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Creating Conducive Environment to Attract Foreign Investment

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  • Creating Conducive Environment to Attract Foreign Investment

International investors eye the African market, which is described as new frontier for economic development.

This has attracted global companies to invest in the aviation sector of some African countries.

But Nigeria despite its vigorous campaign for foreign direct investment and huge opportunities as the most populous country in the continent, has been unable to attract foreign investors in its aviation sector.

The only interest shown in the sector by foreign institution was the loan given to the country by the Chinese Exim Bank for the development of four terminals in major four airports in the country with a proviso that those facilities must be built by Chinese company.

But elsewhere, foreign investors commit funds and technical expertise to development of airport facilities.
For example, the Blaise Diagne International Airport, Dakar, which is one of the biggest airports in Africa, was completed and is being managed by SUMMA Airports.

The Turkish company believes that Africa’s aviation sector growth would exceed global average in the near future, so the time to invest in the sector is now.

A director in the company, Yildirim Ören said the company is now building several airports in Africa.
“The aviation sector in Africa is booming and has very good light for the future and we are very much excited about this.”

“We are also excited to commit these investments in African countries because we believe in the growth of the sector. We will do our best to support the aviation sector in Africa and we will continue in this business,” he said.

In addition to operating the airport in Dakar, SUMMA is constructing airports in Niamey Airport in Niger and Khartoum Airport in Sudan, all under Build Operate and Transfer (BOT) contracts of between 25 and 30 years operating periods.

In the same vein, many international carriers are partnering with African airlines or are operating as local carriers in some countries, like the British Airways Comair in South Africa.

Travel expert, Ikechi Uko, said China has invested major stakes in Ghana’s African World Airline (AWA) and the airline operator has invited foreign investors to build Maintenance, Repair and Overhaul (MRO) facility and aviation training school at Ho airport in Ghana.

Also, Ghana Airport Management Company has taken commercial loans to build the new Kotoka terminal, it is also building a new terminal at Tamale and the company is attracting foreign partners to invest in the airports.

But in Nigeria, international airlines that have been operating for several years do not have any investment in the country. Their operating offices are on rent, but some of them are willing to invest in other African countries.

Uko said that one of the major reasons why Nigeria is not attracting foreign investment is policy inconsistency, noting that all the airport concession agreements Nigeria entered into ended up in controversy.

While it is acknowledged that Bi-Courtney Aviation Services Limited (BASL) build the best airport terminal in the country, the domestic terminal at the Lagos airport, MMA2; the Federal Airports Authority of Nigeria (FAAN) and BASL are in court over the tenure of the concession.

Also, the joint venture between Virgin Atlantic Airways and Virgin Nigeria Airways ended in controversy because of what some industry experts attributed to policy inconsistency and lack of respect for agreements.

A major airline operator in Nigeria said, “Whenever you invite foreigners to come and do business in Nigeria, they will remind you of Virgin Atlantic Airways, Richard Branson’s frustration with Nigeria.

“I suggest that Nigerian government should go, and hold talks with that man because he was not treated well. Before you sign any agreement make sure that you don’t leave possibility of afterthought. We are suffering from what he said about us,” the operator said.

When the Chairman of Virgin Atlantic pulled out of the now defunct Virgin Nigeria Airways, he said, “We have Virgin’s ill-fated footsteps by setting up a new airline in Africa in conjunction with Nigerian government the details of the doomed attempts to crack the Nigerian market in the 2000s is better imagined…we put …together a very good airline-the first airline in West Africa that was ever IOSA/IATA (IATA Operational Safety Audit) operational safety audit accredited but unfortunately it got tied down to the politics of the country…we led the airlines for 11 years…

Industry observers said the Nigerian government should review its institutions and develop policies that would encourage foreign investment in all sectors of the economy.

Executive Chairman of Airline Operators of Nigeria (AON), Nogie Meggison said for Nigeria to build a hub and improve passenger traffic, it must change its policies in the aviation industry.

“We need to improve our infrastructure and our policy. Buying airplanes and setting up airlines do not make a hub. It is the infrastructure that makes a hub. So once you put the infrastructure on ground, more airplanes will come and passengers will also come,” he said.

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.

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

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Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

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Crude oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

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Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

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oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

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