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South Africa guarantees Eskom’s power purchase agreements

24 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

CAPE TOWN (Reuters) – Power purchase agreements between South African power utility Eskom and independent power producers (IPPs) are now categorized as contingent liabilities, adding about 200 billion rand ($13 billion)to government’s guarantee exposure from 2015/16, National Treasury said on Wednesday.

The government issues guarantees, which will amount to 467 billion rand at 31 March 2016, to several state-owned companies, with Eskom accounting for 74 percent of the total guarantee portfolio.

The portion of the guarantees that firms borrow against, known as the exposure amount, is a contingent liability and creditors can call on government to pay the debt should any default occur.

“The probability of default is low, since the regulator generally approves tariff increases that accommodate these agreements. However, significant deterioration in Eskom’s financial position may increase government’s risk exposure,” the Treasury said.

Exposure amounts are projected to increase to 258 billion rand at the end of March, from 226 billion rand in 2014/15, with Eskom accounting for most of the increase.

Africa’s most advanced but struggling economy is diversifying its energy mix away from an over-reliance on coal-power plants to include greener wind and solar projects.

A successful independent power producers program, started in 2010, is expected to provide 7,000 megawatts of energy with 47 projects fully operational by mid-2016, up from the 6,377 MW procured at the end of December.

Treasury reiterated on Wednesday that government’s plan for 9,600 MW of new nuclear power would continue “at a scale and pace that is affordable.”

Additional funding of 200 million rand was available in 2016/17 for transactional advisers and consultants on the nuclear programme.

Energy investment amounts to 70 billion rand this year and will be over 180 billion rand over the next three years as construction on Eskom’s Medupi, Kusile and Ingula power stations is completed, said Finance Minister Pravin Gordhan.

($1 = 15.3266 rand)

 

(Reporting by Wendell Roelf; Editing by Tiisetso Motsoeneng)

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South Africa’s Standard Bank sees FY profit up 30%

24 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s Standard Bank said on Wednesday its full-year profit would rise by up to 30 percent higher, boosted by lower losses from discontinued operations outside Africa, sending its shares up.

Standard Bank said its diluted normalised headline earnings per share (EPS) will be between 20 percent and 30 percent higher for the 12 months to end-December from the previous year.

Headline earnings per share is the main profit gauge in South Africa and strips out certain one-off items.

Standard Bank last year completed the disposal of its controlling interest in its British unit, since renamed ICBC Standard Bank, to China’s ICBC, which also holds a 20 percent stake in the South African bank.

The previous year included the British unit’s loss of 3.7 billion rand which has narrowed substantially in the twelve months to end-2015, the company said.

Shares in Standard Bank were up 4.7 percent at 113.88 rand by 0748 GMT, compared to a 0.9 percent decline in the Johannesburg Securities Exchange’s Top-40 index.

 

(Reporting by TJ Strydom; Editing by James Macharia)

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Mali economic growth to rise to 6% in 2016

23 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

BAMAKO (Reuters) – Mali’s economy will grow 6 percent this year, bolstered by agricultural and mining production, the ministry of economy and finance said on Tuesday, up from an expansion of 4.9 percent in 2015.

According to preliminary figures, the West African nation produced 8.04 million tonnes of grain this season, up from 6.98 million in 2014-2015, and 550,370 tonnes of cotton, an increase from 548,000 tonnes in 2014-2015.

“The prospects are good,” Oumar Diall, head of Mali’s forecasting and economic analysis division, told Reuters. “The growth performance will be particularly in agricultural cotton but also gold exports,” he added.

President Ibrahim Boubacar Keïta said last month that Mali produced 50 tonnes of gold in 2015 and hopes to produce more in 2016 as new mines comes online, though no specific forecast has been given.

The projected economic growth this year would represent a turnaround for Mali, one of the region’s leading cotton producers, whose growth slipped to 4.9 percent last year, down from 7.2 percent in 2014.

Malian government forces are embroiled in a conflict with Tuareg separatists in the north of the country. Although a peace deal was signed last June, mediators have struggled to enforce it and militants have continued to stage deadly attacks including at a hotel in the capital Bamako in November.

 

(Reporting by Tiemoko Diallo, writing by Edward McAllister; editing by Gareth Jones)

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Egypt’s Midor signs $1.2 billion loan agreement

23 February 2016 Comments (0) Business, Latest Updates from Reuters, Middle East

CAIRO (Reuters) – Egypt’s state-owned Middle East Oil Refinery Company (Midor) has signed an initial loan agreement with three banks for $1.2 billion, the state news agency said on Tuesday.

