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
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.
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.
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.
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.
Changes in the air: Intricate skills of aircraft development
Here’s how the typical story-line of technology goes: something new is invented, then it becomes old and we replace it with a more advanced version. But in rare instances, tech is so advanced that we’re not actually prepared to replace it by the time it ages out of fashion, writes WOLE SHADARE.
Well beyond its time
Case in point: the Concorde. It was a plane ahead of its time—quite literally, as a flight from Paris or London to New York was so fast it’d actually land more than two hours before it took off: something that’s only possible today if you cross the International Date Line.
The supersonic jet was supposed to usher in a new age of transportation, but just 27 years after its inaugural commercial flight the futuristic aircraft retired with no successor—16 years ago today, in fact—and supersonic passenger travel ceased to exist.
Bringing cities closer
Gone were the days when a trip from Amsterdam to Lagos took 52 hours in propeller powered airplanes. The development of aircraft from propeller aircraft to jet engine airplanes has drastically cut down travel time between two cities considerably.
In those early stages of development of aircraft and by extension the aviation industry, aircraft makers at that time concentrated efforts on aircraft engines that were less advanced but efficient enough to travel long distances in days.
But advancement in technology has made continents, cities far closer than they would have been. Tribute must be paid to the Wright brothers – Orville and Wilbur –two American aviation pioneers generally credited with inventing, building, and flying the world’s first successful airplane.
The Wrights appear to be the first to make serious studied attempts to simultaneously solve the power and control problems.
Both problems proved difficult, but they never lost interest. They solved the control problem by inventing wing warping for roll control, combined with simultaneous yaw control with a steerable rear rudder. Almost as an afterthought, they designed and built a low-powered internal combustion engine.
1929 also saw the first flight of by far the largest plane ever built until then: the Dornier Do X with a wing span of 48 m. On its 70th test flight on October 21 there were 169 people on board, a record that was not broken for 20 years.
Rise of commercial aviation
After World War II, commercial aviation grew rapidly, using mostly ex-military aircraft to transport people and cargo. This growth was accelerated by the glut of heavy and super-heavy bomber airframes like the B-29 and Lancaster that could be converted into commercial aircraft.
Digital age (1980–present)
The last quarter of the 20th century saw a change of emphasis. No longer was revolutionary progress made in flight speeds, distances and materials technology. This part of the century instead saw the spreading of the digital revolution both in flight avionics and in aircraft design and manufacturing techniques.
The 21st century aviation has seen increasing interest in fuel savings and fuel diversification, as well as low cost airlines and facilities. Additionally, much of the developing world that did not have good access to air transport has been steadily adding aircraft and facilities, though severe congestion remains a problem in many up and coming nations. 20,000 city pairs are served by commercial aviation, up from less than 10,000 as recently as 1996.
End of an era
The first real experiment at considerably cutting travel time was the experiment with Concorde aircraft that was rested few years ago. Although Concorde finished lifespan but it is known as the most impressively beautiful and graceful airliner ever to fly.
Concorde was once the last word in luxury flight and still holds the record for the fastest crossing of the Atlantic by a commercial aircraft.
In 1976, the Concorde symbolized the future. Built by the French Aérospatiale and the British Aircraft Corporation (BAC), even its name was meant to symbolize the coming together of two ancient foes.
Concorde used to reach to 60,000 ft, a height of over 11 miles. So passengers were able to see curvature of the Earth. Due to the intense heat of the airframe, an aircraft used to stretch anywhere from 6 to 10 inches during flight. Every surface, even the windows, was warm to the touch by the end of the flight.
Air France and British Airways blamed low passenger numbers and rising maintenance costs.
Passenger numbers fell after an Air France Concorde crashed minutes after taking off from Paris in July 2000, killing all 109 people on board and four on the ground.
The plane ran over a piece of metal on the runway, bursting a tyre which caused the fuel tank to ignite as it was taking off.
The 9/11 attacks in 2001 also had a severe impact on the number of people choosing to fly.
The operators also blamed rising maintenance costs. Although advanced when it was launched, 30 years on the planes were outdated and expensive to run.
The end of supersonic jet saw to the dominance of the aircraft market by two aircraft giants, Boeing and Airbus. The rivalry between the two plane makers has led to advancement in technology for their customers and travellers alike.
The global commercial aircraft market is dominated by two manufacturers -European conglomerate Airbus and Seattle-based aerospace giant Boeing. Their drive to secure market share is affecting everything from which aircraft you are on, to what routes you can choose from and how many passengers you share the cabin with.
The rivalry between the two is shaping not just their own future but the air travel industry itself, driving innovative aircraft design, new buying patterns among airlines and expanded route maps that offer travellers more choice, flexibility and convenience.
Boeing and Airbus each control around half of the global aircraft market, and analysts anticipate the booming travel industry needing as many as 39,000 new planes over the next 20 years. With a value of over $6 trillion over two decades, even small differences in market share add up to big business, so it is no wonder competition is so fierce.
An important outcome of this intense rivalry has been the competition for more fuel efficient, cost-effective aircraft. Rising prices mean the cost of fuel now makes up almost half of the operating costs of airlines, so small improvements in fuel efficiency can yield huge benefits to carriers. One reason superjumbos are less popular is that alternative narrow-body or smaller wide-body craft are so much more efficient than they used to be.
