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Q2 GDP drop fuels calls for fiscal policy reforms

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Q2 GDP drop fuels calls for fiscal policy reforms

Calls for the Federal Government to urgently execute fiscal policy reforms got louder in the last few days following the National Bureau of Statistics’ (NBS) release of second quarter 2019 Gross Domestic Product Report (GDP), which showed a slowdown in growth, writes Tony Chukwunyem

 

G

oing by reactions that have trailed last Tuesday’s release of second quarter 2019 Gross Domestic Product (GDP) data by the National Bureau of Statistics (NBS), it is clear that while many financial analysts had predicted that the country would record sluggish growth, they did not expect the GDP numbers to be so weak.

According to the Q2 ’19 GDP report released by the NBS last Tuesday, Nigeria’s economic growth slowed to an annual rate of 1.94 per cent in the three months to the end of June, the second quarter in a row of decline. That compared with a revised expansion of 2.1per cent in the first quarter.

 

 

Highlights

 

 

The consensus among analysts is that the highlight of the report was the performance of the oil sector, which recorded positive growth while the non-oil sector either slowed or contracted.

 

 

Specifically, the oil sector expanded by 5.15 per cent in Q2’19, after four quarters of negative growth, while the non-oil sector’s growth slumped to 1.6 per cent from 2.5 per cent in Q1’19. 

 

 

Analysts note that the sluggish performance of the non-oil sector was due to slower growth in the agriculture, construction and ICT sectors alongside contraction in manufacturing and trading activities.

 

 

As the Lagos-based firm, Financial Derivates Company Limited (FDC) pointed out in a note last Thursday: “A breakdown of the GDP shows that the fastest growing sectors were mainly in services – oil & gas (5.15 per cent), human health (1.13per cent) and education (0.96per cent). These sectors contribute approximately 12per cent to GDP and employ less than 10per cent of the Nigerian labour force.

 

 

“The decelerating sectors are also interest rate sensitive and employment elastic – agric (1.79per cent) and construction (0.67per cent). This tepid performance was largely due to seasonal factors. Q2 is usually the planting season of most agric commodities, thereby creating scarcity and pushing up prices. The rainy season also commenced in Q2 and slowed construction activities.

 

 

“The sectors with negative growth include – manufacturing (-0.13per cent), trade (-0.25per cent), and real estate (-3.84per cent). These sectors employ more than 30per cent of the labour force,” the firm stated.

 

 

Reactions

 

 

Commenting on the GDP report, the Chief Economist for Africa and the Middle East at Standard Chartered Bank, Razia Khan, was quoted by Bloomberg to have said: “Firmer GDP recovery will require stronger, largely fiscal and reform stimulus. Monetary easing alone is unlikely to be sufficient.”

 

 

In fact, Khan noted that although the latest GDP data shows that the oil sector expanded by 5.15per cent- the quickest pace since the third quarter of 2018- softening oil prices may make this pace of growth unsustainable.

 

 

She said: “The recovery in oil GDP looks promising. However, given softer oil prices in subsequent quarters this pace of growth may not be sustained.”

 

 

Likewise, in their reaction to the GDP data, analysts at Cowry Asset Management Limited stated: “The slower improvement in the non-oil sector indicates that the fiscal authority still needs to rejig its policies as current efforts appear to be less effective – given that the increase in output over the past few years is not commensurate with its average annual expenditure. Hence, market-driven policies are expected to be implemented in order to stimulate the real sector for increased productivity.”

 

 

Also, commenting on the GDP numbers during a business programme on Channels TV, last Wednesday, the Managing Director,  Afrinvest Securities Limited,  Mr.  Ayodeji Ebo, said  that the Q2 GDP report, when compared with Q1 data, indicates that economic growth is decreasing, adding  that the development will  not send a positive signal to foreign investors. He disclosed that in the wake of the Q2 GDP data released by the NBS, Afrinvest had reviewed its GDP forecast for the year down to 2.2 per cent from the initial 2.5 per cent.

 

 

The Afrinvest Securities boss also argued that monetary policy measures alone would not be able to produce the kind of economic growth, the country’s economy urgently needs and that this can only be achieved if the fiscal authorities come up with the appropriated policy reforms.

 

 

Noting that the late submission of the national budget in  recent years has  always adversely impacted the economy, Ebo stressed that for the new leadership of the National Assembly  to be able to fufil its promise of passing the 2020 budget by December, the executive should submit  the appropriation bill  last week at the latest.

 

 

He disagreed with the view in some quarters that the sluggish GDP growth could make the Central Bank of Nigeria (CBN) to cut interest rates. According to him, given that the Apex Bank continues to be concerned about maintaining exchange rate stability, it is not likely that the weak GDP will lead to   monetary policy easing.

