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Explore Mergers, Experts Tell Airlines



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  • Explore Mergers, Experts Tell Airlines

Following the high frequency at which domestic airlines go out of business, experts in the sector have said that the option of mergers and acquisitions may be a lasting solution to the problem.

The Nigerian Civil Aviation Authority recently said that in the last 17 years, the number of registered domestic airlines operating in the country had dropped from 150 to about nine.

The NCAA said most of the operators collapsed because they were unable to meet the stringent regulatory requirements of the industry.

A former Managing Director, Federal Airports Authority of Nigeria, Mr. Richard Aisuebeogun, said a drop from 150 to nine was a colossal failure, adding that domestic airlines should begin to think of mergers as a hedge against economic crisis.

“Domestic airlines should consider mergers and acquisitions, which will enable them to spread risks, sustain their operations, provide better access to the international capital market and provide employment opportunities for the industry,” he said.

Aisuebeogun and other stakeholders, who spoke at an event organised by the Aviation Roundtable in Lagos, also opined that empowering the NCAA to enforce its economic as well safety regulations irrespective of third party agreements of airlines and other service providers, would help domestic airlines to grow.

“It is my opinion that effective financial assessment of the airline industry is dependent on close monitoring, adequacy and effectiveness of economic regulatory framework. Government subventions in the form of bailout funds should be objective and closely monitored by both the lender and industry regulator, the NCAA, in order to ensure that they are effectively and proficiently utilised by the beneficiary airlines,” he said.

According to him, there has been so much focus on flight operation standards and safety issues while little or no attention is paid to economic regulations, which is why airlines are sometimes mismanaged.

A former Director-General of the NCAA, Dr. Harold Demuren, said that for the NCAA to effectively carry out its duties, it must be free from political interference.

He stressed that people that should be in position of authority at the NCAA must be qualified.

Demuren said, “The government should not put people who are not qualified to be there. They should not put people who do not know what they are doing; and we must not get tired of talking to the government; we must let them know what has to be done.

“Any decision taken by the regulator has major effects on the industry; the man who is going to issue certificates for airworthiness, for instance, must be qualified, competent and experienced; he must know what he is doing. The NCAA’s autonomy is possible and stakeholders must fight for it. We must have safety regulations without political interference.”

Demuren said the failure of domestic airlines was due to poor safety and financial regulations, adding that when he was the director-general of the NCAA, the minister tried to influence him into taking certain decisions that could be detrimental to safety but that he refused to be influenced by anyone’s decision.

The Director, Legal Services, Nigerian Airspace Management Agency, Anastasia Gbem, said the NCAA had autonomy not only to make regulations but also not to summit decisions on safety and security to anyone for approval.

An aviation security expert, Capt. John Ojikutu, said the director-general and other top officials of the NCAA were expected to have certain professional qualifications with cognate experience of at least 10 years, adding that ICAO would not bother itself about political appointees but the executive head and the operatives such as inspectors and instructors.

The Managing Director of Aero Consults Limited, Mr. Ade Obadofin, stated that the regulator should place emphasis on safety analysis and evaluation based on data.

“There is a need to go beyond rule making alone; the NCAA should be talking about performance-based regulation,” he said.

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


Dangote Cement Refutes Claim it Sells Cement High in Nigeria



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Dangote Cement Plc has refuted the widely propagated story that the company sells cement at a significantly higher price in Nigeria compared to other African nations like Zambia and Ghana.

The management of the leading manufacturing company said it sells a bag at N2,450 in Obajana and Gboko, and N2,510 in Ibese, the amounts stated include VAT.

Devakumar Edwin, Dangote’s Group Executive Director, Strategy, Portfolio Development & Capital Projects, who spoke with journalists in Lagos, said the company sells for an equivalent of $5.1, including VAT in Nigeria, it sells for $7.2 in Ghana and $5.95 in Zambia ex-factory, inclusive of all taxes.

Devakumar, therefore, described the allegation as false, misleading, and unfounded, and challenged the media to conduct independent investigation into the price of cement in some other African countries, including Cameroun, Ghana, Sierra Leone, Zambia.

To ensure that we meet local demand, we had to suspend exports from our recently commissioned export terminals, thereby foregoing dollar earnings.

“We also had to reactivate our 4.5m ton capacity Gboko Plant which was closed 4 years ago and run it at a higher cost all in a bid to guarantee that we meet demand and keep the price of Cement within control in the country.”

