Major International Business Headlines Brief::: 11 October 2021

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Major International Business Headlines Brief::: 11 October 2021

 


 

 


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ü  Kraft Heinz says people must get used to higher food prices

ü  Star Entertainment: Shares fall on money laundering claim

ü  Energy prices: No commitment from Kwarteng on business gas help

ü  Liberty Steel cash injection to save 660 jobs

ü  Former Tesco boss Dave Lewis to advise on supply chain crisis

ü  Asia shares bounce, dollar breaks higher on yen

ü  U.S. earnings seen strong, but supply chains and costs worry investors

ü  Yellen confident U.S. Congress will pass minimum global corporate tax

ü  Southwest cancels many flights, blames weather and air traffic control issues

ü  Lenovo stock drops 17% after withdrawing Shanghai listing application

ü  China Evergrande bondholders brace for Monday's coupon deadline

ü  China's Ant Group increases registered capital by 47% to $5.4 bln

ü  KKR, Allianz, Axa to bid on Red Electrica's fibre unit, Expansion says

ü  Nigeria: Inside Nigeria's Debt Crisis - How Foreign Loan Under Buhari Triples Past Govts' Combined Figure

ü  Africa: International Community Strikes a Ground-breaking Tax Deal for the Digital Age

ü  Seychelles: Desroches Island Running On 90% Solar Energy, Drawing Praise

 

 

 

 

 

 


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Kraft Heinz says people must get used to higher food prices

People will have to get used to higher food prices, the boss of Kraft Heinz has told the BBC.

 

Miguel Patricio said the international food giant, which makes tomato sauce and baked beans, was putting up prices in several countries.

 

Unlike in previous years, he said, inflation was "across the board".

 

The cost of ingredients such as cereals and oils has pushed global food prices to a 10-year high, according to the UN Food and Agriculture Organisation.

 

Kraft Heinz has increased prices on more than half its products in the US, its home market, and Mr Patricio admitted that is happening elsewhere too.

 

"We are raising prices, where necessary, around the world," he said.

 

During the pandemic, many countries saw production of raw materials, ranging from crops to vegetable oils, fall. Measures to control the virus, as well as illness, limited output and delivery.

 

As economies have restarted the supply of these products hasn't been able to keep up with returning demand, leading to higher prices. Higher wages and energy prices have also added to the burden for manufacturers.

 

Mr Patricio says this broad range of factors is contributing to the rising cost of food.

 

"Specifically in the UK, with the lack of truck drivers. In [the] US logistic costs also increased substantially, and there's a shortage of labour in certain areas of the economy."

 

Mr Patricio says that consumers will need to get used to higher food prices given that the world's population is rising whilst the amount of land on which to grow food is not.

 

In the longer term "there's a lot to come in technology to improve the effectiveness of farmers" that will help.

 

Not all cost increases should be passed on to consumers, Mr Patricio said. Firms would have to absorb some of the rise in costs.

 

"I think it's up to us, and to the industry, and to the other companies to try to minimise these price increases," he said.

 

But big food producers like Kraft Heinz, Nestle and PepsiCo "will most likely have to pass that cost on to consumers" according to Kona Haque, head of research at the agricultural commodities firm ED&F Man.

 

"Whether it's corn, sugar, coffee, soybeans, palm oil, you name it, all of these basic food commodities have been rising," she said.

 

"Poor harvests in Brazil, which is one of the world's biggest agricultural exporters, drought in Russia, reduced planting in the US and stockpiling in China have combined with more expensive fertiliser, energy and shipping costs to push prices up."

 

But she said food producers would all be affected and would therefore all be raising prices in similar ways: "because it's so widespread that everyone will do it, meaning they probably won't lose customers".

 

This week PespsiCo warned it was also facing rising costs on everything from transport to raw ingredients, and said that further prices rises were likely at the start of next year.

 

However, as well as pushing up costs, the pandemic did help boost sales for some Kraft Heinz brands, Mr Patricio said, because staying in meant "people are cooking far more than they were before".

 

Customers in the UK bought more Heinz Baked Beans, while customers in the US bought more Kraft Mac & Cheese. Overall sales rose 1.6% to $13bn in the first half of this year, described by Erin Lash, at the investment firm Morningstar, as "still quite impressive relative to the comparable pre-pandemic period in 2019". despite representing a slight slowdown.

 

The company is also undergoing an extensive restructuring under Mr Patricio, involving selling some old, and buying some new brands which Ms Lash said was "narrowing its focus and increasing its spending on innovation and marketing" which would support future sales.

 

Mr Patricio said the firm was also spending significant sums on developing new packaging to meet its aims on reducing plastic waste.

 

Most of the 650 million bottles of ketchup the firm sells every year are plastic, for example. But Mr Patricio said the firm was "encouraging" customers to buy glass bottles even though they are less convenient "because you have to tap on the bottom".

 

He adds "We are working hard, not only on the plastic bottles, but everywhere in our footprint that has plastic."

 

Campaigners against plastic waste would like to see a reduction in the use of single serving sachets.

 

However following faced a shortage of sachets during the pandemic, as consumers bought more takeaways from restaurants, Kraft Heinz has invested in expanding production of them by 30%.

 

"Thanks God we did that, because now we don't have that [shortage] problem anymore", says Mr Patricio. But he says the company is working on a solution "to cutting the amount of plastic they use".-BBC

 

 

 

Star Entertainment: Shares fall on money laundering claim

Shares in Australian gambling giant Star Entertainment have slumped after allegations that it enabled illegal activity at its casinos for years.

 

A joint report by three news outlets implicated the firm in suspected money laundering, organised crime and fraud.

 

The company's main rival Crown Resorts was hit by similar claims in 2019.

 

Star said it is "concerned by a number of assertions within the media reports that it considers misleading."

 

In the statement released by Star to the Australian Securities Exchange it also said: "We will take the appropriate steps to address all allegations with relevant state and federal regulators and authorities."

 

The report by the Sydney Morning Herald and the Age, and television programme 60 Minutes, said Star's management had been warned that its anti-money-laundering controls were inadequate.

 

 

According to the report, between 2014 and 2021 the firm wooed high-rolling gamblers who were allegedly linked to criminal or foreign-influence activities.

 

Crown Resorts scandal

Two years ago the same news outlets made similar allegations about Australia's biggest gaming and entertainment group Crown Resorts. That report triggered a series of public investigations into the firm that has left its future in doubt.

 

In February, the New South Wales state gaming authority said Crown was unfit to operate its casino in Sydney after an official inquiry found it had facilitated money laundering.

 

The ruling prevented the company from securing a licence to operate the newly-built A$2.2bn (£1.2bn; $1.6bn) Sydney casino.

 

The scandal also saw the departure of its chief executive Ken Barton less than a week after the findings of the inquiry were made public.