 

 

Similarly, analysts at ARM Research stated that while the weak GDP numbers will encourage the CBN to continue with its stance of boosting economic growth, concerns over exchange rate stability will prevent it  from slashing its Monetary Policy Rate (MPR)-the benchmark interest rate.

 

 

The experts stated: “For us, while the growth numbers was not surprising, we believe it would only support CBN’s posture on fuelling economic growth this year. Nonetheless, we see no room for a cut in MPR over the rest of the year buoyed by looming currency concerns. We believe the focus would be on the use of unorthodox methods to spur growth. Regardless, we retain our growth forecast of 2.2% for FY 19 with support from both oil and non-oil sectors.”

 

 

Also, in its reaction to the GDP report, the Lagos-based Financial Derivatives Company (FDC) Limited stated: “The weak Q2 GDP growth indicates that the economy is in need of a fiscal stimulus. This should be the focus of the fiscal team as they formulate the 2020 budget and the medium term policy framework.”

 

 

But the firm added: “The fiscal catalyst, however, needs to be supported by pro-cyclical monetary policy. Although, the 50bps cut in the monetary policy rate (MPR) to 13.5 per cent per annum. In May was expected to induce credit growth and boost output, the Q2 numbers suggest that this measure is inadequate or untimely.”

 

 

Furthermore, it pointed out : “Though weaker than widely expected, the growth is the strongest Q2 GDP expansion since 2015. This year (Q1+Q2), the economy has achieved an average growth of 2.02%. This is 0.28% below the IMF’s forecast of 2.3%. To achieve this growth target, the economy needs to grow by at least 2.6% in H2’19. This calls for the use of proactive policies to boost aggregate investment and stimulate growth.”

 

 

Still expressing optimism about the economy, FDC stated: “The Q2 GDP growth corresponds with the Q2 PMI readings. The readings contracted (49.5 points) in July before recovering to 50.9 in August. If this growth momentum is sustained in September, it suggests that the level of economic activities will improve.”

 

 

Poor Q2 capital importation data

 

 

However, weak Q2 capital importation data released by the NBS late last Thursday may have dampened the optimism the FDC and other such analysts have about the economy’s prospects.

 

 

According to the NBS, the economy recorded a decline of $3.2 billion in investment inflow from $8.48 billion in the first quarter of this year to $5.82 billion in the second quarter.

 

 

The report stated: “The total  value  of  capital  importation  into  Nigeria  stood  at  $5.82 billion  in  the  second  quarter  of  2019. This represents a decrease of 31.41 per cent compared to Q1 2019 and 5.56 per cent increase compared to the second quarter of 2018.”

 

 

It disclosed that the largest amount of capital importation by type was received through portfolio investment, which accounted for 73.76 per cent or  $4.29 billion  of  total  capital  importation. The study added that this was followed by “other investment,” which accounted for 22.41 per cent of $1.3 billion of total capital imported and Foreign Direct Investment (FDI), which accounted for a paltry 3.83 per cent or $222.89 million of total capital imported in the second quarter of this year.

 

 

Although the NBS did not give reasons for the decline in investment inflows, the general belief in financial circles is that delay in appointing and assigning portfolios to cabinet members may have affected investors’ confidence.

 

 

In addition, analysts believe that President Muhammadu Buhari’s decision to appoint mainly experienced politicians and very few technocrats as ministers sent a signal to foreign investors that the president is not disposed to carrying out major fiscal reforms in his second term in office.

 

 

Last line

 

 

Although, the feeling in industry circles, last weekend was that the Federal Government would probably not heed calls to embark on key reforms, analysts believe that as more grim data is released by the NBS in the months ahead, government will eventually realise that unless it acts fast, the economy could soon slip back into recession.

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Aviation

Lagos, Abuja airports get Cat 3 aviation safety tools

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Lagos, Abuja airports get Cat 3 aviation safety tools

…To begin installation soon

Wole Shadare

The Nigerian Airspace Management Agency (NAMA) has taken delivery of some consignments of equipment for category 3 Instrument Landing Systems/Distance Measuring Equipment (ILS/DME) for Lagos and Abuja airports.

The consignments, which were cleared over the weekend from Apapa Wharf, are already at the premises of the agency in Lagos.

Speaking on this development, the Managing Director of NAMA, Capt. Fola Akinkuotu said installation of these landing aids, which will commence soon, is part of the agency’s effort to ensure that aircraft are able to land in adverse weather condition especially during the harmattan.

He also revealed that the second phase of the project, involving the installation of ILS/DME in Kano, Port Harcourt and Katsina airports, will commence as soon as Lagos and Abuja installations are complete, stressing that the choice of these airports was informed by the severe weather conditions prevalent in them.