Boeing’s latest version of the 787 consumes 40% less fuel per traveller carried than its equivalent aircraft did in the 1970s11. That means those smaller aircraft can fly for longer without having to stop and refuel at intermediate destinations, enabling airlines to deploy them on services that would have needed a 747 or A380 before.
More frequent services, operated by more adaptable, smaller aircraft became practical and cost effective. This allowed airlines to keep ticket prices low, while giving consumers more flights to the destinations they wanted, giving the more control over their time and their travel.
One driver of this increased efficiency is the new generation of engines powering aircraft. Sustained demand for jet and the need for competitive advantage allowed companies like Pratt & Whitney to develop innovative new approaches to propulsion technology like the ‘geared turbofan’. This engine alone can yield 16% more fuel efficiency, with half the carbon-dioxide emissions and only 25% of the noise pollution of previous models.
MAP: Delta tops list as BEDC rolls out 572,392 meters for four states
BEDC Electricity Plc. (BEDC) has announced a total rollout plan of 572,392 meters within the next two years across its franchise areas covering Edo, Delta, Ondo and Ekiti states under the Meter Asset Provider (MAP) scheme.
The breakdown according to a statement from BEDC, is as follows: Edo, 190,000 meters, Delta; 200,200 meters, Ekiti; 67,452 meters and Ondo; 114740 meters respectively.
Executive Director, Commercial, Mr. Abu Ejoor made this known during Media launches of the MAP scheme held across the coverage areas in Benin, Asaba, Ado-Ekiti and Akure, stressing that in taking off, MAP will initially have up to three months of build up roll out, which will eventually pick up with expected increase in monthly rate, across its franchise areas.
Mr. Ejoor disclosed that in Edo state, BEDC was taking off in two major locations; GRA to Ihama in Benin City and Okpela in Auchi North, adding that customers should cooperate with enumerators going round various locations in Edo and respond promptly to request for completion of enumeration forms.
Speaking on current power reality in Edo state, the Executive Director affirmed that 44 per cent of BEDC’s power allocation of 9 per cent from the national grid comes to Edo state, hinting that average of 86,061MW of electricity is delivered to the state monthly.
He added that about 14 per cent power generated is lost due to poor network infrastructure, saying work was ongoing to improve the network, adding “about 36% of power generated is lost through commercial theft or illegal consumption and non-payment of bills. About 30% of power supplied to households are wasted due to inefficient management of use.”
Mr. Ejoor equally informed journalists that the 132KV breaker of the 15MVA transformer at Okpella Transmission Station has been replaced with the transformer back to service.
Of budget and IOCs’ $62bn oil revenues’ underpayment
The $62 billion (N10.32 trillion) oil revenues allegedly underpaid by the international oil companies (IOCs) to the Federal Government coffers can fund Nigeria’s budget for two years. Adeola Yusuf reports
The relationship between the Federal Government and International Oil Companies (IOCs) operating in the Nigeria’s deep water production space hit a new low last Wednesday. The business tie between the duo was rocked by a fresh bickering over allegation of $62 billion (n10.32 trillion) oil revenues underpayment.
Nigeria, Africa’s biggest crude exporter is cash trapped and it, would not tolerate what it termed a “short-change” from the operators in its oil sector.
Speaking through the Attorney-General and Minister of Justice, Abubakar Malami, the government declared that there is no limit to what it could do in terms of engagement and settlement in pursuit of the $62 billion oil revenues allegedly underpaid by Shell, Chevron, ExxonMobil and two other oil supermajors.
The country is seeking recovery of $62 billion from the oil companies including Total and Eni using a 2018 Supreme Court ruling, which it says enables it to increase its share of income from production-sharing contracts (PSCs).
Though the allegation has since been rebuffed by some of the companies, the money in question is N22.320 trillion if converted to Nigeria currency, and it is, if established, enough to fund the country’s budget for two years, thus, it should be thoroughly followed.
The deal and its controversy `
Stating that Nigeria had been “short-changed” under the law by the companies, Malami said in a telephone interview according to Reuters on Thursday, that the regulations allow the government to revisit revenue-sharing deals on petroleum sales if crude prices exceed $20 a barrel.
The government was pursuing a case for recovery if it was established that the oil companies had under-paid the government, he said.
“Computing the amount that should be credited to the Nigerian government if the law was effectively applied, that translates to around $62 billion against the IOCs (international oil companies),” the Attorney-General said.
He continued; “All options are on the table and there is no limit to what we can do in terms of engagement, in terms of settlement, if the need arises.”
Though Malami declined to name the oil companies involved in the matter, industry and government sources declared, according to Reuters that Royal Dutch Shell, Chevron, Exxon Mobil and Eni, were earlier asked to pay the central government between $2.5 billion and $5 billion each.
A sector with transparency issues
The oil sector, aside from this fresh $62 billion underpayment allegation, has myriads of issues that bother on lack of transparency. Just last Thursday, the Federal Government reconfirmed that Nigeria is yet to know the actual volume of fuel imports and consumption as it inaugurated a team of 89 persons drawn from five key agencies to, among other things, authenticate the actual volume of products imported and consumed in the country.