 

A regulatory report into Crown's suitability to run its casino in Melbourne is due on Friday, while an inquiry into its Perth casino is expected next year.

 

Star Entertainment Group's shares ended Sydney trade almost 23% lower on Monday.--BBC

 

 

Energy prices: No commitment from Kwarteng on business gas help

Business Secretary Kwasi Kwarteng has not committed to any additional government help for businesses struggling amid record gas prices.

 

Some industries have warned firms could be forced to shut down operations.

 

Mr Kwarteng said he was working closely with the chancellor over possible support for energy intensive sectors - but a Treasury source denied this.

 

The business secretary said domestic customers would not see a change to the energy price cap this winter.

 

Asked on BBC One's Andrew Marr programme whether there would be additional government help for energy-intensive companies, Mr Kwarteng described the situation as "critical" and said he was "looking to find a solution".

 

When Andrew Marr suggested this sounded like a "yes" the business secretary said: "No, it doesn't sound like yes at all.

 

"We already have existing support and we're looking to see whether that's sufficient to get us through this situation."

 

Speaking to Times Radio Mr Kwarteng, who met leaders from heavy industry on Friday, said he was not going to commit to "any firm figure or subsidy" for companies.

 

Asked about whether the government would ensure factories would not have to close if they could not pay for gas he said it was a commercial decision and "up to them".

 

He added: "We are not in the business of bail-outs. What we are in the business of is ensuring security of supply and that is what I am focused on."

 

Wholesale gas prices have risen 250% since January.

 

CEO of British Glass Dave Dalton, who was at Friday's meeting with Mr Kwarteng, said some of the confederation's "significant" members were "teetering on the edge".

 

"I think some companies are staring down the ability to survive, absolutely - ultimately that obviously cascades on to jobs and impacts on the consumer," he told the BBC.

 

Gareth Stace, director general of UK Steel, said he was frustrated by the lack of action to support businesses.

 

He told the BBC that without help in the next week or so, there would be "significant and permanent damage to the UK steel sector".

 

Unite leader Sharon Graham said the country was "contemplating factory shutdowns across viable manufacturing and businesses" and that workers were "worried sick".

 

 

Businesses have been shouting louder and louder for support through this period of soaring energy prices.

 

This morning, the business secretary told the BBC he was listening to their concerns - but would not commit to any extra support.

 

Those industries that use a lot of energy for manufacturing say that the time for working out a way forward has long gone.

 

The director general of UK Steel, Gareth Stace, expressed his frustration, saying pauses in steel production will only increase.

 

The government says the current situation emphasises the need for a revolution in how we generate energy, moving towards home-grown renewables.

 

But that's little comfort for those businesses dependent on energy from fossil fuels now, competing with intense demand in a global market.

 

line

On the Andrew Marr show, Mr Kwarteng denied asking for "billions" from the Treasury to subsidise energy-intensive businesses and said supply itself was "not an issue".

 

A Treasury source said the business secretary had been "mistaken" to say that he had been working on possible support measures with the Chancellor Rishi Sunak.

 

Bridget Phillipson, Labour's shadow chief secretary to the Treasury, said the government "needs to get a grip" and called for "urgent answers on who exactly is running the show".

 

"The two key government departments responsible for the current cost of living crisis have spent this morning infighting about whether they were in talks with each other. What a farce," she said.

 

She also accused the government of having "put its out of office on", referring to reports that the prime minister is on holiday in Spain.

 

graphic: gas prices over last year updated

A number of Conservative MPs have called for the government to take action to support heavy industry.

 

The SNP's Westminster leader Ian Blackford called on the UK government to "nurse" businesses through the crisis, describing it as a "perfect storm".

 

Ofgem price warning

The domestic consumer energy price cap, which is reviewed every six months, sets the maximum level a supplier can charge a consumer on a standard tariff in England, Wales and Scotland.

 

Mr Kwarteng told Marr that protecting consumers was his "first and foremost objective" and as such the price cap would stay at its current level until its next update which is due to in April.

 

Some suppliers say the cap is just delaying an inevitable increase in consumer prices and should be reviewed more regularly.

 

Energy regulator Ofgem has warned households will see further "significant rises" in the spring, when the cap is reviewed.

 

Asked by Marr if he was sure the lights would stay on this winter, Mr Kwarteng said "yes, I am".

 

Due to high gas prices household energy suppliers have been forced to sell gas for less than they can buy it due to the price cap, leading some to fail.

 

Last month, nine domestic energy supply companies went out of business, forcing 1.7 million customers to move to new suppliers and on to higher rates.

 

Paul Richards, chief executive of Together Energy, which he said is currently making losses, said while he supported a price cap to protect customers, the current mechanism "is not fit for industry, nor is it fit for customers".

 

He said it protected customers in the short term but somewhere between £1bn and £3bn in costs would be spread back across business and households as a result of suppliers going bust.

 

The founder of OVO Energy Stephen Fitzpatrick told Marr that it has been "too easy" for companies to enter the energy market and that there will be more companies in difficulty.

 

He said the market was a complicated one, and he thought some people had not understood the risks.-BBC

 

 

 

Liberty Steel cash injection to save 660 jobs

Liberty Steel has secured a £50m cash injection which it says will safeguard 660 jobs at its plant in Rotherham.

 

The deal is part of a wider restructure of GFG Alliance, Liberty's owner, which was forced to seek funding when its key lender, Greensill Capital, collapsed.

 

GFG Alliance said the cash would allow the Rotherham plant to reopen this month after being closed since spring.

 

Community, the steelworkers' union, said it was "overdue" but was "an important step in the right direction".

 

Jeffrey Kabel, GFG's chief transformation officer, said: "The injection of £50m of shareholder funds into Liberty Steel UK is an important step in our restructuring and transformation.

 

"It will help to create sustainable value, ensure that Liberty has the ability to raise and deploy capital quickly in the UK and enable our businesses to demonstrate their potential and agree long-term debt restructuring."

 

At the beginning of the year, Liberty Steel employed 3,000 steelworkers in the UK.

 

But its future was thrown into doubt when Greensill collapsed in early March. GFG has been struggling to raise new financing since then, while the majority of its workers have been on furlough.

 

In April, GFG approached the government for help, but the request was rejected by Business Secretary Kwasi Kwarteng.

 

GFG, one of the UK's largest industrial groups, is owned by businessman Sanjeev Gupta.

 

A further 2,000 people work at other GFG steel sites in the UK.

 

GFG said the cash injection would allow Liberty Steel (LSUK) to restart its electric arc furnace at Rotherham.

 

"Production ramp-up will commence in October 2021 with a plan to reach 50,000 tonnes per month as soon as possible," it added.

 

"The restart of operations will enable colleagues to return to work, setting the platform for LSUK's longer-term refinancing and delivery of its plan to expand Rotherham's capacity, creating a two million tonnes per annum green steel plant."

