Connect with us

Business

Nigeria’s Aviation Sector Hits Turbulence

Published

on

Arik Airplane
  • Nigeria’s Aviation Sector Hits Turbulence

Nigeria may consider itself a regional aviation hub but years of mismanagement and now recession have blighted domestic airline operations, making delays and cancellations the norm.

Industry experts say the sector needs a fundamental overhaul, pointing to opaque management practices, rampant corruption and risks for passengers from security and dilapidated infrastructure.

Arik Air, which has a 60 percent share of domestic flights and is the country’s biggest private carrier, has found itself increasingly in the firing line of disgruntled passengers.

Earlier this month, irate passengers beat up one of its executives at Lagos international airport after the third consecutive cancellation of their flight to Johannesburg.

In December, Arik operations were grounded by a 24-hour strike by employees demanding the payment of seven months arrears in salary.

There was no response from Arik when asked to comment on the situation by AFP.

Other domestic operators are struggling. Aero Contractors, the second biggest carrier, stopped services for four months at the end of last year because of “serious financial difficulties”.

For John Ojikutu, an aviation security consultant, most Nigerian airlines run their businesses like a grocery store.

“They just want to make profit,” he told AFP.

The result is airlines in Nigeria generally have a short life span: in 35 years more than 40 operators have gone bust, including Nigeria Airways, which collapsed in 2003.

– Dollar shortage –

Ojikutu said the airlines are heavily in debt and “taking advantage” of the country.

“People are… operating without paying the fuel marketers, without paying their staff, without paying for the services they’re given (insurance, maintenance),” he said.

“If they are not making profit, the question is what do they really do with all this money?… They are selling tickets every day.

“As long as we don’t have a strong, credible, independent regulatory agency we cannot have a viable aviation industry in this country.”

In their defence, the airlines blame a lack of foreign currency that has left them unable to pay fuel suppliers or, in some cases, landing charges at airports outside Nigeria.

Nigeria is one of Africa’s main oil producers but is forced to export crude and import petroleum products because of a lack of domestic refining capacity.

The fall in the price of crude on international markets has seen the naira currency lose value against the dollar and Nigerian banks no longer have enough liquidity.

Foreign airlines such as United and Iberia have stopped flights to Nigeria because of difficulties in repatriating profits in dollars.

In September last year, members of the House of Representatives asked the government to declare a state of emergency in the aviation sector, saying 160,000 jobs were at risk.

Lawmakers also called for an investigation into the alleged misappropriation of 120 billion naira (357 million euros) of public funds in 2012 meant to modernise the sector.

– Airport closure –

Two years ago, the Nigerian state got on the board of several airlines, including Arik and Aero, through its Asset Management Corporation of Nigeria.

But according to Ojikutu, no serious audit has been carried out to evaluate the real financial situation of the companies.

“Funders and banks may have been too lenient in granting credit to Nigerian airlines for excessive expansion on the basis that somehow government (or AMCON) will step in to protect banks from failing due to non-performing loans to airlines,” added Joachim Vermooten, an expert in transport economics at the University Johannesburg.

Another major challenge is upgrading ageing infrastructure which cannot handle the millions of passengers who now travel every day through Nigerian airports.

From early March for example, the airport in Abuja will close for six weeks for major resurfacing work on the only runway serving the federal capital.

The runway, which was built in 1982 with a life span of 20 years, is now “completely gone” and “unsafe for operation”, according to the aviation minister Hadi Sirika.

“The entire structure of the runway has failed,” he has said.

Passengers for Abuja will have to land at Kaduna, some 200 kilometres to the north, and transit to the capital by bus on a road known for frequent kidnappings.

The airport closure is the talk of Abuja, underlining not just Nigeria’s reliance on air transport but the lack of a viable alternative.

AFP

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.

Business

Aliko Dangote Remains Africa’s Richest Man With $12.1 Billion Net Worth -Forbes

Published

on

Aliko Dangote Remains Africa’s Richest Man With $12.1 Billion Net Worth -Forbes

Nigerian industrialist, Aliko Dangote, is Africa’s richest person for the tenth year in a row.