Minister of Petroleum Resources, Chief Timipre Sylva, who inaugurated the initiative code-named ‘Operation White’ in Abuja, according to a statement, maintained that the team is to also ensure transparency and accountability in the distribution of petroleum products across the country.
Speaking at a brief ceremony held at the NNPC Towers Thursday, Sylva who earlier visited the team’s Command and Control Centre at the NNPC Towers, observed that the initiative was long overdue for the country, even as he charged members of the team to carry out the assignment with commitment, zeal and patriotism.
The tough budget ahead
Nigeria, all things being equal, has outlined N10.729 trillion for its 2020 budget based on expectations of higher oil prices. The has set out to produce no less of 2.18 million barrels of crude oil daily in the entire 365 days of year 2020. The country also expects that the product will not sell below $57 per barrel. All these are contained in the latest document from the National Assembly, a legislative arm that, due to its statutory role, felt that the about 9 trillion earlier proposed by President Muhammadu Buhari for the 2020 budget was not enough. The budget, to the legislators deserved to be jerked and exactly that is what it did.
The legislature penultimate Thursday, October 3, 2019, increased the value of the country’s 2020 budget outline to N10.729 trillion based on expectations of higher oil prices.
The legislature passed a medium-term expenditure framework that increased the anticipated oil price to $57 per barrel from a previous $55 per barrel. That pushed the budget up from N10.002 trillion naira.
The finance minister had previously revised the expected oil price down from $60 per barrel to cushion against supply shocks.
The framework passed on Thursday also pegged oil production at 2.18 million barrels per day (bpd). While Nigeria is currently producing at roughly that level, it had pledged to cut it meet an OPEC cap on crude oil of 1.685 million bpd.
The document is a plan Nigeria uses to prepare its annual budget. The finance minister submits the framework to the legislature, which must then approve it.
President Muhammadu Buhari has presented a finalised budget proposal to the legislature last Tuesday, October 8, 2019, and the move to ensure funding for the budget has begun in earnest.
For Nigeria to realise this target, it must unfailing on daily basis be producing 1.8 million barrels and the oil must sell at $57per barrel or above that benchmark.
Unfortunately for Nigeria, it cannot solely determine oil price. The stability enjoyed by the country in production is also determined by the relative peace in the Nigeria Delta.
Asides this, the Organisation of Petroleum Exporting Countries (OPEC) also helps in determining what volume of crude is profitable to produce and sell to the global market.
The inability of the country to determine all these, rolled into one, will put it under intense pressure on the increase of the revenues for the budget to N10.729 trillion.
With a resolution to the alleged $62 billion (N22. 32 trillion) trapped through underpayment, the country could fund its budget conveniently for two years.
The plan for recovery
In the latest plan, the government argued that the energy companies failed to comply with a 1993 contract-law requirement that the state receive a greater share of revenue when the oil price exceeds $20 per barrel, according to a document collectively prepared by the attorney-general’s office, and the Justice Ministry.
Oil prices rose to more than $100 a barrel in 2014 before a sharp drop that triggered a 2016 recession in Nigeria, leaving the government struggling to fund its budgets.
President Muhammadu Buhari on Tuesday presented a record 10.33 trillion naira ($33.8 billion) budget for 2020 to lawmakers. He has repeatedly rolled out record spending plans but struggled to fund them due to lower oil output and an inability to boost non-oil exports.
Under the production-sharing contract law, companies including Royal Dutch Shell Plc, ExxonMobil Corp., Chevron Corp., Total SA and Eni SpA agreed to fund the exploration and production of deep-offshore oil fields on the basis that they would share profit with the government after recovering their costs.
When the law came into effect 26 years ago, crude was selling for $9.50 per barrel. The oil companies currently take 80per cent of the profit from these deep-offshore fields, while the government receives 20per cent, according to the document. Oil traded at $58.29 a barrel on the London-based ICE Futures Europe Exchange.
Most of Nigeria’s crude is pumped by the five oil companies, which operate joint ventures and partnerships with the state-owned Nigerian National Petroleum Corp.
Representatives of the oil companies met Justice Minister Abubakar Malami Oct. 3 in Abuja, according to two people familiar with the discussions who asked not to be identified because the meeting wasn’t public.
Malami reportedly told them that while no hostility is intended toward investors, the government would ensure that all the country’s laws are respected, the people said.
Oil companies including Shell have gone to the Federal High Court to challenge the government’s claim that they owe the state any money, arguing that the Supreme Court ruling doesn’t allow the government to collect arrears. They also contend that because the companies weren’t party to the 2018 case, they shouldn’t be subject to the ruling.
“We do not agree with the legal basis for the claim that we owe outstanding revenues,” Bloomberg quoted Shell’s Nigerian unit to have said in an emailed response to questions.
IOC’s reactions and legal foundation
Chevron spokesman Ray Fohr said the company doesn’t comment on matters before the court. Its units in Nigeria “comply with all applicable laws and regulations,” he said by email.