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Boeing to start paying compensation to families of victims killed in 737 Max crashes

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Boeing to start paying compensation to families of victims killed in 737 Max crashes

Boeing will begin to pay $50 million in financial assistance to the families of more than 300 victims of the two 737 Max crashes, the company announced Monday.

The Boeing Financial Assistance Fund set aside for the victims’ relatives is half of a $100 million pledge “to address family and community needs of those affected by the tragedies,” announced in July.

Boeing said the other half of the fund will support education and economic empowerment in impacted communities.

The money works out to $144,500 to the families of each of the 346 victims of the Lion Air Flight 610 and Ethiopian Airlines Flight 302, which crashed just months apart, according to Reuters.

In July, Boeing hired attorney Kenneth Feinberg and his colleague, Camille Biros, to come up with a formula to determine how the money is allocated amongst the grieving families.

The company’s CEO Dennis Muilenburg said the opening of the fund “is an important step in our efforts to help affected families.”

“The recent 737 MAX tragedies weigh heavily on all of us at Boeing, and we continue to extend our deepest sympathies to the families and loved ones of all those on board,” Muilenburg said in a statement.

‘Vague’ and ‘disingenuous’

But news of the fund has not gone down well with many of the victims’ relatives.

Bob Clifford, who represents dozens of families affected by the March 2019 Ethiopian Airlines crash, told CNN Business earlier this month that the compensation offer from Boeing was “disingenuous” and “vague.”

“Half of the fund for relief is a problem,” he said in a July statement. “Even giving Boeing its due, it missed its mark because they added a new layer of confusion to expedient and efficient relief to these families.”

Clifford added that if Boeing “wanted to give real relief to the families, they should work with the insurance partners of Ethiopian Airlines to expedite payments to the families.”

“Instead, they are now making it harder,” he said.

Michael Stumo, the father Samya Stumo who was killed in the Ethiopian Airlines crash, told Congress in July that Boeing’s initial announcement “seemed like a PR stunt to us.”

“They had never reached out to the families to discuss what the needs of the families are,” he said.

A Boeing spokesperson said in July that people who accept funds will not be required to give up the right to pursue legal action against the company. The spokesperson declined further comment on Boeing’s ongoing lawsuits.

Boeing’s 737 Max jets were grounded worldwide in March after Ethiopian Airlines Flight 302 crashed shortly after takeoff, killing all 157 people on board. It came five months after the crash of Lion Air Flight 610, also a 737 Max, in October 2018. All 189 people on board were killed.

The company is facing multiple lawsuits and federal investigations related to the 737 Max, and it is unclear when the aircraft, which is Boeing’s top-selling plane, will be cleared to fly again.

Speaking to an investors conference earlier this month, Muilenburg said that the 737 Max’s return could come in phases. “I think a phased ungrounding of the airplane amongst regulators from around the world is a possibility,” he said.

Federal Aviation Administration chief Stephen Dickson said Thursday that if other countries weren’t prepared to unground when the FAA is, “it may get to the point where we have to make our own decision.”

The company has expressed hope the plane will be cleared for flight early in the fourth quarter, which begins in October, reports CNN.

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Wema Bank partners UNEP on climate action

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Wema Bank partners UNEP on climate action

Wema Bank Plc has become one of the signatories to the principles for responsible banking, committing to strategically align its business with the Sustainable Development Goals and the Paris Agreement on climate change.

By signing the Principles for Responsible Banking, the bank joins a coalition of 130 banks worldwide, representing over $47 trillion in assets, in committing to taking on a role in helping to achieve a sustainable future.

Taking place at the start of the UN General Assembly, the official launch of the Principles for Responsible Banking marked the beginning of the most significant partnership to date between the global banking industry and the UN.

“The UN Principles for Responsible Banking are a guide for the global banking industry to respond to, drive and benefit from a sustainable development economy. The principles create the accountability that can realise responsibility and the ambition that can drive action.” said UN Secretary-General, Antonio Guterres, at the launch event, attended by the 130 founding signatories and over 45 of their CEOs.

The Principles for Responsible Banking were developed by a core group of 30 founding banks through an innovative global partnership between banks and the UNEP Finance Initiative (UNEP FI).

UNEP FI is the UN-private sector collaboration that includes membership of more than 250 financial institutions around the globe.

According to a statement from Wema Bank management, the bank aims to contribute to an inclusive society founded on human dignity, equality and the sustainable use of natural resources for clients, customers and businesses thrive.

“At Wema Bank, the journey has started with our sustainability vision of developing “Digital Solutions for Societal Impact,” said Ademola Adebise, MD/CEO Wema Bank.

“The landscape is wide, but we believe that with the use of technology and through innovation, daily improvements can be made to the society that we operate in. As a deliberate strategy, we will continue to drive our corporate sustainability initiatives with a focus on reducing our environmental footprint, promoting responsible business practices and creating shared value for our stakeholders.