“Over the past 15 months, our production costs have gone up significantly. About 50% of our costs are linked to USD so the cost of critical components like: gas, gypsum, bags, and spare parts; has increased significantly due to devaluation of the Naira and VAT increase.

“Despite this, DCP has not increased ex-factory prices since December 2019 till date while prices of most other building materials have gone up significantly.

“We have only adjusted our transport rates to account for higher costs of diesel, spare parts, tyres, and truck replacement. Still, we charge our customers only N300 – 350 per bag for deliveries within a 1,200km radius.

“We have been responsible enough not to even attempt to cash in on the recent rise in demand to increase prices so far,” Devakumar said.

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Samsung, Vision Care Begin Fresh CSR Activities, Earmark 12,000 Masks for Nigeria



Samsung Heavy Industries Nigeria Limited (SHIN) and Vision Care, an international relief organization dedicated to the prevention of blindness, have launched fresh Corporate Social Responsibility (CSR) initiative to help Nigeria mitigate the impact of COVID-19 pandemic.

Vision Care is a member of the International Agency for the Prevention of Blindness (IAPB), and participant of ‘VISION 2020’, a global initiative of the IAPB and the World Health Organisation (WHO).

Vision Care has since conducted more than 25 Vision Eye Camps yearly and has grown into an international non-profit organisation serving 38 countries throughout Asia, Africa and Central-South America.

Since 2015, SHIN has worked with Vision Care in the yearly Eye Camp as part of its Corporate Social Responsibility (CSR) to provide free cataract surgeries to Nigerians who cannot afford the payment. SHIN has been sponsoring the eye surgeries of Nigerians on a yearly basis.

In 2019, SHIN sponsored the eye surgeries of at least 115 Nigerian patients and 224 outward patients as part of its CSR in Nigeria.

Since it started the programme, SHIN has sponsored the eye surgeries of 572 Nigerian patients, 1,593 outward patients and has also donated glasses to 99 patients.

Due to outbreak of the COVID-19 Pandemic, the yearly Eye Camp for 2021 had been called off to adhere to Federal Government’s measures in response to the virus.

Consequently, SHIN and Vision Care came up with a fresh CSR initiative this year to donate 496 bags of rice (25kg) and 12,000 reusable face masks to three states in the country to fulfill their commitment of contributing to the society.

The items will be delivered later this month.

The three states that will benefit from the donation are Lagos, Kano and Bayelsa states.

Out of the 496 bags of rice, and 12,000 facemasks, Lagos will receive 96 bags of rice and 200 masks.

SHIN also stated that Kano State will receive 200 bags of rice and 5,000 masks, while Bayelsa State will get 200 bags and 5,000 masks.

“This is an additional CSR activity from SHI in addition to SHIN’s donation of 5,000 COVID-19 test kits from Korea. The washable masks that the head office has purchased from Korea are certified to retain its effectiveness against COVID-19 transmission for up to 50 washes,” SHIN said in a statement.

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Senate Summons NICON, AIICO, Others Over N17.4bn Pension Remittances



pension fund

The Senate Public Accounts Committee has summoned the management of the NICON Insurance Plc, AIICO Insurance and other insurance companies over their alleged failure to remit N17.4bn pension fund to the Pension Transitional Arrangement Directorate.

The Senate hinged the summon on the 2016 report of the Auditor-General for the Federation which unraveled the alleged non-remittance of N17.4bn pension fund to PTAD.

Appearing before the panel on Monday, the Executive Secretary of PTAD, Dr Chioma Ejikeme, informed the lawmakers that PTAD took over the assets and liabilities of the defunct pension offices without a formal handing over.

She said, “On taking over, the directorate wrote all underwriters to make returns and remit whatever amount that was in their custody into a CBN dedicated account.

“Some of the underwriters responded to the request while some did not.

“The bank certificate of balances, accounting statements, three years financial statements and policy files requested by the federal auditor were not handed over to PTAD at the time of consolidation.

“It is worthy to note that we discovered that N17.4bn which comprised of cash, securities and properties from the nine insurance underwriters was unremitted as a result of the letter PTAD sent to them.

“These figures represent the claims by the underwriters with regards to their indebtedness.

“In order to ascertain the true position of legacy funds in custody of underwriters, the directorate appointed a consultant in 2018 who carried out forensic audit of nine out the 12 insurance underwriters and produced a final report on the recovery of the legacy funds and assets for PTAD.”

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