Exxon and Total declined to comment, while Eni officials didn’t immediately respond to requests for comment.
The Supreme Court ruling followed a lawsuit by states in Nigeria’s oil-producing region seeking interpretation of the nation’s production-sharing law. The states argued that they weren’t receiving their full due. The court ruled in their favor and asked the attorney general and justice minister to take steps to recover the outstanding revenue.
The 1993 law required that its provisions be reviewed after 15 years and subsequently every five years. The attorney-general’s office insists that the provision for a higher share of revenue doesn’t require legislative action to take effect, according to the document.
“Instead it imposes a duty on the oil companies and contracting parties, being NNPC, to by themselves review the sharing formula,” the ministry said.
The government is expected to have done its home work very well before coming up with the allegation. The $62 billion translating to N22.32 trillion in contention is a lot of money, and it should be meticulously followed and recovered.
The IOCs, on the other hand, should put up a good defense to clear the air on the allegation and they have a lot of stakes in ensuring that transparency and accountability are enshrined in the country’s oil industry.
Ikeja Electric deepens bilateral power deals, investments
Ikeja Electric (IE) at the weekend deepened the bilateral power supply deals and investments in its franchise areas as it inked a 20 hours daily supply contract with firms and residents in Government Reserve Area (GRA), Ikeja.
Managing Director and Chief Executive Officer of the power utility company, Dr. Anthony Youdeowei, who led the company’s delegation at the signing ceremony held at the IE’s corporate headquarters in Lagos, maintained that his company would through the deal deliver “a minimum of 20 hours supply daily” to Ikeja GRA.
This new deal, he said came as a result of the success recorded through a similar deal signed between Ikeja Electric and Residents of Magodo, another high-brow community under its franchise.
“Today, we are signing willing buyer willing seller power purchase agreement with Incorporated Trustees of Ikeja GRA residents Association in line with the company’s Bilateral Power Agreement,” he said.
The power supply, he explained, is a minimum of 20 hours of power supply for residents and businesses at the association in Ikeja GRA includes streets like Oduduwa, Isaac John, Joel Ogunaike, Fani Kayode, among other.
In its previous Power Purchase deal with Magodo Residents, it stated that “with the agreement, IE will provide the residents with electricity supply beyond the existing standards, with guaranteed performance levels. In addition, there will also be access to dedicated Customer Care and Technical teams for prompt resolution of queries and/or technical issues within the estate.”
Also, the Chief Operating Officer, IE, Mrs. Folake Soetan expressed confidence in the success of the trend-setting agreement, which she noted was in line with the Federal Government’s willing seller, willing buyer policy.
Chairman of Ikeja GRA power committee, Barrister Kennedy Anyiam-Osigwe, who expressed satisfaction with the agreement, noted that the GRA Ikeja would play its part of the deal by ensuring prompt bill payment system.
Saying that the negotiation for the agreement lasted for about three years, Anyiam-Osigwe said: “The IkejaGRA is very strategy area and we found out that we are having very poor service. We thought okay, how do we find solution to this. When we tried to see what we can do, we engaged with Ikeja Electric and see how we can have a nearly 24 hours power, and they argued that it may be difficult – it may be challenge to give us 24 hours power but they could give us premium power within 20 – 22 hours daily. We engaged them in so many meetings, negotiations and today we have signed the agreement.”
On wire tapping and sharp practices by electricity customers, he said; “The arrangement we have is that anybody who is found wanting among our members should just be cut off by Ikeja Electric.”
The Power Purchase Agreement suggests residents of the Ikeja GRA will enjoy a steady power supply when compared to non-residents. However, they will have to pay tariffs much higher than is provided for in MYTO. Residents in Magodo who currently enjoy a similar arrangement informed newsmen that they pay higher tariffs but have enjoyed regular power supply and often go days without a power cut.
They also explain that even when the power cuts they get messages from Ikeja Electric explaining why the power was cut and indicating when it will return. We understand Ikeja Electric still relies on the grid to deliver this power as such power cuts will still be expected in the transmission and distribution end.
Housing: Stakeholders seek injection of N500bn into sector
Worried by shortage of affordable homes in the country , concerned stakeholders have called on the Federal Government to inject N500 billion into building 100,000 housing units across Nigeria.
According to them, government should apply the money to build 50,000 units in Lagos, 25,000 units in Port Harcourt, 15,000 units in Abuja and 10,000 housing units in Kano to revamp the economy.
This was coming as a response to the recent United Nations’ (UN) report, which rubbished the acclaimed Federal Government’s progress in the housing sector.
Canvassing big bang injection of N500 billion into the sector, Managing Director, Rock of Ages Investment, Mr. Francis Onwuemele, said the housing units should be completed in 15 months, while mortgage should be created for each.
Apart from the fact that the initiative would yield a minimum of 500,000 new jobs, Onwuemele proposed a mortgage payment of N600,000 per year or N50,000 per month, saying this would yield an inflow of N50 billion monthly.
He said: “This inflow (unlike the error in FESTAC) will be ploughed back monthly and immediately into another tranche of 100,000 housing units.