“Our long-term aspiration is to become a responsible stakeholder in the growing digital economy, with capacity for increased innovation to identify untapped opportunities in the market space and impact positively on the society, environment and business,” he added.

By signing up to the principles, the bank commits to using its products, services and relationships to support and accelerate the fundamental changes in the society to enable shared prosperity for both current and future generations.

“A banking industry that plans for the risks associated with climate change and other environmental challenges can not only drive the transition to low-carbon and climate-resilient economies, it can benefit from it.

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Cocoa exporters lose N117bn to price fluctuation

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Cocoa exporters lose N117bn to price fluctuation

Earnings drop by 43.3%

 

 

 

Despite rise in cocoa export in eight years,  earnings by Nigerian  exporters have dropped by 43.3 per cent from N270 billion ($740million) to N153billion ($419.16million).

It was gathered that fluctuation in the price of the commodity, heavy rain and diseases in the last few  years were largely responsible for the sharp dropped.

Findings by New Telegraph revealed that between 2011 and 2019, exporters lost N117 billion because of unstable price of the beans in the global market.

Some of the beans are being exported through the Lagos Port Complex and Port and Terminal Multi-services Limited (PTML) of Tincan Island Port.

According to the International Cocoa Organisation (ICCO), Nigerian cocoa was commonly exported as powder, raw beans, cocoa cake and  cocoa butter.

It added that Nigeria was one of the top producers of cocoa in the region, after Ivory Coast and Ghana but the latest data provided by the organisation revealed that the price of the beans had  fallen by 28.5 per cent from $2,391.80 per tonne in July to $1,710.88 per tonnes as at September 18, 2019.

There are two cocoa production seasons in the country, October to February, and April to September.

Besides the unstable price,  it was  learnt that  heavy rain, aged trees, delays at port road and black pod and broom diseases had made production fall by 80,000 tonnes or 32.65 per cent from the projected 325,000 tonnes to 245,000 tonnes. 

The organisation noted that unlike Nigeria, cocoa beans at Ivorian ports recorded a total of 437,000 tonnes between April and June, 2019.

It also explained that Ghanaian cocoa output had reached 743,935 tonnes since May, 2019.

Also, ICCO explained that out of the global output of 4.83million tonnes, African countries were projected to export 3.67million tonnes this year.

According to ICCO report in July 2019, Cameroon is expected to produce 250,000 tonnes; Côte d’Ivoire,  2.15million tonnes; Ghana, 900, 000 tonnes and Nigeria, 245, 000 tonnes.

It explained that the demand for the beans had recorded a 3.4 per cent growth to 4.75 million tonnes projected for the current season.

Already, the Cocoa Association of Nigeria (CAN) has expressed fear about the  price,  beans quality and black pod disease.

The association   forecast for the season was 325,000 tonnes at an estimated price of $2,353 per tonne, but the price has gone up $1,710.88 within the last two months.

Expressing fear over the output, the President of CAN, Sayina Riman, explained that farmers would witness black pod and evident in the main crop.

Riman said that the cocoa trees were already at the fruiting stage ahead of the main crop but the weather could affect pod formation.

He stressed that  cocoa trees needed a delicate balance of rainy and dry weather, saying that with little rain they become susceptible to insects or black pod disease.

Riman explained that the association was now waiting for the end of the mid-crop before revising its figures.

He lamented that the farm gate prices declined to around N720,000 ($2,353) per tonne from N850,000 in January.

The president added that prices could recover after the world’s two biggest producers – Ivory Coast and Ghana – agreed last week to impose a price floor of $2,600 per tonne on the chocolate ingredient.

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SEC set for dialogue on commodities trading eco-system

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SEC set for dialogue on commodities trading eco-system

In its efforts to further deepen the capital market and have a vibrant commodities exchange, the Securities and Exchange Commission is set to hold a roundtable on the commodities trading ecosystem. According to the Acting Director General of the SEC, Ms. Mary Uduk, in a statement, the roundtable, which is scheduled to hold on October 3, 2019, in Lagos, is with the theme: ‘Building a strong Commodities Trading Ecosystem for Inclusive Economic Development.’

It is expected to convene industry experts, policy makers and thought leaders to have discussions to further develop the commodities market in Nigeria. Uduk said the objective of the roundtable was to obtain the buy-in of policy makers and agencies of government and to get perspectives of stakeholders towards encouraging investments and get more participation in the commodities market. According to her, “the Capital Market Master Plan did an analysis of where we are and where we want to be as the leading capital market in Africa and one of the areas is the commodities market which is very important, but one of the least developed.