 

News of the move was welcomed by industry body UK Steel.

 

A spokesperson said it was "really good news for not only the company, but those many thousands of workers and their families, the communities where those jobs a located and of course the whole of the UK steel sector".

 

"Our friends at Liberty Steel can now fire up those furnaces, make the steel that this economy needs and most importantly give some certainty to the well-paid and highly-skilled workforce."

 

But the spokesperson added: "The last thing the sector needs now is for government to merely sit on its hands and risk an energy crisis becoming a steel industry crisis."

 

UK Steel called on Prime Minister Boris Johnson to intervene on the industry's behalf "before it is too late".

 

Huge challenges

Roy Rickhuss, general secretary of Community, said the deal "demonstrates that GFG can raise funds for the UK".

 

"Huge challenges remain," Mr Rickhuss said. "But the workforce is ready to get back to making the best steels money can buy and the £50m injection will enable us to restart steelmaking."

 

Meanwhile, plans are proceeding to sell off GFG's Speciality Steel business, which employs about 750 staff at plants in South Yorkshire.

 

GFG said the cash lifeline would help Speciality Steel to "establish a stable operating environment and create an attractive asset".

 

Further afield, GFG said it had also agreed a debt restructuring for Liberty's Australian division with Credit Suisse Asset Management.

 

Greensill's heavy exposure to Mr Gupta's business had prompted Credit Suisse to freeze withdrawals from up to £10bn worth of funds held as security.-BBC

 

 

 

Former Tesco boss Dave Lewis to advise on supply chain crisis

Boris Johnson has appointed the former Tesco chief executive, Sir David Lewis, to advise it on how to fix the supply chain crisis that has led to petrol and other shortages.

 

It comes as the Office for National Statistics found one in six UK adults said they had been unable to buy essential foods in the last fortnight.

 

The recent fuel crisis was caused in part by a shortage of lorry drivers.

 

Brexit and the pandemic have both contributed to labour shortages.

 

The ONS found that 17% of adults said they had not been able to buy essential food items because they were not available, and almost a quarter (23%) said the same for non-essential food items.

 

The government said businesses had faced a range of challenges over recent months as they recovered from the coronavirus pandemic which has affected supply chains across Europe and around the world.

 

 

Mr Johnson said: "There are currently global supply issues which we are working with industry to mitigate, and Dave brings a wealth of experience which will help us continue to protect our businesses and supply chains."

 

A statement said this would include "both identifying the causes of current blockages and pre-empting potential future ones, and advising on resolutions either through direct government action or through industry with government support".

 

Sir Dave left the supermarket giant in September last year after helping mend its fortunes following a major accounting scandal.

 

He has been appointed until the end of the year and will start work in his new role on Monday.

 

Christmas supplies

Many businesses in the UK have been reporting supply chain issues.

 

A shortage of HGV drivers and specialised workers has led to gaps on supermarket shelves and problems with fuel supplies failing to reach petrol forecourts.

 

The body representing the road haulage industry has estimated there is currently a shortfall of about 100,000 drivers, although it said there was already a significant shortage of drivers before the pandemic and Brexit. Changes to the way drivers are taxed has also put some off.

 

On Thursday, a trade body representing thousands of fuel retailers called for an independent inquiry into the continuing supply problems for petrol and diesel, which have led to panic-buying and lengthy queues.

 

Alongside the driver shortage issues, some manufacturers have also said a global shortage of computer chips and rising shipping costs for products from China is adding to the bottleneck and extra costs.

 

Hundreds of container ships are still queuing for access to overloaded ports, mostly in the US and China. Port closures caused by Covid-19 outbreaks have further exacerbated the problem.

 

Meanwhile, shortages of workers in food processing, hospitality and the care sector have been reported after some overseas workers returned home due to Brexit and the pandemic and chose not to return to the UK.

 

Retailers have also said they face a struggle to ensure supplies are in place for the crucial Christmas trading period.

 

Earlier this week, Tesco's current chief executive Ken Murphy said there would "be bumps in the road in the run-up to Christmas".

 

"We're seeing our share of challenges," he said.

 

Nestle, the producer of Quality Street and Lion bars. has also said it is experiencing some supply chain problems ahead of the Christmas period.

 

Nestle chief executive Mark Schneider said: "Like other businesses, we are seeing some labour shortages and some transportation issues but it's our UK team's top priority to work constructively with retailers to supply them".

 

When asked whether he could guarantee Quality Street would be in the shops this Christmas he replied: "We are working hard."

 

Farmers are warning of a Christmas turkey shortage because visa changes to allow labour recruitment from abroad have come too late.

 

Some 600 pigs have already been shot and a mass cull is "the next stage", according to the National Pig Association (NPA), which said the sector was also experiencing staff shortages due to Brexit and Covid. The NPA said mature pigs have continued to "back up" on farms.

 

The Toy Retailers Association has said shoppers may struggle to find what they want, while John Lewis says it is chartering a fleet of extra ships to make sure it has Christmas stock on time.-BBC

 

 

Asia shares bounce, dollar breaks higher on yen

(Reuters) - Asian shares rallied on Monday courtesy of gains in China which also helped U.S. stock futures pare early losses, while rising Treasury yields lifted the dollar to a near-three-year peak against the Japanese yen.

 

Nasdaq futures and S&P 500 futures were both down around 0.1%, but well above early lows. EUROSTOXX 50 futures dipped 0.1% and FTSE futures held steady.

 

Oil prices extended their bull run, with gains across the energy complex stoking inflation concerns.

 

"Bond yields continue to push higher, inflation expectations are rising and monetary tightening in various guises is becoming more prevalent," said ANZ analysts in a note.

 

"The global chips shortage will extend well into next year, adding further uncertainty to uneven recoveries," they said. "Add in energy shortages, and the economic landscape is materially more sober than the optimism that accompanied the early stages of global recovery."

 

Yet a 1% rise in the Chinese blue chip index (.CSI300) helped stabilise the mood and MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) added 0.7%.

 

The drop in the yen provided a welcome boost to Japan's Nikkei (.N225) which reversed early losses to rise 1.7%, though Australia (.AXJO) was still off 0.4%.

 

The U.S. earnings season kicks off this week and is likely to bring tales of supply disruptions and rising costs. JPMorgan reports on Wednesday, followed by BofA, Morgan Stanley and Citigroup on Thursday, and Goldman on Friday.

 

The focus will also be on U.S. inflation and retail sales data, and minutes of the Federal Reserve's last meeting which should confirm that a November tapering was discussed.

 

While the headline U.S. payrolls number on Friday disappointed, it was a partly due to reopening problems in state and local education while private sector employment was firmer.

 

Indeed, with a lack of labour driving the jobless rate down to 4.8%, investors were more concerned about the risk of wage inflation and pushed Treasury yields sharply higher.

