bear, 70,000 tons; LNG Enugu, 68,000 tons; LNG Ogun, 70,000 tons and LNG Nave Bellatrix, 30,000 tons. According to Business Monitor International (BMI) Research, the global LNG tanker market looks increasingly bullish for 2018 and 2019 because of strong demand growth.

 

 

Last year, Pakistan had turned to Nigeria for a new trade deal to import more liquefied natural gas. Following the deal, Pakistan’s per annum import of gas, which stood at 4.5 million tons, was increased to nine million tons by the end of 2017.

 

The National Bureau of Statistics (NBS) had explained a total of N372.44 billion was earned by the Federal Government from LNG exports in the first quarter of 2017. Last year, Nigeria exported 3.40 million metric tons through Onne and Warri Ports between January and December.

 

 

T he gas was transported to India, Pakistan, China and other major buyers such as Colombia, Turkey, Egypt, Jamaica, Jordan and Poland. Between last September and October, Nigerian Ports Authority (NPA) shipping data revealed that a total of 443,000 metric tons of the product were carried by seven vessels from Onne Port to various destinations.

 

 

Last October, 130,000 tons of the product were ferried out of the country by LNG Sokoto, laden with 65,000 tons and LNG Akwa Ibom, 65,000 tons respectively.

 

Also in September, LNG Abalamabie left the country with 77,000 tons; LNG Ogun, 68,000 tons; MT Tom Arawa, 25,000 tons; LNG Lokoja, 68,000 tons and LNG Abuja II, 75,000 tons.

 

Last July and August, 506,000 metric tons of gas was exported out of the country. A total of 388,000 metric tons of the product were ferried out from Onne Port in June, while six vessels exported 389,000 tons of gas from Onne and Warri ports in May, 2017.

 

March and April shipment recorded a total of 293,000 metric tons from Onne Port, while 274,000 tons was taken away from Warri Port.

 

At Onne Port, LNG Trinity Arrow ferried 65,000 tons; LNG Kano, 68,000 tons; LNG Cross Rivers, 65,000 tons; LNG Adamawa, 65,000 tons and Silver Joan, 65,000 tons, while, LNG Kano exported 65,000 tons; LNG Enugu, 68,000 tons; LNG Ogun, 68,000 tons and LNG Maran Gas Agamemnon, 70,000 tons from Warri Port.

 

 

In February this year, 365,000 tons of gas was exported from Onne Port by LNG Cross Rivers laden with 65,000 tons; LNG Goodside Goode, 70,000 tons; LNG Pskov, 70,000 tons; MT Aegean Wave, 25,000 tons; LNG Maran Gas Mystras, 65,000 tons and LNG Vuekiy Novgorod, 70,000 tons.

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