In the Forbes Africa latest billionaires list, Dangote’s total net worth stood at $12.1 billion, a $2 billion increment when compared to last year. Thanks to the 30 percent increase in the price of Dangote Cement share.

Nassef Sawiris of Egypt followed Dangote with $8.5 billion net worth with the majority of his investments coming from construction and other investments.

In third place was Nicky Oppenheimer of South Africa with an $8 billion total net worth.

Mike Adenuga and Abdulsamad Rabio, the two Nigerians, came fifth and sixth with $6.3 billion and $5.5 billion net worth, respectively.Forbes Africa's billionaires list

Continue Reading

Business

Portland Paints, Chemical and Allied Products Plc Agreed to Merge

Published

on

Portland Paints

Portland Paints, Chemical and Allied Products Plc Agreed to Merge

Portland Paints and Products Nigeria Plc and Chemical and Allied Products Plc have agreed to merge, according to the latest statement from both companies.

In a statement released through the Nigerian Stock Exchange, the Board of Directors of CAP said we are “pleased to inform you that following discussions and negotiations, the Boards of CAP and Portland Paints have reached an agreement to undertake a merger between both entities (the “Merger” or the “Proposed Merger”).

Accordingly, we “hereby present to you the terms and benefits of the Proposed Merger for your consideration and seek your support and approval to effect the Proposed Merger.

“The Proposed Merger presents a compelling opportunity to create significant value for shareholders of CAP and achieve the company’s strategic growth objectives as a larger company with a broader product portfolio, more corporate owned brands and diversified revenues.

“The resultant entity is also expected to benefit from enhanced distribution capabilities in addition to economies of scale and operational efficiencies.”

Continue Reading

Business

Tony Elumelu Acquires Shell, Total, ENI Stakes in OML 17

Published

on

Shell

Tony Elumelu Acquires Shell, Total, ENI Stakes in OML 17

Tony Elumelu owned Heir Holdings Limited and its related company Transnational Corporation of Nigeria Plc on Friday announced it has completed the purchase of 45 percent stake in Oil Mining Lease (OML 17) through TNOG Oil and Gas Limited.

The acquisition includes all assets of Shell Petroleum Development Company of Nigeria Limited (30 Percent), Total E&P Nigeria Ltd (10 percent) and ENI (five percent) — in the lease.

It was further stated that TNOG Oil and Gas Limited will also have the sole right to operate OML 17.

The field presently has a production capacity of 27,000 barrels per day. Also, there are estimated 2P reserves (proven and probable) of 1.2 billion barrels and an additional one billion barrels in possible reserves — all of oil equivalent.

A consortium of global and regional banks and investors provided a financing component of $1.1 billion for the largest oil and gas financing in Africa in over a decade.

In a statement released on Friday, Shell said the completion was after all the necessary approvals have were received from authorities.

“A total of $453m was paid at completion with the balance to be paid over an agreed period. SPDC will retain its interest in the Port Harcourt Industrial and Residential Areas, which fall within the lease area,” the SPDC said.

Speaking after the completion of the deal, Elumelu said “We have a very clear vision: creating Africa’s first integrated energy multinational, a global quality business, uniquely focused on Africa and Africa’s energy needs. The acquisition of such a high-quality asset, with significant potential for further growth, is a strong statement of our confidence in Nigeria, the Nigerian oil and gas sector and a tribute to the extremely high-quality management team that we have assembled.

“As a Nigerian, and more particularly an indigene of the Niger Delta region, I understand well our responsibilities that come with stewardship of the asset, our engagement with communities and the strategic importance of the oil and gas sector in Nigeria. We see significant benefits from integrating our production, with our ability to power Nigeria, through Transcorp, and deliver value across the energy value chain.

“I would like to thank Shell, Total and ENI, for the professionalism of the process, the Federal Government of Nigeria, the Ministry of Petroleum Resources, and the NNPC for the confidence they have placed in us.”

Tony Elumelu is the Chairman of Heirs Holdings Limited, Transcorp and United Bank for Africa Plc.

Also, read Transcorp Plc Acquires FGN’s 100% Equity in Afam Power for N105 Billion

Continue Reading

Trending