 

Yields on 10-year notes were trading up at 1.62%, having jumped 15 basis points last week in the biggest such rise since March.

 

Bonds also sold off in Asia and Europe, with short-term yields in Britain hitting their highest since February 2020.

 

Analysts at BofA warned the global inflationary pulse would be aggravated by energy costs with oil potentially topping $100 a barrel amid limited supply and strong re-opening demand.

 

The winners in such a scenario would be real assets, real estate, commodities, volatility, cash, and emerging markets, while bonds, credit and stocks would be affected negatively.

 

BofA recommended commodities as a hedge and noted resources accounted for 20-25% of the main equity indices in the UK, Australia and Canada; 20% in emerging markets; 10% in the Eurozone, and only 5% in the United States, China and Japan.

 

The dollar was underpinned as U.S. yields outpaced those in Germany and Japan, lifting it to the highest since late 2018 on the yen at 112.41 .

 

The euro hovered at $1.1572 , having reached the lowest since July last year at $1.1527 last week. The dollar index held at 94.158, just off the recent top of 94.504.

 

The firmer dollar and higher yields has weighed on gold, which offers no fixed return, and left it sidelined at $1,760 an ounce .

 

Oil prices were up again after gaining 4% last week to the highest in almost seven years.

 

Brent climbed 91 cents to $83.30, while U.S. crude rose $1.13 to $80.48 per barrel.

 

The Thomson Reuters Trust Principles.

 

 

 

U.S. earnings seen strong, but supply chains and costs worry investors

(Reuters) - Investors are primed for another period of strong U.S. profit growth as third-quarter reports from Corporate America flow in starting next week. But as business continues to emerge from the coronavirus pandemic, new problems are arising that are taking center stage for Wall Street, including supply-chain snags and inflationary pressures.

 

In the run-up to earnings season, a number of companies have issued downbeat outlooks. FedEx Corp (FDX.N) said labor shortages drove up wage rates and overtime spending, while Nike Inc (NKE.N) blamed a supply-chain crunch and soaring freight costs as it lowered its fiscal 2022 sales estimate and warned of holiday-season delays. read more

 

"The pace of growth is decelerating, but still it's at a meaningful level," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. With the product and labor shortages and inflationary pressures, "we'll be looking to see to what extent demand is there, and what does it mean for the important holiday spending period."

 

Analysts see a 29.6% year-over-year increase in earnings for S&P 500 companies in the third quarter, according to IBES data from Refinitiv as of Friday, down from 96.3% growth in the second quarter. The third-quarter forecast is down a touch from several weeks ago, a reversal of the recent trend for estimates.

 

Third-quarter earnings growth was always expected to be much lower than the blowout gain of the second quarter, when companies had much easier year-ago comparisons because of the pandemic.

 

"We were going up at such a high clip. The positive revision momentum has lapsed," said Nick Raich, CEO of independent research firm The Earnings Scout.

 

Earnings season is kicking off this week with the big banks including JPMorgan Chase (JPM.N). 

 

Investors are weighing the impact of sharply higher energy costs on businesses and consumers after a recent surge in oil and natural gas prices. While higher energy prices should be a boon for energy producers, they are an inflationary risk for many other companies like airlines and other industrials and cut into consumer spending.

 

U.S. companies have so far this year kept profit margins at record levels because they have cut costs and passed along high prices to customers. Some investors are anxious to see how long that can go on. read more

 

Third-quarter earnings arrive with the market still wobbly after a weak and volatile September. The S&P 500 (.SPX) in September registered its biggest monthly percentage drop since the onset of the pandemic in March 2020. It was also the index's first monthly decline since January.

 

Analysts are skeptical about how much is priced in.

 

"COVID-related supply chain issues have spread beyond consumer goods. And longer-term signs of global friction are easy to find," Savita Subramanian, head of U.S. equity & quantitative strategy at BofA Securities, wrote in a note on Friday. But she said these issues are far from being fully priced into stocks.

 

Morgan Stanley's analysts say that consensus earnings expectations also have not fully priced in the supply-chain constraints facing companies, making it much harder for companies to surpass estimates at the same rate as in recent quarters.

 

"Consumer Discretionary companies of all kinds are right in the cross hairs of the supply shortages, higher logistics costs and higher labor costs," they wrote. Those strategists see the equity market set for a bigger pullback, and say third-quarter earnings could determine how deeply the stock market dips.

 

The Thomson Reuters Trust Principles.

 

 

 

Yellen confident U.S. Congress will pass minimum global corporate tax

(Reuters) - Treasury Secretary Janet Yellen said on Sunday she was confident the U.S. Congress would approve legislation to implement the global corporate minimum tax agreed by 136 countries.

 

Yellen said the actions to bring the United States into compliance with the global minimum tax would likely be included in the so-called reconciliation budget bill containing President Joe Biden's proposed spending initiatives.

 

Asked on ABC's "This Week" whether she was confident the measure would get through, Yellen said: "Yes. I am confident that what we need to do to come into compliance with the minimum tax will be included in a reconciliation package. I hope that we, that it will be passed and we will be able to reassure the world that the United States will do its part."

 

The parliamentary maneuver known as budget reconciliation would allow Democrats to act without Republican votes.

 

A group of 136 countries on Friday set a minimum global tax rate of 15% for big companies and sought to make it harder for them to avoid taxation in a landmark deal that Biden said leveled the playing field.

 

Treasury officials and tax experts have said that the global minimum tax would not require a treaty to implement and could be achieved in the reconciliation bill because it is a voluntary agreement among countries to individually impose a minimum tax on overseas earnings of corporations.

 

The United States has had such a minimum tax since the end of 2017, so it is a matter of raising the rate to conform with the agreement.

 

Treasury officials have said they regard the global minimum tax as less controversial than a higher overall corporate tax rate or a higher capital gains tax, because it puts the United States on a more competitive footing with other countries.

 

The U.S. Chamber of Commerce said it will review details of the Biden administration proposals closely.

 

"We remain especially concerned about the cumulative impact of the (global minimum tax) proposal and the tax changes being sought by the administration as part of the reconciliation bill pending before Congress,” Neil Bradley, the chamber's chief policy officer, said in a statement.

 

Yellen did not address how to implement another part of the deal that aims to revamp taxation for large technology companies and other highly profitable multinational firms.

 

The so-called "Pillar 1" part of the tax deal would reallocate taxing rights on companies with more than $20 billion in annual revenue to countries where their products and services are sold for 25% of the profit above a 10% margin.

 

U.S. Senate Republicans have argued that this would require a new international tax treaty that would require ratification with a two-thirds Senate majority.

 

Republican senators told Yellen in a letter they were concerned the Biden administration was considering circumventing the need to obtain the Senate's authority to implement treaties.

