24 May

Daily Watch – Foreign airlines have half a billion USD trapped in Nigeria, NEITI indicts NNPC

  • Details from the 2013 audit and financial report of activities in Nigeria’s oil and gas industry which was conducted by NEITI have shown that Nigeria made $58.07 billion from her hydrocarbons industry in that year. The report also showed that the country lost $5.966 billion and N20.4 billion in the sector from the operation of Offshore Processing Agreements by the NNPC; crude oil swap and theft. The NEITI report also showed that the sums of $3.8 billion and N358.3 billion are still outstanding payments which the NNPC and all of its subsidiaries owed the federation.
  • A Bloomberg report claims that Nigeria has suspended discussions with MTN over the record US$3.9billion fine imposed on the mobile operator’s subsidiary there while the House of Representatives investigates the size of the penalty and the way in which it was imposed. The Reps instituted a probe and as a result, further discussions with MTN are on hold until its outcome is made known. The fine has exerted strong downward pressure on MTN’s share price, which has fallen by 43 per cent year-on-year. MTN will hold its annual general meeting of shareholders on Wednesday afternoon, where the interim Executive Chairman, Phuthuma Nhleko, is expected to provide an update of developments not only in Nigeria but across the group, which operates in 22 countries across the Middle East and Africa.
  • IATA has confirmed that $575 million in revenue generated by foreign airlines in the country was trapped in the CBN as at March this year. IATA’s Area Manager, South West Africa, Dr Samson Fatokun, said that foreign airlines have found it increasingly difficult to repatriate their earnings due to the dollar shortage in the country brought on by the low earnings from crude oil sales. Fatokun however explained that IATA had been engaging government through the Ministry of Transportation, CBN and the vice-president’s office. IATA also spoke on the high charges and taxes levied on airlines, saying that African countries have the highest charges and taxes on airlines in the world. Regional Vice-President, Africa and Middle East, Hussein Abbas, said while the continent has the highest charges and taxes in the world, Senegal and Nigeria have the highest taxes on the continent, noting that high taxes discourage passenger patronage and keep travellers away from the airports. Abbas said since crude oil prices crashed, airlines in Africa still buy aviation fuel at very exorbitant rates, adding that IATA and the ICAO had been engaging governments of nation states in the region to reduce such charges and introduce them in a transparent way so that they would reflect the services they provide to the airlines.
  • Renewed funding commitments for Nigeria’s struggling power utilities should help catalyse new capital investments as the sector gradually gets de-risked. The 2013 privatisation of the power sector was constrained by lack of market reflective tariffs in the distribution sector, gas to power challenges exacerbated by vandalism of power assets, circular debt that caused bad liquidity in the sector and an unwillingness to grant bank guarantees or open LCs for the sector due to perceived elevated risks. Analysts say recent funding commitments by the CBN and United Capital from the private sector may help improve investment drive in the sector. Last week, the CBN disbursed N55.45 billion to 24 industry participants, the fourth tranche from the N213 billion of the CBN-NEMSF.
  • A crude oil pipeline belonging to Agip has been set ablaze in Ikienghenbiri, Southern Ijaw LGA of Bayelsa State, following a clash between rival armed groups disputing a surveillance contract. The latest skirmish came after calls by ex-militants in the Niger Delta on reneged militant groups in the region to stop attacks on oil and gas pipelines. Meanwhile, a group of armed youths from Ikienghenbiri have been arrested for blowing up a major oil pipeline line owned by Agip. The armed men, attacked the pipeline in the swamp of Azuzuama-Ikienghenbiri axis of the trunk conveying the crude oil from Tebidaba to Brass terminal.