For Online E-newspaper
The East African : March 3rd 2014
60 MARCH 1-7,2014 BUSINESS, MARKETS AND FINANCIAL ANALYSIS THE MARKET WHISPERER EQUITY MARKETS (WEEKLY CHANGE IN BENCHMARK INDEX) NSE 20 Share Index Kenya 4,933.41 -2.01% (CUMULATIVE MOVEMENT) DSE All Share Index Tanzania 1,995.32 4.94% USE All Share Index Uganda 1,494.00 7.71% RSE All Share Index Rwanda 143.88 0.85% JSE All Share Index South Africa 47,105.66 -0.50% NGSE All Share Index 39,167.34 Nigeria - 1.64% This has been the back and forth between the Tanzania Petroleum Development Corporation (TPDC) and Swala Energy Ltd, after the former terminated the latter’s hydrocarbon exploration licence. In April 2012, Swala Energy through its subsidiary Swala Oil and Gas (Tanzania) plc jointly bid in a restricted tender for the Eyasi gas exploration licence on a 50:50 basis with fellow Australian company Pura Vida Energy NL. According to TPDC, which holds exploration and production rights of oil and gas on behalf of the country, after the bid evaluation, the joint venture between Swala and Pura Vida Energy scored the highest points based on criteria set in the bidding document. Subsequently, the two com- panies were invited by TPDC on March 28, 2013, for pre-contract production sharing agreement (PSA) negotiations. In the course of the negotia- tions, Pura Vida Energy withdrew from the joint venture with Swala, saying the company wanted to focus on its newly acquired exploration rights in Morocco, Gabon, and Madagascar. According to TPDC, the withdrawal of Pura Vida Energy substantially affected the joint bid and the negotiations because the invitation for the pre-contract negotiations was TPDC says after the withdrawal of Pura Vida Energy’s 50pc interest, the joint venture could no longer support the application based on the technical expertise, financial resources and experience of the consortium. TPDC says after the with- drawal of Pura Vida Energy’s 50 per cent interest, the joint venture could no longer support the application and made it ineligible on the ground that the evaluation of the bid was based on the joint venture upon successful pre-contract negotiations. But the oil explorer disputes this. In a statement issued at the Australian Stock Exchange on Friday last week, Swala Energy CEO David Ridge said A gas pipeline. Swala Energy is an Australian oil and gas company with assets in Tanzania and Kenya. Picture: File Without Pu≥a, no licence fo≥ Swala Ene≥gy W e can do it. No, you can’t. Yes, we can. No, you can’t. the joint bidding agreement allowed either party to withdraw at any stage, with the remaining party assuming the withdrawing party’s interests in the licence, and promised to challenge the TPDC interpretation in court. Dr Ridge said his company was disappointed that TPDC reached such a questionable decision given the fact that the company had invested significantly in the negotiations. According to Dr Ridge, TPDC’s decision raises questions not only in respect of the transparency of the process followed in the current licensing process but also in respect of TPDC’s commitment to local content and Tanzanian participation. Swala Energy is an Austral- ian oil and gas company with assets in Kenya and Tanzania. The company, which owns 65 per cent of Swala Oil and Gas (Tanzania) was registered in the British Virgin Islands in September 2010 and has since acquired a number of assets in the East African Rift System. Last year, the company con- verted into a public Australian company listed on the Australian Stock Exchange. Su≥p≥isingly, local investo≥s take up bulk of Kigali bond RWANDA HAS a tendency of surprising investors. Take its latest bond issue, for example. The country last week said its latest government paper, which sought to raise $18.3 million, was oversubscribed by 40 per cent. It was the highest oversubscription in the country’s nascent bond market. But most significant was the local participation in the issue. Rwandans took up 94 per cent of the bond with the rest being East Africans. To understand why this matters, consider that the Rwanda Stock Exchange (RSE) currently has three government bonds with the longest — a five-year bond — maturing in September 2016. The RSE has only one eight-year corporate bond worth Rwf10 billion ($14.4 million) issued in 2010 by I&M Bank (previously Commercial Bank of Rwanda). The central bank says its marketing strategy for the bond worked to ensure its success. The National Bank of Rwanda (BNR) conducted a series of road shows across Rwanda and the region to drum up support for the bond, dubbed the Mashiriki Bond, but Rwandan investors took up the bulk of the issue. This example of liquidity in the market is something that will certainly encour- age Treasury in light of the country’s growing efforts to substitute external borrowing and aid with locally sourced financing. Finance and Economic Planning Minister Claver Gatete said 52.85 per cent of subscribers were banks, 46.16 per cent institutional investors while the rest were retail investors. Mr Gatete explained that BNR employed the book-building method to determine the price of the bond. The initial guidance was announced in the up- per 11s which was later revised to 11.575 -11.625 per cent range. The final price was 11.625 per cent with a coupon rate of 11.475 per cent. Published at Nation Centre, Kimathi Street, and Printed at Mombasa Road, Nairobi by Nation Media Group, Box 49010, GPO Nairobi, 00100. Registered at the GPO as a newspaper. Nairobi Office, Tel: 3288000, 211448, 337710, Fax 214531, 213936. Dar es Salaam Office. Tel: 2119657/8. Kampala Office, Tel: 232771, 232772. Fax 232781 Download free QR Readers from the web and scan this QR (Quick Response) code with your smart phone for pictures, videos and more stories 2013 is USE’s best yea≥ eve≥ LIFE IS good at the Uganda Securities Exchange. The latest data from the bourse shows that 2013 was its best year so far, with total turnover rising nearly 10 times, supported by a 560 per cent rise in shares traded compared with the previous year. The USE said turnover grew 825 per cent from the previous year’s record of U s h 2 6 . 4 b i l l i o n ($10.4 million) to Ush245 billion ($96.6 million) — representing a daily average turnover of approximately Ush1,008.7 billion ($397.9 million). It’s all down to renewed inter- 560 Percentage rise in shares traded on the USE in 2013, compared with the previous year. est from international investors in stocks such as BAT, Umeme, Stanbic and DFCU.
February 24th 2014
March 10th 2014