- Domestic Airlines Seek $50m Grant From CBN’s Special Forex Window
Domestic airline operators in the country have appealed to the Central Bank of Nigeria (CBN), to allot the local industry at least $50million grant from the foreign exchange (forex) special intervention programme.
The airlines, while commending the take-off of the programme, said domestic operators deserved equally wider forex window like their foreign counterparts, given their more important role in development of the local economy.
Recall that the CBN, following agitations by stakeholders, in October intervened in the inter-bank forex market, granting concession to some sectors, through forward settlement. Besides aviation, raw materials and machineries for manufacturing companies and agricultural chemicals are other beneficiaries.
The CBN’s Special Secondary Market Intervention Sales (SMIS) is, however, a one-off exercise dedicated to the clearance of the backlog of matured forex obligation for airlines, especially the international carriers that have funds stuck in Nigerian.
The Guardian yesterday learnt that the forex bidding processes opened about two weeks ago, with invitation sent to the airlines to place their request. Some airlines, however, could not meet the deadline as the invitation allegedly came without prior notice and closed too soon.
For airlines that made submission, on the basis of naira, they could immediately pool their forex grants expected within 60 days. Chairman of Arik Air, Joseph Arumemi-Ikhide, said considering the need of the local airlines, they deserved more than what they had been given in the short period that the window was opened for bidding.
Arumemi-Ikhide stressed that all activities of the airlines, from maintenance to fuel and other services are denominated in foreign exchange.
He said while the foreign airlines were being given more forex grants on account of their funds stuck in the Nigerian economy, the domestic airlines are more important to the economy since the money remains in the Nigerian system.
According to him, “That is why we are asking for better allocation that should also be a regular programme instead of one-off and the sudden approach. CBN should give us between $40million and $50million to grow the economy.
“Foreign airlines are collecting the money to take back to their country and pay salaries of their people overseas. We are the ones that remain here to benefit the system.
“We also have money stuck everywhere, we are not making noise about it. Arik’s money is in Angola and West African countries, why didn’t the International Air Transport Association (IATA) speak for the repatriation of our funds? It behoves upon us all to support our own and stop favouring foreign airlines against those that are ours,” he said.
The chairman noted that since former President Olusegun Obasanjo, no other administration has been bold enough to support and promote domestic airlines, but often quick to unfairly condemn them as weak.
Executive Vice President of Arik, Chris Ndulue, said while the forex intervention is good for the industry, it should be made available on continuous basis to the beneficiaries.
Chief Executive Officer of Med-View Airlines, Muneer Bankole, had also commended the initiative, with optimism that its implementation would upturn the fortunes of the aviation industry.
Bankole said: “The currency is actually the backbone of airlines, as it is all over the world. It has to be dollar denominated and the situation here has not helped the sector. We have cried out to the government to build an environment and a window in the Central Bank for the airlines to access, for relief. So, it is good that the intervention is coming but has to be properly done to benefit all,” he said.
A Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site
Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site
Two residents from the eastern city of Dhahran, Saudi Arabia, on Sunday said they heard a loud blast, but they are yet to know the cause, according to a Reuters report.
Saudi’s Eastern province is home to the kingdom’s largest crude oil production and export facilities of Saudi Aramco.
A blast in any of the facilities in that region could hurt global oil supplies and bolster oil prices above $70 per barrel in the first half of the year.
One of the residents said the explosion took place around 8:30 pm Saudi time while the other resident claimed the time was around 8:00 pm.
However, Saudi authorities are yet to confirm or respond to the story.
Brent Crude Oil Approaches $70 Per Barrel on Friday
Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension
Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.
Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.
Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.
While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.
According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.
“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”
Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.
“The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.
“I do believe we’re headed for a much healthier supply and demand environment” she said.
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.
OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.
Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”
Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.
Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.
Experts have started predicting $75 a barrel by April.
“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”
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