The loan represents around 80 percent of the cost of its $1.4 billion Alexandria refinery lab expansion, while the remaining $230 million will be self-financed, Midor Chairman Mohamed Abdel Aziz said.

The agreement was signed by Abdel Aziz with the heads of a banking consortium that includes French banks Credit Agricole and BNP Paribas and Italy’s CDP.

The expansion at Midor aims to increase the company’s refining capacity to 160,000 barrels per day (bpd) from 100,000 bpd.

Egypt has struggled with soaring energy bills caused by high subsidies it provides on fuel for its population of more than 80 million.

 

(Reporting by Asma Alsharif; editing by Jason Neely)

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Kenya’s Mumias Sugar sees better second half, losses widens in H1

23 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s Mumias Sugar expected to perform better in the second half after posting a wider pretax loss for the six months ended Dec. 31, the company said on Tuesday, adding falling prices due to illegal imports could pose a challenge.

The heavily-indebted firm has been struggling with cash flow problems in recent years, forcing the government to step in with bailout funds and has hired a new chief executive, Errol Johnston, to drive its turnaround.

Mumias said losses widened to 2.26 billion shillings ($22.23 million) from a loss of 2.08 billion shillings in the year ago period, due to increased finance costs.

Finance costs nearly doubled to 732.6 million shillings from 378.7 million shillings in the six-month period ended Dec. 31, 2014, it said in a statement.

“During the six-month period, high interest rates coupled with a depreciated Kenya shilling adversely affected the company in terms of high cost of finance and foreign exchange losses,” it said.

“This coupled with high operating and administrative costs saw the company post a pretax loss … which is 9 percent higher than the … loss incurred during a similar period last year.”

The shilling hit lows last seen in October 2011 in late 2015, while interest rates peaked above 22 percent.

Mumias said net revenue for the period rose 11 percent from a year ago to 2.98 billion shillings, while administrative expenses shot up to 1 billion shillings from 820.9 million shillings.

Mumias – which also faced hurdles from raw material shortages and low sugar prices – said it was seeking an additional 2 billion shillings cash injection from the government.

Kenya has used high tariffs to protect its sugar farmers but the policy has encouraged smuggling of cheaper sugar imports.

It said loss per share widened to 1.04 shillings, from 0.95 shillings during the first half ending December 2014.

($1 = 101.6500 Kenyan shillings)

 

(Reporting by George Obulutsa; Editing by Biju Dwarakanath)

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Zimbabwe orders diamond mines shut, says not nationalising

22 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

HARARE (Reuters) – Zimbabwe ordered diamond mining firms to stop operations immediately on Monday and leave the Marange fields as their licences have expired but denied the government was seizing the mines.

The diamond fields in the east of Zimbabwe near Mozambique are mined by nine firms. Eight, including two Chinese-run companies, are joint ventures 50 percent owned by the government and the other one is wholly owned by the state.

“The JV companies neglected or failed to renew the special (mining) grants. Some expired as far back as 2010 and others in 2013,” Mines Minister Walter Chidhakwa told reporters and executives from the mines in question.

“Since they no longer hold any titles, these companies were notified this morning to cease all mining activities with immediate effect,” he said, adding that Harare’s position was final and not negotiable.

Monday’s move follows months of wrangling between the mining companies and the government over its plans to merge the mines into one new entity to ensure efficiency and transparency, a proposal opposed by some of the firms.

Chidhakwa said the state-owned Zimbabwe Consolidated Diamond Company (ZCDC) will now hold all the diamond claims in the country, but said the state was not nationalising the mines.

“We are not expropriating. Remember the concession that we are taking does not belong to the company … it vests in the state. We are not touching the equipment, the bulldozers, the excavators, everything that you have put up remains your assets,” Chidhakwa said.

The latest move by President Robert Mugabe’s government could further tarnish the country’s image as a risky investment destination, with investors already unnerved by Mugabe’s drive to force foreign-owned firms to sell majority shares to locals.

“We have created a very unstable and threatening investment environment, no matter which sector you invest in Zimbabwe you will be interfered with,” said economic consultant John Robertson.