 

Under the U.S. Constitution, the Senate must ratify any treaty with a two-thirds majority, or 67 votes. Biden's fellow Democrats control only 50 seats in the 100-member chamber. Republicans in recent years have been overwhelmingly hostile to treaties and have backed cuts in corporate taxes.

 

Yellen told a Senate Banking Committee hearing in late September that the administration was instead considering alternative means to modify existing bilateral tax treaties that would avoid a two-thirds majority vote.

 

Yellen has said she believes that taxing rights reallocation for big multinationals would hold some bipartisan appeal because the deal would replace digital services taxes that have been imposed by some countries on companies including Facebook (FB.O), Alphabet Inc's (GOOGL.O) Google, Amazon.com (AMZN.O) and Apple (AAPL.O).

 

She has said that U.S. implementation for that part of the deal may not come until 2022.

 

The Thomson Reuters Trust Principles.

 

 

 

Southwest cancels many flights, blames weather and air traffic control issues

(Reuters) - Southwest Airlines Co (LUV.N) cancelled at least 30% of its scheduled flights on Sunday, a second straight day of heavy cancellations, data from flightaware.com showed.

 

Southwest declined to confirm the number of cancelled flights, saying only it had a significant amount over the weekend due to unfavorable weather in Florida that was compounded by air traffic control issues in the same region.

 

"With fewer frequencies between cities in our current schedule, recovering during operational challenges is more difficult and prolonged," the airline said in a emailed statement.

 

According to the flight tracking site, the airline has cancelled 1,103 flights so far on Sunday, which comes on top of 808 or 24% of scheduled flights on Saturday. The cancellation rate was much greater than those of other airlines.

 

 

Southwest Airlines' pilots union denied speculation on social media that the cancellations were due to union action. The union had said on Oct. 5 it would file a temporary restraining order to stop Southwest complying with a COVID-19 vaccine mandate for federal contractors, which includes major airlines, that has been set by President Joe Biden.

 

The union, SWAPA, put out a statement on Saturday saying it was "aware of operational difficulties affecting Southwest Airlines" but that its pilots were "not participating in any official or unofficial job actions."

 

Alan Kasher, Southwest's executive vice president of daily operations, told employees earlier on Sunday that while the airline was staffed for the weekend, it did not anticipate the size of the disruptions.

 

"And as we’ve seen before, an unexpected number of delays ultimately leads to a staffing shortage, and at times, mandatory overtime because of the longer operating day. Although we’ve made schedule adjustments leading into the fall, our route system has not fully recovered—that will take time," he wrote on the company's intranet.

 

 

The Federal Aviation Authority said no air traffic staffing shortages had been reported since Friday but that some airlines were experiencing scheduling challenges due to aircraft and crews being out of place.

 

The Thomson Reuters Trust Principles.

 

 

 

Lenovo stock drops 17% after withdrawing Shanghai listing application

(Reuters) - Lenovo Group Ltd (0992.HK) saw its stock fall more than 17% on Monday, its biggest intraday decline in over a decade, after the Chinese technology giant withdrew its application for a 10 billion yuan ($1.55 billion) share listing in Shanghai.

 

The world's biggest personal computer maker on Friday said it would withdraw its application, days after it had been accepted by Shanghai's STAR Market. read more

 

On Sunday, Lenovo said it had done so because of the possibility of the validity of financial information in its prospectus lapsing during the application's vetting. It did not detail reasons why the information may no longer be valid.

 

It also cited "relevant capital market conditions such as the latest circumstances in connection with the listing."

 

"The group's business operations are in good condition as usual. The withdrawal of the application is not expected to give rise to any adverse impact on the financial positions of the group," Hong Kong-listed Lenovo said in the Sunday statement.

 

($1 = 6.4368 Chinese yuan renminbi)

 

The Thomson Reuters Trust Principles.

 

 

 

China Evergrande bondholders brace for Monday's coupon deadline

(Reuters) - Offshore bondholders of beleaguered developer China Evergrande Group (3333.HK) were on Monday bracing for news on more than $148 million in looming bond coupon payments after the company missed two coupon deadlines last month.

 

Expectations that the company will make the semi-annual payments on its April 2022, April 2023 and April 2024 notes due Oct. 11 are slim as it prioritises onshore creditors and remains silent on its dollar debt obligations.

 

That has left offshore investors worried about the risk of large losses at the end of 30-day grace periods as the developer wrestles with more than $300 billion in liabilities. read more

 

Evergrande's troubles have sent shockwaves across global markets and the firm has already missed payments on dollar bonds, worth a combined $131 million, that were due on Sept. 23 and Sept. 29.

 

Advisers to offshore bondholders said on Friday that they want more information and transparency from the cash-strapped property developer.

 

The offshore bondholders are also demanding more information about Evergrande's plan to divest some businesses and how the proceeds would be used, the advisers said. read more

 

Trading in shares of Evergrande, as well as its Evergrande Property Services Group (6666.HK) unit, has been halted since Oct. 4 pending a major deal announcement. On Monday, the company's electric vehicle unit (0708.HK) swung between large losses and gains, falling as much as 4.65% and rising by up to 9.28%.

 

Evergrande contagion worries affecting the broader Chinese property sector spilled into heavy selling of Chinese high-yield dollar debt last week, particularly after smaller developer Fantasia Holdings Group Co (1777.HK) missed the deadline on a $206 million international market debt payment on Oct. 4.

 

The option-adjusted spread on the ICE BofA Asian Dollar High Yield Corporate China Issuers Index (.MERACYC) was last recorded at 2,069 basis points on Friday evening U.S. time, its widest ever.

 

Fantasia Group China Co said on Monday it will adjust the trading mechanism of its Shanghai-traded bonds following credit downgrades by China Chengxin International Credit Rating Co (CCXI), and said its parent had formed an emergency group to resolve liquidity problems.

 

The move comes after the Shanghai Stock Exchange on Friday paused trading of two of Fantasia Group's exchange-traded bonds following sharp falls, and echoes a similar adjustment in trading of Evergrande's onshore bonds last month.

 

"We believe policymakers have zero tolerance for systemic risk to emerge and are aiming to maintain a stable property market, and policy support could be forthcoming if the deterioration in property activity levels worsen," said Kenneth Ho, head of Asia Credit Strategy at Goldman Sachs.

 

 

"That said, we also believe that policymakers do not want to over-stimulate, and their longer term goal is to deleverage the property sector. Finding the right balance may require more time, and the uncertainties are likely to be a continued source of volatility for the China property (high-yield) market."

 

The Thomson Reuters Trust Principles.

 

 

 

China's Ant Group increases registered capital by 47% to $5.4 bln

(Reuters) - China's Ant Group has raised its registered capital to 35 billion yuan ($5.44 billion) from 23.8 billion yuan, public business registration records showed, as the fintech giant continues its government-mandated restructuring.