The Nigerian economy is mainly agrarian driven, all states of the federation have exportable quantities of commodities and we have some of the highest grades in the world. “Government wants to diversify to agriculture and so we need to be able to export some of these commodities. If the farmers do very well, the earnings of the country will be boosted” She said. She disclosed that these commodities can be exported, while on the other hand industries can be set up that will employ a large number of our teeming population.

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Keystone Bank, ING, others launch global principles for responsible banking

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Keystone Bank, ING, others launch global principles for responsible banking

Keystone Bank Limited has become one of the founding signatories of the Principles for Responsible Banking, committing to strategically align its business with the Sustainable Development Goals and the Paris Agreement on Climate Change.

By signing the Principles for Responsible Banking, Keystone Bank joins a coalition of 130 banks worldwide, including the global financial institution, ING, representing over $47 trillion in assets, in committing to taking on a crucial role in helping to achieve a sustainable future.

Taking place at the start of the UN General Assembly, the official launch of the Principles for Responsible Banking marked the beginning of the most significant partnership to date between the global banking industry and the UN.

“The UN Principles for Responsible Banking are a guide for the global banking industry to respond to, drive and benefit from a sustainable development economy.

“The Principles create the accountability that can realize responsibility, and the ambition that can drive action,” said UN secretary-general Antonio Guterres at the launch event, attended by the 130 founding signatories and over 45 of their CEOs.

Also speaking, Inger Andersen, Executive Director of the United Nations Environment Programme (UNEP) explained that a banking industry that plans for the risks associated with climate change and other environmental challenges cannot only drive the transition to low-carbon and climate-resilient economies, it can benefit from it.

“When the financial system shifts its capital away from resource-hungry, brown investments to those that back nature as solution, everybody wins in the long-term,” Anderson noted.

Commenting on the development, Executive Director, Keystone Bank Limited, Yemi Odusanya, said Keystone Bank is convinced that only in an inclusive society founded on human dignity, equality and the sustainable use of natural resources can our clients, customers and businesses thrive.

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Power: Incessant grid collapse despite N453bn bill

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Power: Incessant grid collapse despite N453bn bill

Nigeria’s power grid collapse has surged even as electric distribution companies (Discos) received N453 billion as electricity bills from consumers in one year. Adeola Yusuf, in this report, reveals how the power sector is embroiled in mixed grill

 

The number of registered customers of power distribution companies (Discos) has ballooned to 8.699 million, but this is not the news.

The news is that through this effort, Nigerian electricity consumers were made to cough out a whopping N453 billion as bills to 11 Discos between July 2018 and June 2019, despite gross insufficient supply rocking the sector.

This, a document by the Ministry of Power sighted by New Telegraph showed, is a surge of about N47 billion year-on-year when compared to N406 billion paid by consumers from July 2017 to June 2018.

The Discos, which serve as collection agents from customers, have, for the umpteenth time, said that they have been suffering revenue under-recovery.

The statistics

According to the latest data, the number of registered customers has also ballooned to 8,699,271.

The total revenue collected by power distribution companies in the country, for instance, rose to N233.5 billion in the first half of this year. The surge is from N218.4 billion revenue recorded in the same period last year.

The downside

Nothwisthstanding payment of this huge revenue, Nigerians still complain of gross insufficient power supply as manifested in the incessant collapse of the national grid.

The National Electricity Transmission System also known as power grid had, in the last eight months, suffered nine major collapses, which plunged the country into blackout.

The collapse, which were major system failures between January and August 2019, were confirmed by both the Transmission Company of Nigeria (TCN) and the Discos, whose coverage areas were rocked by the blackout.

Going back memory lane

The nation’s power grid, it would be recalled, recorded its eighth total collapse in July, plunging consumers across the country into blackout for some hours.

The government-owned TCN, which manages the grid, blamed electricity distribution companies for most of the system failures.

The grid suffered four total collapses in January and one each in February, April and May, according to the system operator.

The system collapsed, according to TCN, due to high voltage following a massive drop of load by the electricity distribution companies.

‘Milking’ the customers

The Discos’ revenue collection, despite the incessant power supply epilepsy, stood at N118.9 billion in the second quarter, up from N114.6 billion in Q1.

Another data obtained from the Association of National Electricity Distributors (ANED) confirmed the revenue collected as bills from customers.

Discos’ reaction

ANED, the umbrella body for the Discos, said energy received in Q2 dropped to 6,912.8 gigawatt-hours from 6,950.8GWh in Q1, with energy billed being 5,587.5GWh (an equivalent of N180.8bn) and 5,576.8GWh (N176.5bn), respectively.

The Discos’ collection efficiency improved to 66 per cent in Q2 from 65 per cent in Q1.