“In a year, you would have injected same N500 billion into achieving another 100,000 units of homes. By the third year, you would have created 200,000 mortgages and 200,000 mortgagors and easily rake in a monthly inflow of N100 billion or N1.2 trillion yearly with one million jobs created.”
If government adopted the strategy, he said that the multiplier effect by workers would be incredible, adding that the Gross Domestic Products (GDP) would move up rapidly and that crime rates would drop, while kidnapping would disappear.
Co-Founder, A-ZSME, Mr. John-Bede Anthonio, maintained that government must use Bonds with long-term tenure of 30-50 years from both local and international markets for affordable housing production.
He, however, warned that there must be transparency.
“Jakande, in 1980, took World Bank finance to execute all the low cost housing estates in Lagos and now the state government is about to finish the repayment. Prudent spending, not used for buying cars of 5.5 billion,” he said.
Anthonio, a former Managing Director of Lagos State Development and Property Corporation, urged government to put its house in order, decrying closure of border instead of removing subsidy of fuel.
Another housing professional, Okupe Adewunmi, said that if prices of houses were right, there would be effective demand, urging government on the need to help with infrastructure so that people could have better accessibility and productivity.
A report presented in Abuja by UN Special Rapporteur, Ms. Leilani Farha, revealed that the country’s housing sector was in a precarious condition to the extent that government needed to immediately declare a national emergency in the sector.
The report said that the huge government budget for the sector had no commensurate impact on the lives of the population that needed shelter in the country.
Farha, who stated that she completed her 10-day long fact-finding visit to three Nigerian urban cities of Abuja, Lagos and Port Harcourt with utmost shock seeing the realities on ground, also noted that the prevalent inhumane conditions of poor informal settlement amounted to gross human rights violations.
She said: “Nigeria’s housing sector is in a complete crisis. There is no current national housing action plan or strategy. Coordination and communication between federal and state governments seem lacking. Private market housing is unaffordable for most, rental housing is scarce, requires tenant to have one to two year’s rent in advance and there is no rent control or caps.
Poor remuneration, high interest rate, collateral’s bottleneck, unfavourable conditions of loan’s repayment, short-term nature of money and high cost of housing units have been adduced among other factors low-income earners are not benefiting from mortgage.
Lagos’ Chairman of the Nigerian Institute of Town Planners (NITP), Mr. Bisi Adedire, stated that apart from low-income nature of many Nigerians, stringent conditions attached to mortgage loans and collateral’s requirement were hard to comeby by low-come people.
“People cannot meet up with collateral requirement to guarantee their payment. Also the condition of payment is not favorable, couple with interest rate.”
Adedire explained further that high cost of houses was another obstacle, adding that workers in the informal sector were not captured by most mortgage institutions.
According to report from Festus Adebayo-led Abuja Housing Show, a major requirement for getting mortgage loan facility that would enable borrower to own a home was by having a good job with regular income, but that has become a challenge when people’s earning is low.
He said: “At N18,000 per month minimum wage, public sector workers cannot afford mortgage loan. Even with the yet to be implemented new minimum wage of N30,000, this class of people will not still be able to afford mortgage loan.
“Therefore, for many years to come, unless a drastic change occurs, homeownership through mortgage loan, will continue to elude workers who earn the national minimum wage.”
Sustaining the argument, Adebayo said it was based on the term of mortgage’s structure, which required not less than one third or 33.3 per cent of N30,000 per month.
NNPC generates N2.8bn, spends N34.1bn on refineries in two months
The Nigerian National Petroleum Corporation (NNPC) made N2.837 billion revenues on its ailing refineries and expended a whooping N34.094 billion on the same assets in two months.
The Monthly Financial and Operational Reports (MFORs) for the months of June and July released by the Corporation, which showed this, noted that NNPC suffered a whooping N31.256 billion deficits on the three inefficient refineries located in Port Harcourt, Warri and Kaduna.
Although, NNPC had for a long time been suffering deficit on the refineries, the deficit recorded in June was about N5 billion worse than the one suffered in May.
This became worse in July as the Corporation spent N14.661 billion in the three assets, whereas the refineries fetched it a staggering N825 million as revenues.
The May data showed that while NNPC made N5.684 billion on the installation, it expended N18.870 billion on monthly operations of the refineries in May.
Meanwhile, Nigerians have thronged Twitter account of NNPC to query the huge losses recorded by the Corporation on the refineries.
A don, Sunday Kanshio, demanded an immediate end to the losses recorded by NNPC on refineries.
“Just look at the losses from the refineries. Imagine if the refineries were your private companies,” he queried, adding: “What are the components of the losses?”
The Corporation, the MFORs obtained by New Telegraph showed, also suffered a geometric surge of 77 per cent in pipeline vandalism with 106 pipeline ruptures, puncture points recorded in just the month of June.
This also became worse with over 208 pipeline rupture points in July.
Despite this loss, NNPC added that it supplied about 1.7 billion litres of premium motor spirit (PMS) also known as petrol to filling stations nationwide. This, checks by this newspaper showed, translated to about N233 billion expenditure on importation of the product – using the N133.28 per litre ex-depot price.
The Corporation, the report stated, recorded 77 per cent rise in cases of oil pipeline vandalism in its network of pipeline infrastructure across the country in the month under review.