 

Ant, an affiliate of e-commerce leader Alibaba Group Holding Ltd (9988.HK), in a Monday statement said the increase was to support growth and was "according to relevant regulations and business needs."

 

Authorities in April ordered sweeping restructuring at Ant after halting the financial technology (fintech) firm's record $37 billion initial public offering in November, underscoring government determination to rein in its internet giants. read more

 

The overhaul subjects Ant to tougher regulatory oversight and capital requirements.

 

Ant said the 47% jump in registered capital comes from "capitalisation of the company's capital reserve." It said it had not engaged in any fundraising activity and that no additional investors were involved.

 

($1 = 6.4374 Chinese yuan renminbi)

 

The Thomson Reuters Trust Principles.

 

 

 

KKR, Allianz, Axa to bid on Red Electrica's fibre unit, Expansion says

(Reuters) - KKR (KKR.N), Axa (AXAF.PA) and Allianz (ALVG.DE) will participate in an auction for a 49% stake in the fibre-optic subsidiary of Spanish grid operator Red Electrica (REE.MC), newspaper Expansion reported on Monday, citing unnamed sources.

 

The subsidiary, known as Reintel, could fetch between 1.2 billion euros and 1.3 billion euros ($1.4 billion-$1.5 billion), Expansion said, citing financial sources.

 

Red Electrica declined to comment, while KKR, Axa and Allianz did not immediately respond to requests for comment.

 

Reintel, which is owned by Red Electrica, operates a network of more than 50,000 km (31,068 miles) of fibre-optic cable laid along the electricity grid and rail network.

 

($1 = 0.8636 euros)

 

The Thomson Reuters Trust Principles.

 

 

 

Nigeria: Inside Nigeria's Debt Crisis - How Foreign Loan Under Buhari Triples Past Govts' Combined Figure

A PREMIUM TIMES examination shows the current administration has taken by far more loans than any other government since 1999, contradicting a claim by the Senate finance committee.

 

Nigeria's public debt has risen the most under the Buhari administration when compared to previous governments since 1999, and foreign debt has grown three times more than the combined figure recorded by the past three administrations, a PREMIUM TIMES analysis of the government's domestic and foreign debts has shown.

 

While the Obasanjo government met $28 billion as foreign debt in 1999, it left $2.11 billion in 2007 after successfully securing a write-off by the London and Paris clubs of foreign creditors.

 

The Yar'adua/Jonathan government added $1.39 billion to what they met, and the Jonathan government incurred additional $3.8 billion, taking the country's total foreign debt to $7.3 billion when that administration came to an end in 2015.

Nigeria's external loan reached $28.57 billion by December 2020, meaning an extra $21.27 billion had been accumulated under the Buhari administration -- three times the combined amount by past governments since 1999.

 

For domestic debt, considered relatively less harmful to the value of Naira than foreign debt, the figure rose from N795 billion in 1999 when the Obasanjo government came to power, to N8.8 trillion in 2015 when the Buhari administration assumed office. By December 2020, Nigeria's domestic debt stood at N16.02 trillion -- twice as much the combined amount taken by the past three governments.

 

The domestic and foreign debt figures are higher now as the government has borrowed more in 2021.

 

"More than Three-Quarter"

 

The figures contradict a claim by the chairman of the Senate Committee on Finance, Solomon Adeola, that "three-quarter" of Nigeria's total debt profile estimated at N33 trillion naira was incurred by past administrations dating back to the military era.

Speaking at a Senate hearing on September 22, Mr Adeola in a response to a request by the Senate president, Ahmad Lawan, to clarify concerns over the nation's piling debt, said, "The borrowing you are saying is accumulated borrowing. It is not a borrowing of this administration alone, it is a borrowing that stems from the days of the military to the days when the Democratic dispensation started.

 

"It is an accumulated loan, it is not a loan that says that it is the current administration of President Buhari that has borrowed.

 

"It is a loan that has been borrowed by the previous administration - the Obasanjo, the Jonathan, the Yar'Adua of this world.

 

"[And] since the business of government is a continuum, the president of the day has no choice but to continue to pay back all these loans that have been borrowed by the previous administrations.

"More than three-quarter of these loans you're seeing were borrowed from the previous administrations, and we are paying back - we are doing what is supposed to be done, the way it is supposed to be done.

 

"So, when my colleague said that for every sixty-seven naira of any loan that was borrowed, we are using to pay, he should know that more than sixty naira of it are loans borrowed by previous administration. And that is where we are."

 

Government figures obtained and analysed by PREMIUM TIMES do not support Mr Adeola's "three-quarter" claim. While previous administrations borrowed as shown above, it is the present government that has taken the bulk of the domestic and foreign loans.

 

Debt Forgiveness

 

In 2006, Nigeria became the first African country to settle its public debt under a scheme devised to help the world's poorest and indebted states. The country under former President Olusegun Obasanjo paid off $18 billion to secure forgiveness of the balance of its nearly $30 billion debts to the London and Paris clubs of foreign creditors.

 

But 15 years later in 2021, Nigeria's public debt is high again, putting pressure on the government's revenue and performance.

 

A report by the World Bank placed Nigeria among the top 10 countries with the highest debt risk exposure. Nigeria is fifth with $11.7 billion debt exposure, behind India ($22 billion), Bangladesh ($18.1 billion), Pakistan ($16.4 billion), and Vietnam ($14.1 billion).

 

In recent periods, there has been a furore over Nigeria's borrowing plans and debt profile. The Debt Management Office (DMO) said as of March 31, Nigeria's total public debt stood at N33.1 trillion ($87.24 billion) -- accumulated between 1999 and 2021.

 

The overall public debt, DMO said, is the total public debt stock which includes the external and domestic debts of the federal and state governments and the Federal Capital Territory.

 

The federal government's share of the public debt jumped from N3.55 trillion in 1999 to N26.91 trillion in March 2021. This means the nation's debt stock has risen by over 650 per cent in 21 years.

 

Contributions By Past Governments

 

Records show that Nigeria's external debt stood at $28.04 billion in 1999 when Mr Obasanjo came into office. Following the debt forgiveness, it was $2.11 billion at the time Mr Obasanjo left office in 2007.

 

However, while external debts declined under Mr Obasanjo, domestic debts increased from N795 billion to N2.17 trillion between 1999 to 2007.

 

The country's currency exchange rate was between N98.02 and N116.8 to a dollar within the period, according to the central bank.

 

At the beginning of the Umaru Yar'Adua/Goodluck Jonathan administration, Nigeria's domestic debt stood at N2.17 trillion but jumped to N5. 62 trillion at the end of their administration in 2011. External debt also moved from $2.11 billion to $3.5 billion within the period under review.

