13 Feb

Daily Watch – Carriers mull the end multiple charges yoke, 7up goes private

  • Nigerian stocks shed 1.5 percent on Monday in late trades to drop to one month low as investors sold off shares from the relatively liquid banking sector. The NSE, hit by a global risk-off sentiment, fell for the sixth straight day to 42,633 points, a level last seen in January. Investors have been closing local positions on concern that rising global inflation would lead to higher interest rates in developed economies and draw capital away from emerging markets. Nigeria’s benchmark index has slipped from its January highs but is still up 12.8 percent so far this year. The index of Nigeria’s top 10 lenders declined 3.78 percent to led the main index lower. FBN Holdings dropped 5 percent, while Fidelity Bank and Guaranty Trust Bank fell more than 4.5 percent each. Top decliners include Eterna Oil 9.67 percent. Equity Assurance and Aiico Insurance were each down more than 8 percent.
  • Local airlines will save as much as ₦11.55 billion in annual revenue if a planned removal of mandatory VAT on all air tickets is passed. This new plan is due to be discussed and considered at the next FEC meeting according to Minister of State for Aviation, Hadi Sirika. Sirika said that a special committee of industry stakeholders set up by the FG to review multiple charges had submitted its report with a proposal for the VAT removal among others proposed in order to align Nigeria’s aviation industry with its global counterparts. Observers say the policy review will spare local carriers groaning under the pressure of paying multiple charges. NCAA figures show that local carriers transported at least 7.7 million passengers in 2017. Nigeria’s air regulation charges are so numerous that one expert surmised that airlines actually earn less than ₦10,000 out of an average ticket fare of ₦30,000.
  • Container terminal operators in Nigeria waived ₦1.5 billion in charges on 500 containers carrying power equipment belonging to the Transmission Company of Nigeria. According to a statement issued by the operators’ umbrella body, the Seaport Terminal Operators Association of Nigeria, the container terminal operators waived the amount on the long held TCN containers in support of the FG’s effort to ensure steady power supply in the country. In April 2016, the Office of the Vice President set up a committee comprising of the ministers of Finance, Transport, Power, Works and Housing along with the Comptroller-General of the Nigeria Customs Service to look into the issue of stranded power equipment containers in Nigerian ports. “We agreed at the meeting to a 50 percent storage waiver ending April 30th, 2016 for the power projects while the shipping lines agreed to a 75 percent waiver on demurrage,” the statement read. The FG confirmed in January 2017 that it had taken delivery of the 500 power equipment containers and Power, Works and Housing Minister, Babatunde Fashola said the containers had been deployed to TCN sites.
  • The NSE has approved the voluntary delisting of Seven-Up Bottling Co after it received a takeover bid from its majority shareholder aimed at restructuring the soft drinks bottler. The bourse, which suspended trading in the company’s shares in January, said in a notice that it approved the delisting last week. In January, Seven-Up’s minority shareholders backed a $70 million buyout bid by majority investor Affelka, the investment firm of the Lebanese El-Khalil family. The bottler received the takeover proposal last August after posting losses, in a deal aimed at restructuring the 7-Up, Pepsi and Mirinda distributor. Seven-Up Bottling last traded at ₦101.97 per share, valuing the company at ₦65.32 billion ($214 million). The Seven-Up Bottling takeover comes six years after its main rival Coca-Cola delisted its local bottling unit in a $136 million buyout deal to expand the business and fend off competition.