According to the report, 106 pipeline points were breached, representing a geometric surge from the 60 points vandalised in May 2019.
It further explained that the Aba-Enugu axis in the system 2E pipeline corridor accounted for 25 per cent of the total pulverised points, while the Lagos Atlas Cove-Mosimi axis of the system 2B had 23 per cent of the compromised pipeline points.
It noted that the Ibadan-Ilorin leg of the System 2B pipeline accounted for 18 per cent of affected lines, followed by the PHC-Aba section of the system 2E, which was responsible for 13 per cent of the affected pipeline.
Arik Air resumes flights to Owerri
Arik Air says it will resume flight services to the Sam Mbakwe Airport, Owerri, from October 21.
The airline made the announcement in a statement signed by its Chief Executive Officer, Capt. Roy Ilegbodu, on Monday in Lagos.
Ilegbodu said the airline suspended flights to Owerri early in 2019 due to operational exigencies, adding that since then passengers had been yearning for a return of the carrier.
He said re-launch of flights to Owerri was coming on the heels of resumption of services to Warri by the airline on September 6.
“We made a promise to our esteemed customers that we will be returning to the routes that were suspended earlier in the year and our resumption of flights to Warri and now Owerri are a promise kept.
“In the coming weeks, the airline will be returning to more previously suspended destinations as well as opening more routes to cope with passengers’ demands,’’ Ilegbodu added.
Malaysia to cut export duties for crude palm oil in 2020
Malaysia will reduce duties on exports of crude palm oil, its first review since the current tax rate was imposed in 2013, Finance Minister Lim Guan Eng said on Monday.
Under the new tax regime, the export duty rate will be set at 3% when prices are between 2,250 ringgit ($538.54) and 2,400 ringgit per tonne, down from the current duty of 4.5%, reports Reuters.
The export duty rate will go up to 4.5% at the next price tier of 2,401 ringgit to 2,550 ringgit, and rise at 0.5% increments to a maximum of 8% should prices reach over 3,450 ringgit per tonne.
Why safety recommendations should be implemented, by Olateru
Aircraft engineer, Akin Olateru, is Commissioner, Accident Investigation Bureau (AIB). In this interview with WOLE SHADARE, he speaks on the expansion of AIB’s brief to probe rail, road and marine accidents, capacity and air safety. Excerpts
This agency, the Accident Investigation Bureau (AIB), has done so well in terms of accident reports, with timely release of accident reports, unlike what obtained in the past where reports remain on the shelf long after accidents have been investigated?
Since 2017, AIB has released 58 per cent of the total number of releases done since the creation of AIB in 2007. In term of final reports, we have done 58 per cent. The main reason AIB is set up is to investigate accidents and serious incidents and to come up with safety recommendations to prevent future occurrence. If you don’t release those reports in time, you are doing a disservice to the entire industry because there won’t be lessons learnt. How do you prevent the reoccurrence? By the time you are issuing your safety recommendations – may be four or five years – the airline may not even be in operation any more. When I assumed office, I said no report will go beyond 18 months, except in an extremely special case, which we have not had. We are like the back-end of the operations, unlike NCAA that is visible. We influence safety through the backend. Our work is extremely important because we are the only institution that can investigate Nigeria Civil Aviation Authority (NCAA) to see where there are lapses or gaps and to proffer safety recommendations to NCAA on how to do things better.
What have you done to motivate workers to achieve the results so far?
Whatever you think, whatever you feel, all the actions you take in life are majorly influenced by two things – firstly, your beliefs and secondly your values. These two components, in a way, shape our decisions and, in turn, eventually shape our lives. That is life. When I came in in January 2017, AIB was at its lowest ebb. I inherited a disgruntled staff, a poorly funded agency. An agency of government you can say, on mandate in terms of performance, scoring below 35 per cent. Today, I stand tall before you to let you know parts of our achievements since we came into government. I said earlier that there are two major components that shape our lives, that are your values and your beliefs and they influence your decisions in a great deal and they influence everything we do. When I came in, our beliefs and values we had to work on them. On the human elements or human capital, we had a lot to do on that and we did a lot on that and part of the improvements we made in our human capital was training and retraining, changing the mind-set of our investigators. We moved away from our individualistic way of doing things to a group way of doing things, training them to know the effect of good team work. These are some of the key things we concentrated on. In doing that, we needed the assistance and support of great institutions around the world. It makes sense to learn from the best and we approached some nations, institutions at that time. I stand today to tell you the U.S. government has been our greatest ally and greatest supporters through the National Transportation Safety Board (NTSB). They have been in reality and major pillar of support. They have supported us with everything humanly possible through the Managing Director then, Dennis Jones, who had been to Nigeria on several times to train our investigators with his team. The U.S. government, through the Safe Skies programme, supported us immensely. We have other nations who didn’t believe in us. I really sincerely want to thank the U.S. government, especially the NTSB and most especially Mr. Dennis Jones, who is a gift to the world. He has been a major pillar of support. Without them, maybe we won’t be where we are today.
What ground work have you done on the multi-modal system you are proposing?