 

In effect, the debt stock moved from N2.42 trillion to N6.17 trillion in four years, representing an average of N930 billion borrowing per year. The nation's exchange rate also fell from N116.8/$1 to N156.7/$1 during the period, according to CBN.

 

It is important to note that Mr Jonathan completed the tenure from May 2010 to May 2011 after the death of Mr Yar'Adua. The 12 month period saw an increase in the federal government's debt from N4.94 trillion to N6.17 trillion.

 

By May 2011 when Mr Jonathan was elected to serve a fresh term in office, Nigeria's foreign debt was $3.5 billion but went up to $7.35 billion when he left in 2015.

 

In the same vein, the country's domestic debt climbed from N5.62 trillion to N8.8 billion.

 

Nigeria's combined debt figure under Mr Jonathan administration went from N6.17 trillion in 2011 to N9.8 trillion in 2015. This represents a N3.63 trillion increase or an average of N900 billion loan in a year.

 

The country's official exchange rate also stood at N197/$1 during the period under review.

 

Incumbent President Muhammadu Buhari inherited an N8.8 trillion federal government's domestic debt in 2015. However, the figure rose to N16.02 trillion as of December 2020.

 

Likewise, the nation's exchange rate fell from N197 to a dollar in 2015 to N381 at the end of December 2020.

 

Up from $7.35 billion in 2015, Nigeria's external borrowings stood at $28.57 billion as of December 2020. This means that the administration incurred $21.27 billion in foreign loans.

 

But putting together external and domestic borrowing, Mr Buhari had borrowed N17.06 trillion as of March 2021, using the N381 exchange rate. This represents an average of N2.83 trillion per year since 2015.

 

Likewise, the nation's exchange rate moved from N197 to a dollar in 2015 to N381 at the end of December 2020.

 

Debt Service Taking Huge Toll On Yearly Budget

 

Debt service obligations gulped 97 per cent of the Nigerian government's total revenue in 2020, according to Budgit, a civic-tech non-profit organisation. Of the N3.42 trillion generated as revenue, Nigeria spent N3.34 trillion in debt servicing, Budgit said in a July report.

 

Also, N3.3 trillion was set aside for debt servicing in the assented 2021 budget, about a quarter (24.3 per cent) of the entire N13.6 trillion total expenditure.

 

This trend has been in place since 2016.

 

In 2016, the country spent almost a quarter (about 24 per cent) of its budget to service debts. Of the N6.6 trillion budgeted for 2016, the government earmarked N1.5 trillion for debt financing.

 

The sum of N1.6 trillion was proposed for servicing debts out of the total (N7.3 trillion) budgeted for 2017.

 

In 2018, the figure rose as N2.2 trillion or 24.17 per cent was pegged for debt servicing in the N9.1 trillion budget.

 

In 2019, the government proposed to spend 24 per cent (N2.14 trillion) of the N8.9 trillion expenditure on debt service.

 

In mid-September, Mr Buhari sought the approval of the Senate to borrow $4 billion (4,054,476,863) and €710 million loan from bilateral and multilateral organisations to fund the deficit in the 2021 budget.

 

The president said the loan request is an addendum to the 2018-2020 borrowing plan and that the new borrowing is to meet "emerging needs" for some "critical projects."

 

In July, the National Assembly had approved Mr Buhari's request to borrow $8.3 billion and €490 million loans contained in the initial 2018-2020 borrowing plan.

 

"Bad Times Ahead"

 

Economic analyst, Tope Fasua, said Nigeria's loan is already unsustainable because it is taking 95 to 97 per cent of revenue generated. "That ratio is not sustainable," he said.

 

The huge amount the Nigerian government is borrowing mostly is "to cater for a lot of failures and they just borrow to keep some activities going," the economist said. "How the loans are going to be paid is not in question for them and that's very unfortunate.

 

"The loan is unsustainable from the perspective of revenue, from the perspective of corruption and value for money and from the perspective of project implementation."

 

"Only 30 per cent value for money is what we get especially on these loans, some of what we are taking are for very frivolous issues," he said.

 

"In my opinion, we should take loans only for projects that have the ability to pay themselves back. If a project is not generating cash flow, it shouldn't be taken.

 

"If we are taking loans for local roads and schools, who is going to pay? These are projects that should be funded from internally generated revenue."

 

He also attributed the currency challenges to Nigeria's debt portfolio.

 

"We have a challenge with the naira presently, and one of the key things that throws your currency off is debt unsustainability.

 

"And mind you, most of the loans we are taking in recent times have not fallen due for payment, what we are doing is only paying the interest. Many of them have moratoriums on interest payments.

 

"These guys have actually booked for us a bad time and a lot of trouble upfront," he said.

 

Samuel Bamidele, Head of Research and Intelligence at Phillips Consulting Limited said although Nigeria's debt remained within the IMF recommended range with respect to GDP, the country faces a challenge when its debt stock is compared to its revenue. He also worried about how the government was using the borrowed funds.

 

"Nigeria's debt stock at 33% of GDP is sustainable at that level, but the issue is more around servicing the debt," he said. "When your debt stock is above 40 per cent, according to the IMF Debt Sustainability Framework (DSF), it means that it's no longer sustainable," Mr Bamidele said.

 

"So you can say that Nigeria's debt profile is sustainable at the current level but the problem is the revenue. Because when your revenue is low you will need more money in terms of borrowing to finance both capital and recurrent projects.

 

"At a point in time in 2020, our debt service was 99 per cent. What this means is that for every N1 earned, we are using 99 kobo to service debt.

 

"Conversation around our debt should be more geared towards how we are channeling the debt we are borrowing in terms of efficiency and proper allocation. The danger here is we are not sufficiently channeling what we are borrowing on productive capacity and infrastructure, instead we borrow to finance more of recurrent spending."-Premium Times.

 

 

Africa: International Community Strikes a Ground-breaking Tax Deal for the Digital Age

Major reform of the international tax system finalised today at the OECD will ensure that Multinational Enterprises (MNEs) will be subject to a minimum 15% tax rate from 2023.

 

The landmark deal, agreed by 136 countries and jurisdictions representing more than 90% of global GDP, will also reallocate more than USD 125 billion of profits from around 100 of the world's largest and most profitable MNEs to countries worldwide, ensuring that these firms pay a fair share of tax wherever they operate and generate profits.

 

Following years of intensive negotiations to bring the international tax system into the 21st century, 136 jurisdictions (out of the 140 members of the OECD/G20 Inclusive Framework on BEPS) joined the Statement on the Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy. It updates and finalises a July political agreement by members of the Inclusive Framework to fundamentally reform international tax rules.

With Estonia, Hungary and Ireland having joined the agreement, it is now supported by all OECD and G20 countries. Four countries - Kenya, Nigeria, Pakistan and Sri Lanka - have not yet joined the agreement.