“The energy received by Discos in Q2 was less than the amount received in Q1 for most of the Discos. Only Abuja Electricity Distribution Company, Ikeja Electric and Kano Electricity Distribution Company received more energy,” the association said in the document.

ANED said: “In a yearly comparison, the revenue collection of all Discos has increased in N47 billion (12 per cent), mostly due to the reduction of the aggregate technical, commercial and collection losses from 50.8 per cent to 46.7 per cent.”

It said that the aggregate technical and commercial losses went down from 23 per cent to 20 per cent and collection efficiency increased from 63 per cent to 66 per cent.

Who collected what?

The Discos collected N453 billion as revenue from July 2018 to June 2019, compared to N406 billion paid by consumers from July 2017 to June 2018, according to the data.

“Nevertheless, some Discos show signs of fatigue in their ATC&C performance improvement in the last months.

“Ikeja Electric has broken a new record in the ATC&C losses with 26.1 per cent in June, reducing 5.5 points in one year,” ANED said.

It said two other Discos, Kano Electricity Distribution Company Plc and Jos Electricity Distribution Plc, reduced the ATC&C losses in the last 12 months by 8.6 points and 11.6 points, respectively.

“For this year, most of the Discos have not been able to beat their last year’s records on collection efficiency,” the association added.

The Discos said the energy sent out by the power generation companies was very inconsistent during Q2, adding, “It dropped from a historical new record on April 3, 2019 of 109,370MWh down to a daily average lower that 90,000MWh.”

In June, the number of registered customers reached 8,699,271, according to the Discos.

ANED said: “During the last two years, the number of customers has grown by almost 1.5 million with an average of almost 60,000 new customers per month.

“However, due to some delays in the MAP implementation on one side, the small capital expenditure allowance and the lack of access to finance, the number of metered customers remains the same, which is the reason why the metering penetration has decreased in almost four points down to 41.5 per cent.”

Last line

The statistics above showed that Nigerians are ready to pay if supply of electricity improves. Meanwhile, the effect of such payment should be made to reflect through improvement in distribution of power.

The Discos, on their parts, should work assiduously with the Meter Assets Providers (MAPs) to nib the crisis of crazy billings in the bud.

On the other hand, the transmission, which remains a weak link, should be made efficient. The incessant collapse of the national grid should be put to an end.

In all these, government needs to discharge proper roles of an intermediary between the Discos and their customers.

A power sector that works well for all stakeholders should be put in place in Nigeria and the best time to do that is now.

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Closing unemployment gap via road construction

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Closing unemployment gap via road construction

With the huge unemployment rate in Nigeria, Federal Government’s new contracts for road projects will go a long way in bridging the gap through various opportunities. Dayo Ayeyemi reports

 

 

Nigeria’s  unemployment figures jumped by nearly  30 per cent in third quarter of 2018  to 16 million, according to the National Bureau of Statistics (NBS).

It was also predicted that almost two million people would be unemployed by the end of the year, and Nigeria  would need to create four million jobs per year to reverse the trend.

The high level of unemployment has created a bloated and unproductive informal sector, replete with millions of underemployed  persons, particularly youths.

To turn the tide in order to promote job opportunities and  full  economic recovery, industry stakeholders have tasked government  to fund more construction projects.

They identified investments in technology and construction  as growth drivers needed to boost the nation’s economy on sustainable basis.

They also stressed the need for government to create enabling business environment and fix the parlous infrastructure for optimal productivity.

They argued that infrastructure financing played critical role in promoting economic growth, improving standard of living, poverty reduction, enhancing productivity and improving competitiveness.

In pursuant to the  Economic Recovery and Growth Plan (ERGP)  of President Mohammadu Buhari’s administration aimed at wealth and job creation, the Federal Government is not living any stone unturned to reverse the huge unemployment rate in the country.

This is evident in the latest road contracts awarded by the central government across the country..

The states are also not left out in the equation as their authorities braced for road development to boost the economy,  businesses and job creations.

Job opportunities 

According to the Minister of Works and Housing, Mr.  Babatunde Fashola,  the latest road contract will create 3,000 direct and indirect employment opportunities in Nigeria

Also, records disclosed  by the ministry showed that through road contract in the last four years, over 79, 000 persons have been employed directly.

These people were engaged by contractors during  road construction,  rehabilitation and maintenance.

The statistics of road projects  from the ministry showed that in 2016, 277 kilometres (km)  of road was constructed, 345km was rehabilitated and 17,749 people were employed in the process.

For 2017, the federal government constructed 488km of roads, rehabilitated 256km  and engaged 31,227 persons. For 2018 till November, 497km of road had been constructed, while 284km was rehabilitated and 30,402 persons employed.

The summary showed work sector had given jobs to 79,378 within the three  year.