Going multi-modal means we are going to be investigating not just air accidents, we are going to be investigating rail accidents, we are going to be investigating marine accidents and road accidents. We are joining nations round the world who operate this multi-modal system. Last year, the Federal Executive Council approved our proposal, the new draft bill for AIB, before the Senate went on recess. This Bill is in the Senate and hopefully, before the end of this year, the bill will be passed and that would make Nigeria one of the top nations that does multi-modal. Just two months ago, we reviewed that to take care of all those gaps. How do we prevent future occurrence? When I said training, in the last one year we have sent 30 of our investigators to Cranfield
University to train on multi-modal accident investigation. They are back in Nigeria. We are working closely with the U.S. NTSB. Singapore NTSB is working with us on this. As we speak, we have a relationship with NTSB as some of our investigators go there for on-the-job training, not just read books or sit in the classroom, but to actually be physically present with the U.S. investigators to support us on that. Another thing you have to understand is that we will take on some rail staff from Nigeria Railways the same with maritime and same with road and train them how to investigate accidents properly. Those are the programmes we have in place to ensure we get there. It is not going to happen overnight. It takes time to build institutions. I can confidently say to you that AIB is a world-class institution.
You spoke eloquently about the different MOUs AIB has with some countries. Could you specifically tell us in details what these MOUs tend to achieve? Secondly, on the inter-modal system, it is obviously going to be a wide scope for AIB, it requires a lot of trainings, do you really have the capacity to train these different groups?
I will start with the MOU. I will give you an example of Sao Tome and Principe. The last accident, which occurred in Sao Tome, was ceded to Nigeria to investigate. We investigated that accident and final report was released 12 months after the accident. That gave my investigators some kind of exposure. You need to understand what accident investigation is all about. There are no two accidents that are the same. They may look alike, but if you look critically, you will see that there are some other things you need to learn as you go along. That is one thing strengthening your technical competence. Take France for instance, France wants Nigeria to help the Francophone African countries and their MOU is to look at how they can strengthen AIB, either through training or equipment. Come November, there is training dedicated for our investigators from France to go to France and learn something. Don’t forget, when you talk aviation, France is one of the leading countries in the world. They have majority shares in Airbus and there are many activities in France. There is so much we can learn from France. Take Saudi Arabia for instance, it is just because of the recently concluded Hajj, our agreement would have been signed because we have got clearance from the Ministry of Justice to go ahead and sign the agreement. Saudi Arabia has some expertise that we need and they are happy to come to Nigeria to train our team on that. What they will be coming to train us on is looking beyond the Fight Data Recorder and Cockpit Voice Recorder. We have met and discussed everything on the CVR and FDR. You need to look beyond that and that can help to make your report much better. For the Republic of Benin, what they have signed is to say whenever there is an accident, we should come and help them. They don’t have anything on ground, so they told us if we have training, we should please include them. We have an agreement with Gambia through BAGAIA. Today, we have helped Gambia to set up accident investigation agency through the help of Nigeria. We supported them in writing their regulations, the Act, the whole work. We even helped them with our SOP. They came to Nigeria, they sat with us and we put them through. They went back to Gambia. Today, it has been passed by their parliament. These are the kind of thing we are doing to help them. On the multi-modal, it is a huge scope, but one thing you have to agree with me is that AIB does not charge for the work we do, it is being funded by the Federal Government. All over the world, accident investigation is being funded by government and is not expected to charge for its services. NCAA does. They call it cost recovery, but we don’t charge anything. We expect to be funded, that is the norm. We are like the United Nations kind of operation. The more accidents we have, the more money it costs AIB, because all these investigations cost us money. If you look at the new Act that is currently with the Senate, we have increased our scope to ensure it is widened to accommodate enough room for AIB to be able to function, to be able to support its operations, to be able to train, buy more equipment necessary and to support the whole system as a whole. That is our strategy on that.
I want to look at what your manpower will be when you begin with the multi-modal project? Will you be operating from the airport here?
If you understand our set up, it has four office locations. We are in Lagos, Abuja, Enugu and Kano. You don’t build Rome in one day. This will be a gradual process. We need to first of all utilise the maximum of what we have before we do a proper need assessment, whether we are going to increase our point or we are good at four points, but these are decisions that will be taken in a later stage. I cannot really comment on that now.
You are expanding now and the challenges are going to be enormous. As at today, there is a committee that was set up to find out how your recommendations assist with safety. Are you satisfied with that? The number of deaths on the roads is far more than air. Are you confident that what you will give out in terms of recommendations will be implemented?