Zimbabwe was the eighth largest diamond producer in the world with 4.7 million carats in 2014, according to industry group Kimberly Process. Last year, the government received $23 million in royalties and other fees from diamond mines, down from $84 million in 2014.

Chidhakwa gave the firms, including Chinese-run Anjin and Jinan, 90 days to remove their equipment and said company officials now required government approval to access the mines.

He said companies in Marange had not fulfilled their investment promises and refused to be part of a new ZCDC, which was part of the reason why the government had to cancel the expired licences.

Robert Mhlanga, chairman of the largest mine in Marange, Mbada Resources, declined immediate comment on the move.

 

(By MacDonald Dzirutwe. Editing by James Macharia and David Clarke)

 

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Morocco annual inflation eases to 0.3% in January

22 February 2016 Comments (0) Business, Latest Updates from Reuters, Middle East

RABAT (Reuters) – Morocco’s annual consumer price inflation eased to 0.3 percent in January from 0.6 percent in December, mainly due to falling food prices, the country’s High Planning Authority said on Monday.

Food inflation eased to 0.2 percent from 1.1 percent from January 2015 to January 2016. Non-food price inflation rose at 0.6 percent, from 0.2 percent in December.

Transport costs fell 0.4 percent, while hotels and restaurants were 2.3 percent more expensive, the agency said.

On a month-on-month basis, the consumer price index eased to 0.1 percent in January, down from 0.5 percent in December. Food price inflation fell 0.3 percent, while non-food inflation dropped 0.1 percent.

 

(Reporting by Aziz El Yaakoubi; editing by Katharine Houreld)

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AngloGold swings to 2015 profit on weaker currencies, oil prices

22 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Africa’s top bullion producer AngloGold Ashanti Ltd on Monday said it swung into profit in 2015 as it benefited from lower oil prices and weaker currencies in the countries from which it exports gold.

Adjusted headline earnings, which exclude certain one-off items, were $49 million versus a year-earlier loss of $1 million.

“The results for the fourth quarter and full year 2015 show the combination of a strong ongoing focus on cost and capital discipline, as well as the operational leverage the company has to weaker currencies and lower oil prices,” AngloGold said.

 

(Reporting by Ed Stoddard)

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South Africa’s MTN shares slump 13% on profit warning

19 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Shares in MTN Group slumped more than 13 percent on Friday, a day after the South African mobile company flagged it would report at least a 20 percent drop in annual profit.

Shortly after the market closed on Thursday, MTN said the expected fall in profit was due to underperformance in Nigeria, where it faces a $3.9 billion fine for failing to cut off more than 5 million SIM card users by the set date.

Africa’s biggest mobile phone company said the profit warning did not include the penalty because it was still in talks with regulators about the final size of the penalty.

“There remains some uncertainty as to the final quantum (amount) of the Nigerian fine, should an out of court settlement be reached,” the company said.

MTN was handed a $5.2 billion penalty in October, prompting weeks of lobbying that led to a 25 percent reduction to $3.9 billion but the company was still not prepared to pay the lower fine, which equates to more than twice MTN’s annual average capital spending over the past five years.

 

(Reporting by Tiisetso Motsoeneng; Editing by Alexander Smith and Adrian Croft)

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Nigerian red tape prompts South African retailer to exit

19 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South African retailer Truworths has pulled out of its Nigerian business citing import restrictions, its chief executive said on Thursday, a sign President Muhammadu Buhari’s attempts to boost local industry are hurting foreign investment.

As well as being unable to fill its shelves, the clothing retailer said it was struggling to pay its rent and get access to foreign exchange which has dried up due to a collapse in oil prices. Nigeria is Africa’s biggest crude exporter.

“We were unable to operate the stores properly any longer because we were unable to send merchandise to the stores because there’s regulation preventing that,” Michael Mark told Reuters in telephone interview.

In an attempt to boost local manufacturing and prop up the ailing naira, Buhari has effectively banned the import of almost 700 goods, ranging from rice to toothpicks, bread and soap.

Even non-banned items are difficult to import due to dollar shortages.

Buhari won an election a year ago on promises to end a brutal Islamist insurgency in the northeast and wean Africa’s biggest economy off oil.

However, Boko Haram militants continue to launch regular attacks and economists have questioned the logic of Buhari’s shock therapy reform tactics, particularly because of the knock-on effects of the slump in oil prices.

 

(Reporting by Tiisetso Motsoeneng; Writing by Joe Brock; Editing by Ed Cropley)

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