The minister said the  expansive infrastructure spending  saw works budget grow from N18.132billion in 2015 to N394billion in 2018.

The outcome is that there is not one state in Nigeria today where the Federal Government is not executing at least one road project and construction workers are engaged on these sites.

Giving details of the latest  projects, Fashola said it got  approval of  N166 billion for construction of 14 roads nationwide

According to him, the Federal Executive Council (FEC) approved the contracts in order to improve the  nation’s transportation infrastructure and restore its road network as a means to create employment and boost the economy..

The completion period for the road  construction/rehabilitation project ranges from 12 months to 48 months, while the  contracts are expected to create 3,000 direct and indirect employment opportunities in the country

Roads listed included the Kotangora-Rijau road in Niger state which would involve the construction of two bridges; Kano-Katsina road, which involves the construction of additional lane from the Airport Roundabout to Dawanau Roundabout in Kano state; Kotangora-Bangi road in Niger state; Outer Marina-Bonny Camp Road and Eko Bridge through Apongbon Bridge with access ramp in Lagos state; Irrua-Edenu-Ibore-Udomi-Uwessan Road in Edo state, slated for rehabilitation; Ilobu – Erinle road in Kwara/Osun states billed for construction; and the  construction of Wudil Bridge to link Gaban Komi with Wudil by-pass along Maiduguri road in Kano state.

Others are Wukari-Ibi road in Taraba state billed for rehabilitation; construction of Baro-Port Gulu Town road in Niger state; Ajingi-Jahun-Kafin Hausa road in Jigawa state slated for rehabilitation; Aba-Owerri road and NNPC Expressway in Abia state; Kaleyeri-Damaturu road in Yobe state; two outstanding sections of Oba-Nnewi-Arondizuogu-Okigwe road in Imo/Anambra states for reconstruction and Yaba-Yangogi road in the Federal Capital Territory.

In Lagos alone,  the metropolis has been turned to a  construction site as Lagos -Ibadan expressway, Apapa-Oshodi- Oworonshoki, Lagos -Ota -Abeokuta, Ikorodu -Shagamu,  including bridges such as Eko Bridge, Third Mainland bridge,  Alaska, Apongbo  and Leventis bridge are receiving attention.

Challenges

Just last week,  the minister blamed some communities for uncompleted projects in the country, disclosing how a demand of N10 billion compensation was made for work to continue on the 2nd Niger Bridge.

The minister said huge demands had led to uncompleted projects across the country.

Besides, Fashola said that budget funding gaps also worked against completion of roads projects in the country in the last four years.

According to him,  his office has not received funds since his reappointment as minister, as there are still paper work processes ongoing.

Experts views

.Even as challenges of the absence of critical infrastructure continue to impact negatively on the cost of doing business, investment  and capital inflow into the country, Acting Director General, Infrastructure Concession Regulatory Commission (ICRC), Mr. Chidi Izuwah, said in a report  recently that the total amount of funds required to provide quality infrastructure in Nigeria over the next six years was about $100 billion.

Izuwah estimated that while about $60 billion would be required for the oil and gas sector; about $20 billion to revamp the power sector; $14 billion for road; and between $8 and $17 billion for rail tracks.

Some other sectors that require huge investments include housing and highways, ports, airports, dams, bridges and tunnels, water and telecommunication.

Partner, West Africa Financial Services and Chief Economist, PwC Nigeria, Dr Andrew Nevin, said unlocking dead capital and investment in real estate was key to growing the economy.

According to him, PwC estimates that Nigeria holds at least $300 billion or as much as $900 billion worth of dead capital in residential real estate and agricultural land alone.

In the last four years, New Telegraph’s survey showed that difficult or abandoned projects like the Second  Niger Bridge, Lagos-Ibadan Expressway and the Bodo-Bonny Bridge have been brought back to life.

Also, sections of Ilorin-Jebba, Sokoto to Jega, Sokoto-Ilela have been completed, while work progress continues nationwide from Jada to Mayo Belwa, Enugu to Port Harcourt, Lagos to Otta, Ikorodu to Shagamu, Benin to Okene, Lokoja to Abuja, Kano to Maiduguri, Abuja – Kaduna, Kano to mention a few.

The intervention on roads, as made clear by the minister, did not stop on interstate highways. It also included 14 Federal Universities, where unattended internal roads are now receiving attention.

The universities include University of Nigeria, Nsukka; Federal University Oye, Ekiti; University of Benin; Federal University, Lafia; Fed University, Otuoke Bayelsa; Bayero University Kano; Federal University of Technology Owerri  (FUTO); University of Maiduguri; Federal University, Lokoja; Federal Polytechnic Bauchi; Federal University, Gashua; Kaduna Polytechnic; Federal College of Education Katsina; and University College Ibadan.

