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Stakeholders Allege Diversion of $100m BASA Fund

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Minister of State for Aviation, Senator Hadi Sirika

There are fears that the Bilateral Air Service Agreement (BASA) fund, which accruals had risen to over $100 million (N38.1 billion) may have been diverted to fund projects outside the aviation sector, aviation industry sources have said.

Investigations revealed that the funds, which are paid by foreign airlines operating into Nigeria, stem from the commercial agreement between Nigeria and host countries of the international carriers may have been depleted without definite projects executed with the funds.

The fund is domiciled with the Central Bank of Nigeria (CBN) but managed by the Nigeria Civil Aviation Authority (NCAA), with the Director General as signatory.

In 2014, the then Ministry of Aviation hinted that Nigeria may abolish commercial agreement, an offshoot of BASA, which defines the amount of money an airline should pay for each passenger, but indications show that this was not carried through.

So while there was a belief that Nigeria was transiting to slot allocation, which is an alternative to commercial agreement, the fund has continued to accrue.

An NCAA source hinted that since the funds were utilised for airport remodeling, which was not completed as planned, the fund has continued to accumulate and may have been diverted to fund projects outside the industry.

Industry observers noted government is in dire need of money to fund landing aids, runway lighting, perimeter fencing of most airports and improve facilities and equipment at the Nigeria College of Aviation Technology (NCAT) Zaria, but the BASA fund, which ought to be used to carry out these projects has been left in CBN.

They also suggested that the money should also be used to complete some of the perishable terminals now government is emphasising on export of agro-allied produce and as it planned to concession four international airports in the country.

The Minister of State for Aviation, Senator Hadi Sirika travelled to Singapore few days ago with top official of the industry to negotiate BASA for effective resumption of flight by Singapore Airlines to Nigeria.

It is the view of industry stakeholders that BASA fund be accounted for and what it is used for clearly stated projects to ensure that the money is not being diverted for personal use by individuals who have access to the funds.

“So much money has accumulated in the BASA fund. The only time the money from there was used was during the airport remodeling project; since them we don’t know what is happening to the fund. Government may have taken money from the fund when some parastatals in the industry failed to remit their 25 percent allocation of their revenue to the federation account and their money was drawn at source, but we are not sure that the money is being utilised now,” said a source.

BASA is a reciprocal agreement between two countries whose airlines ought to fly to both countries but as Nigeria does not have a national carrier, foreign carriers pay government for their frequencies into the country and over time there has been criticisms that Nigeria is being shortchanged because while other airlines fly to Nigeria, most of those destinations are not being reciprocated by Nigerian carriers, which fly to few international routes.

“These international airlines pay us a lot of money. Recently Air France paid us $8million and Emirates pays us a lot of money; the same with other foreign airlines but no one is talking about the fund,” industry source told THISDAY.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Energy

Unlocking Investments into Africa’s Renewable Energy Market

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green energy - Investors King

The African Energy Guarantee Facility (AEGF) is launching a virtual roadshow of free webinars allowing a deeper understanding of risk issues for renewable energy projects on the continent, and conversations around risk mitigation solutions. The first webinar will take place on Thursday, 23 September from 14:30-16:00 hrs. EAT. 

The session will be oriented on how to get more energy projects from the drawing board to the grid. While the energy demand in African economies is expected to nearly double by 2040, and although the potential for renewable energy is 1,000 times larger than the demand, only 2GW out of almost 180GW of this new renewable power were added on the African continent.

Clearly not good enough! To improve the situation within the next two decades, new solutions need to be implemented urgently. De-risking and promoting private sector investments will play a crucial part of it.

In this 90-min interactive session, AEGF partners: the European Investment Bank (EIB), KfW Development Bank, Munich Re and the African Trade Insurance Agency (ATI) will share their experience and provide valuable insights on how they were able to come together and design practical solutions for investors and financiers of green energy projects in Africa aligned with SDG7 objectives.

Across Africa, the complexity of renewable energy projects and their long tenors hold back crucial energy investment. Tailored to the specific needs and risk profiles of sustain­able energy projects, AEGF will tackle the investment challenge by providing underwriting expertise and capacity tailored to market needs.

The AEGF will significantly boost private investment in sustainable energy projects, both expanding access to clean energy and contribute to achieving UN Sustainable Development Goals. The scheme supports new private sector investment in eligible renewable energy, energy efficiency and energy access projects in sub-Saharan Africa.

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Energy

Shell Signs Agreement To Sell Permian Interest For $9.5B to ConocoPhillips

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Shell profit drops 44 percent

Shell Enterprises LLC, a subsidiary of Royal Dutch Shell plc, has reached an agreement for the sale of its Permian business to ConocoPhillips, a leading shales developer in the basin, for $9.5 billion in cash. The transaction will transfer all of Shell’s interest in the Permian to ConocoPhillips, subject to regulatory approvals.

“After reviewing multiple strategies and portfolio options for our Permian assets, this transaction with ConocoPhillips emerged as a very compelling value proposition,” said Wael Sawan, Upstream Director. “This decision once again reflects our focus on value over volumes as well as disciplined stewardship of capital. This transaction, made possible by the Permian team’s outstanding operational performance, provides excellent value to our shareholders through accelerating cash delivery and additional distributions.”

Shell’s Upstream business plays a critical role in the Powering Progress strategy through a more focused, competitive and resilient portfolio that provides the energy the world needs today whilst funding shareholder distributions as well as the energy transition.

The cash proceeds from this transaction will be used to fund $7 billion in additional shareholder distributions after closing, with the remainder used for further strengthening of the balance sheet. These distributions will be in addition to our shareholder distributions in the range of 20-30 percent of cash flow from operations. The effective date of the transaction is July 1, 2021 with closing expected in Q4 2021.

Shell has been providing energy to U.S. customers for more than 100 years and plans to remain an energy leader in the country for decades to come.

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Crude Oil

Oil Gains 1 Percent on Possible Tight Supply 

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Oil prices - Investors King

Oil prices rose on Tuesday as analysts pointed to signs of U.S. supply tightness, ending days of losses as global markets remain haunted by the potential impact on China’s economy of a crisis at heavily indebted property group China Evergrande.

Brent crude gained 95 cents or 1.3% to $74.87 a barrel by 0645 GMT, having fallen by almost 2% on Monday. The contract for West Texas Intermediate (WTI) , which expires later on Tuesday, was up 91 cents or 1.3% at $71.20 after dropping 2.3% in the previous session.

Global utilities are switching to fuel oil due to rising gas and coal prices, and lingering outages from the Gulf of Mexico after Hurricane Ada that imply less supply is available, ANZ analysts said.

“While slowing Chinese economic growth and uncertainty around the (U.S.) Fed’s tapering timetable weighed on market sentiment, other developments still point to higher oil prices,” ANZ Research said in a note.

Still, investors across financial assets have been rocked by the fallout from heavily indebted Evergrande (3333.HK) and the threat of a wider market shakeout in the longer term.

“Evergrande’s woes are threatening the outlook for the world’s second-largest economy and making some investors question China’s growth outlook and whether it is safe to invest there,” said Edward Moya, senior market analyst at OANDA.

While that view of the state of China’s economy is weighing on markets, the U.S. Federal Reserve is also expected to start tightening monetary policy – likely to make investors warier of riskier assets such as oil.

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