I am happy you have been following the trend when a committee was set up to look into the implementation and effectiveness of those safety recommendations that AIB has issued since inception. I was the chairman of that committee and we came up with the final result of 62 per cent of safety recommendations that were implemented. Partially implemented were 18 per cent and the rest were not implemented. You need to understand one thing. Safety recommendations can be issued to an airline. For instance, there was a helicopter crash; the first safety recommendation issued to that company was a Bell Helicopter. Unfortunately, the company went burst, even before the safety recommendations came out. Some safety recommendations may not be implemented because of cost. For us and NCAA, I have had a meeting with the Director General of NCAA, we have agreed on how to work on MoU basis. We have sent in a proposal and we are waiting for his response because AIB and NCAA need to work together as a team on MoU that will guide our relationship. For clarity sake, I have read some things in the newspapers when somebody said NCAA doesn’t have to implement AIB’s recommendations. It is either the person doesn’t understand aviation or how things work from AIB’s perspective or just trying to be mischievous. I will tell you the process. When we are done with our investigation, we send the final draft to NCAA, among other stakeholders, for their review and we give them 60 days to come back to us to tell us why they are not implementable. We don’t just issue safety recommendations for issuing sake. We give the stakeholders opportunity to comment. That is why we call it 60-day window. We are trying to shorten it to 30 days so that our reports can be out on time. You can imagine you completed reports and you have to give 60 days; that is two months just for stakeholders to read, comment and get back to you. You need to trust AIB. We need to build a world class institution so that when we talk you will listen. This is what we have been doing in the last two and half years to make sure that AIB is a credible institution that everybody would listen when it talks. That is very important. It is same all over the world. The US NTSB don’t have it in their regulations that if you don’t comply they will send you to jail. It is not so with also. We are making it easy, we work with you. We give you time to assess our recommendations and discuss with us if you think it is not right. On the road, I will give you an example that there is a crash and the vehicle summersaulted caused by a huge ditch or pot hole on the road and we issue a safety recommendation to FERMA to fix the ditch. We will work with FERMA the same thing we are doing with NCAA. Once that pot hole is fixed, this is how you can prevent all these needless deaths. People die every day on our roads. The problem is that nobody investigated anything, nobody checks anything, nobody says this is what we need to do to prevent future occurrence. We have tanker fire accidents many times; have you read any recommendation on how to prevent it? These are the things we are going to fix. The people that don’t want to comply with it, it’s either they don’t know or they just don’t want to comply.
Foreign airlines lobby govs, others for more flight services
- Domestic carriers fret, bleed
Capital flight could rise to N600bn yearly
t a time Nigerian carriers are shouting themselves hoarse to cut down on multiple designations to foreign airlines, the carriers are clandestinely lobbying the Ministry of Aviation for more flights into the country, New Telegraph has learnt.
Besides, the carriers are lobbying influential people in government and some state governors for help to extend flight operations to many states in Nigeria, a situation that has far more implications for the growth of domestic airlines.
Not a few have lamented that foreign airlines are now designated to multiple routes within Nigeria, but this development threatens the survival of local airlines.
This newspaper gathered from a source close to some European carriers that they, in conjunction with their home countries, are mounting so much pressure to expand their operations in the country; a situation that defeats the Bilateral Air Services Agreement (BASA) Nigeria has with many of the countries.
BASAs are treaties signed between Countries to allow international commercial air transport services between territories.
BASAs promote international air link between countries, which supports and enables movement of persons, cargo, trade and tourism. These agreements provide the framework under which identified airlines from the two countries fly into designated ports in each other’s country.
Nigeria loses over N500 billion in capital flight yearly due to the lopsided air pact the country has with many countries. Nigeria’s carriers do not have the capacity to compete with their foreign counterpart. They are equally not protected by government policy, leaving predator foreign carriers that are having a field day in the country.
There are indications that the ticket sales of foreign airlines out of Nigeria could rise to N600 billion in no distant time, as more foreign airlines have been granted permission to operate to Nigeria, while many are taking away the domestic market from local airlines.
Nigerian airlines have been muscled, as they only make less than two per cent from the huge sales in the country.
For example, Ethiopia Airlines operates in five cities namely Enugu, Kano, Kaduna, Abuja and Lagos. Turkish Airlines operates in four cities: Abuja, Kano, Lagos and Port Harcourt, while Emirates Airlines operates two frequencies daily into Lagos and one to Abuja.
For instance, Turkish Airlines has just started Istanbul to Abuja, Abuja to Port Harcourt, Port Harcourt to Abuja, then Abuja to Istanbul. Lufthansa and Air France are also doing the same, thereby running indigenous airlines out of business.
While Emirates has two frequencies into Lagos and one to Abuja, it has announced plans to introduce a third flight in and out of Lagos to commence very soon, making it three flights daily to Lagos.
Indigenous airlines have the capacity to cover all the domestic routes being operated now by these foreign airlines. The practice in international aviation is for foreign airlines to partner with local airlines to help them distribute their passengers within the domestic routes.
Besides multiple designations, foreign airlines are being encouraged to do multiple frequencies into the country and within the country, a practice not allowed in other countries.
A few days ago, Rivers State Government and Ethiopian Airlines were said to have reached an agreement for the operation of permanent international flights from the Port Harcourt International airport subject to the approval of the relevant federal authorities.
The two parties reached the pact at the headquarters of Ethiopian Airlines in Addis Ababa after a meeting attended by the Group Chief Executive Officer of the airline, Dr Tewolde Gebremariam and other top managers.
Aviation safety consultant, Group Capt. John Ojikutu (Rtd), said Wike’s position is at variance with the position of the National Assembly on the matter.
He stated that while the National Assembly is planning to curtail foreign airlines’ incursion into “our domestic routes and reduce their multiple destinations in Nigeria, the state governors are thinking differently.
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