He also stated that even as rehabilitation and reconstruction works were ongoing, maintenance of existing roads and bridges was not left to suffer.

Last line

Government must revisit all abandoned road projects and release funds for  their speedy completion.

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Nigerian oil cargo load suffers overhang over apathy

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Nigerian oil cargo load suffers overhang over apathy

Country tops chart of W’African crude overhang

 

Thirty five Nigerian oil cargo load at the weekend suffered overhang as buyers’ apathy took toll on the country’s grade.

A loading schedule for October crude showed at the weekend continued to weigh on the market, making a large overhang slow to clear.

Around 50 cargoes of October-loading west African, the schedule showed, were still available, with about 35 Nigerian, 10 Angolan and cargoes of Congolese Djeno, Ghanaian TEN and Jubilee.

“For a VLCC to Asia, freight will be $3 a barrel plus another $1 a barrel lost to backwardation – that equates to some $4 a barrel before you consider the differential,” one trader said, illustrating the heavy cost after the major Saudi outage.

Meanwhile, Nigeria also suffered major obstructions and shut-in of over 450,000 barrels of Bonny Light crude grade export as the shutdown and force majeure declared on Nembe Creek Trunkline (NCTL), a major crude exporting pipeline, by Aiteo Group exceeded three days.

NCTL, a 97-kilometre, 150,000 barrels of oil per day recently purchased by Aiteo Group as a part of the related facilities of the prolific oil bloc Oil Mining Lease (OML 29)  from Shell Petroleum Development Company (SPDC).

The installation was shut down and placed under force majeure last week, a spokesman for the operator, Aiteo, said.

Though he declined to give any reason for the shutdown, a source at the company said that the shutdown could not be unconnected to sabotage on the major crude exporting pipeline.

The pipeline is one of two that export Bonny Light, so the terminal is currently loading only from the Trans Niger pipeline, a spokesman for terminal operator, Shell, said.

Export of about 150,000 barrels per day crude oil from the trunkline has been hampered on deaily basis for the past three days that the facility has been shut down, he added.

Less than 24 hours after switching on the Nembe Creek Trunk Line (NCTL), after identified leak points were amended, Aiteo Group had earlier in May announced a fresh closure of the same trunk line as two new compromised spots were discovered  near Awoba Riser Manifold.

NCTL is one of Nigeria’s major oil transportation arteries that evacuate crude from the Niger Delta to the Atlantic coast for export.

With the shutdown, Nigeria loses 150,000 barrels of crude oil per day until it is reopened.

In a reaction to the May closure of  the oil asset, spokesman for Aiteo, Ndiana Matthew, said that the shutdown was consistent with the company’s emergency response procedure, which was  swiftly activated and to limit oil spread on bodies of water; while efforts to identify the cause of incident and repair have been initiated.

“Consequently, all injectors have been advised in accordance with NCTL shutdown procedure to shut-in production into the NCTL immediately. Appropriate Oil Leakage/Spillage Notification Report will follow shortly to DPR/NOSDRA,” Mathew said.

He reiterated the company’s commitment to work closely with her host communities to achieve an amicable relationship.

“Moreover, the Nembe community provides most of the supply, logistics and security contracts going into our local operations.

“Apart from encouraging community participation in this manner, the company has, in addition, continued to provide considerable amenities and services directly to the community in a most beneficial and impactful way.

“Hence, we remain open and are committed to constructive dialogue for the development of both the nation and the community,” he said.

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Egypt Air discounts fares on Business class, codeshares with United

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Egypt Air discounts fares on Business class, codeshares with United

Egypt Air has announced the launch of up to 50 per cent discount on the Business class fares between Cairo and most of the airline’s international destinations.

This is in line with the carrier’s plan to provide the optimum service for the best and competitive fares.

The airline offers premium business class product such as the Super Diamond Full Flat Bed seats on the Boeing Dreamliner B787-9 aircraft and Full Flat Bed on both the Boeing 777-300ER and Airbus A330-300 aircraft.

Furthermore, as a way of identifying with Nigeria’s 59th Independence Anniversary, the airline’s Country Manager in Nigeria, Mr. Muharram Abdulrahman noted that the airline would offer its Nigerian customers 50% percent discount in Business Class for tickets issued between September 30  – October 7, 2019.   

In another development, EgyptAir has announced an extension of its Codeshare with United Airlines in an effort to extend its network in North America.

“Subject to the agreement, EGYPTAIR customers can now book their flights to Boston, San Francesco, Los Angeles and Chicago through Washington starting from September 12th 3122. EGYPTAIR is keen on expanding its network in North America especially after inaugurating the new non-stop service to Washington in June, providing integration for EGYPTAIR network,” said Capt. Ahmed Adel, EGYPTAIR Chairman & CEO.

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