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Nigerian Airlines Spend N50bn Annually on Aircraft Maintenance Overseas

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Airline
  • Nigerian Airlines Spend N50bn Annually on Aircraft Maintenance Overseas

The low value of the naira has increased the cost of overseas aircraft maintenance to over N50 billion annually, Nigerian airline operators have said.

They noted that the cost would have been higher if many of the airlines did not shut down their operations in the last five years. There are relatively fewer operating aircraft as the number of aircraft on maintenance has decreased by about 35 percent.

Senior official and engineer in Aero Contractors, James Ominyi recently told THISDAY that aircraft maintenance on C-check could cost between $600,000 to $1 million and there are other associated costs, including cost of ferrying the aircraft, pilot’s allowances and accommodation and loss of revenues when an aircraft taken overseas stays longer than necessary waiting for slot at the maintenance facility.

“You need to seek the over flight permit of the country. And then, depending on the distance, you have to pay for fuel. But I know it will not be less than $50, 000. You also will have to pay for landing and fueling, which is called technical stop, Ominyi said.

He explained that generally, MROs could charge $600, 000 for C-check, depending on the scope of work, but noted that at the end of the day, the airline may end up paying up to a one million dollars or more because there could be findings that would be beyond what was captured in the agreement in the C-Check and then the airline would have to pay for it.

“When they open the engine and they open the side wall panels they may see cracks that are beyond what is agreed on, which they have to rectify and this will be at extra cost. I have seen a C-Check that had cost up to a million pounds in UK. That is possible because the moment they open up the aircraft, they will see so many things that ought to be done that was not tracked before,” Ominyi explained.

The cost of aircraft maintenance would have reduced by at least 30 percent if Nigeria has maintenance facility in the country, but the crash of the naira has upped the cost of maintenance said the head of flight operations, Air Peace, Captain Victor Egonu.

He noted that while the cost of aircraft maintenance is the same in dollar terms, it costs Nigerian airlines more since the devaluation of the naira because the airlines now have to exchange more naira for the same amount of dollars to pay for maintenance.

Unfortunately the cost of airfares has not increased due to the prevalent economic recession, which has drastically reduced the citizens’ purchasing power.

Egonu admitted that there are three major factors that have led to the death of many Nigerian airlines and these are cost of maintenance, bad management and high cost of aviation fuel.

“Most of the reason why airlines are dying is cost of maintenance because we don’t have Maintenance, Repair and Overhaul (MRO) facility in Nigeria. The decrease in the value of the naira has drastically affected the airlines because the cost of maintenance is still the same, but Nigerian airlines earn less because of the devaluation of the local currency. Airlines also spend more on aviation fuel. Although it is sold in naira but the product is imported so Nigerian airlines pay more for it,” Egonu said.

He noted that the crash of the naira affected all aspects of the economy, adding that investment in the country is very low presently and noted that even if MRO facility is built there is no expertise to manage it because Nigeria does not have aeronautical engineers that would work there.

Egonu urged government to facilitate the training of more Nigerian aeronautical engineers to manage MRO if it is built in the country.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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