 

The two-pillar solution will be delivered to the G20 Finance Ministers meeting in Washington D.C. on 13 October, then to the G20 Leaders Summit in Rome at the end of the month.

 

The global minimum tax agreement does not seek to eliminate tax competition, but puts multilaterally agreed limitations on it, and will see countries collect around USD 150 billion in new revenues annually.

 

Pillar One will ensure a fairer distribution of profits and taxing rights among countries with respect to the largest and most profitable multinational enterprises. It will re-allocate some taxing rights over MNEs from their home countries to the markets where they have business activities and earn profits, regardless of whether firms have a physical presence there.  Specifically, multinational enterprises with global sales above EUR 20 billion and profitability above 10% - that can be considered as the winners of globalisation - will be covered by the new rules, with 25% of profit above the 10% threshold to be reallocated to market jurisdictions.

Under Pillar One, taxing rights on more than USD 125 billion of profit are expected to be reallocated to market jurisdictions each year. Developing country revenue gains are expected to be greater than those in more advanced economies, as a proportion of existing revenues.

 

Pillar Two introduces a global minimum corporate tax rate set at 15%.  The new minimum tax rate will apply to companies with revenue above EUR 750 million and is estimated to generate around USD 150 billion in additional global tax revenues annually. Further benefits will also arise from the stabilisation of the international tax system and the increased tax certainty for taxpayers and tax administrations.

"Today's agreement will make our international tax arrangements fairer and work better," said OECD Secretary-General Mathias Cormann. "This is a major victory for effective and balanced multilateralism. It is a far-reaching agreement which ensures our international tax system is fit for purpose in a digitalised and globalised world economy. We must now work swiftly and diligently to ensure the effective implementation of this major reform," Secretary-General Cormann said.

 

Countries are aiming to sign a multilateral convention during 2022, with effective implementation in 2023. The convention is already under development and will be the vehicle for implementation of the newly agreed taxing right under Pillar One, as well as for the standstill and removal provisions in relation to all existing Digital Service Taxes and other similar relevant unilateral measures. This will bring more certainty and help ease trade tensions. The OECD will develop model rules for bringing Pillar Two into domestic legislation during 2022, to be effective in 2023.

 

Developing countries, as members of the Inclusive Framework on an equal footing, have played an active role in the negotiations and the Two-Pillar Solution contains a number of features to ensure that the concerns of low-capacity countries are addressed. The OECD will ensure the rules can be effectively and efficiently administered, also offering comprehensive capacity building support to countries which need it.

 

 

Seychelles: Desroches Island Running On 90% Solar Energy, Drawing Praise

Seychelles' Desroches island is consuming 90 percent less fuel thanks to the installation of a 2.5-megawatt solar farm commissioned by the Islands Development Company (IDC).

 

The solar farm on Desroches was inaugurated on Saturday by President Wavel Ramkalwan and chairperson of the IDC board of directors, Patrick Berlouis. The farm is the second-largest solar plant in Seychelles after the one on Ile de Romainville, a man-made island.

 

With tourism being the number one economic driver of the island, followed by agriculture, Desroches is home to a branch of the Four Seasons resorts chain which consumes almost half of the electricity generated by the solar farm.

 

The resort manager, Nick Solomon, said that when the generator was running, the resort "was using around 55,000 litres of diesel per month and with the solar plant we are expecting a reduction of about 90 percent."

"This is a huge change for us. As a company, Four Seasons is very focused on sustainability and to have our resort run almost exclusively off renewable energy is something very exciting for us and something that we are very proud to be a part of," said Solomon.

 

The chief executive of IDC, Glenny Savy, said the 2.5-megawatt solar farm was built by a South African-based distributed renewable energy company, Sustainable Power Solutions (SPS), and equipped with software from Metal, a tech company.

 

"The only money that IDC spent was to build the pillar onto which the PV panels stand, and the building that houses the equipment. We just buy electricity at a cost of $0.19 per kilowatt, as compared to $0.42 when the generators were operating," said Savy.

 

Covering 394 hectares, Desroches is the largest island in the Amirantes group and the closest to the granitic islands, lying 230 kilometres southwest of Victoria. The solar farm on Desroches is the fourth and biggest installation on the outer islands managed by IDC.

The chairperson of the IDC board of directors, Patrick Berlouis, said that one of the company's strategic objectives is to explore and introduce renewable energy projects on the islands in an effort to reduce reliance on fossil fuels and reduce operating costs.

 

"Since 2018, with the installation of the solar farm on Alphonse, we have been pursuing this objective with a passion. Earlier this year in April, we commissioned smaller solar plants on Astove and Farquhar, and today it is the turn of Desroches. We can proudly say that the country and IDC in particular is doing its very best to curtail the use of fossil fuel," said Berlouis.

 

Seychelles' Platte island will be the scene for the next stage of IDC's energy masterplan in which the company will supply the 42-room resort presently under construction. The system will also produce 2.5-megawatt of electricity but interestingly, part of the installation will be on the lagoon.

At the same time, IDC plans to set up smaller systems on the islands of Poivre, Marie-Louise, Desnoeufs, and Remir, while on Coetivy an initial 50-kilowatt modular system will be set up and this will grow as economic activities develop on that island.

 

During the first quarter of 2023, with the opening of the resort on Ile Plate, 98 percent of all power generated on the IDC outer islands will be from the sun.

 

The climate change and energy minister, Flavien Joubert, launched a challenge to other inner and outer private islands to to aim for 100 percent renewable energy.

 

Joubert said that what is important in this equation is financing and IDC has come up with an innovative approach.

 

"IDC has come up with an independent power producer solution that provides competitively priced power without the large upfront financial burden that most people complain about when talking about renewable energy. This is the kind of experience that should be shared with different partners to help them make the very critical decision of embarking on a journey to increase the use of renewable on their island," said Joubert.

 

Joubert said that with a growing population, the demand for electricity and water will increase drastically in Seychelles, an archipelago in the western Indian Ocean.

 

A target of 15.5 percent of energy efficiency and 15 percent renewables by 2030 has been set.

 

"Seychelles is currently producing about 5 percent renewable energy and will need to scale up to an additional 10 percent in this decade to take into account economic growth. Our recent revised National Determined Contributions sets an even more ambitious target of being net-zero by 2050," said Joubert.-News Agency.

 

 


 


 


Invest Wisely!

Bulls n Bears 

 

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INVESTORS DIARY 2021

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

National Unity Day

 

December 22

 


 

Christmas Day

 

December 25

 


 

Boxing Day

 

December 26

 


 

Public Holiday in lieu of Boxing Day falling on a Sunday

 

December 27

 


Companies under Cautionary

 

 

 


 

 

 

 


ART

PPC

 

 


Starafrica

Fidelity

Turnall

 


Medtech

Zimre

Nampak Zimbabwe

 


 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

 


 

 


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