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Despite Poor Infrastructure, FG Rakes in N45bn from Aviation Agencies

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  • Despite Poor Infrastructure, FG Rakes in N45bn from Aviation Agencies

Revenue generating agencies in the aviation industry remitted over N45 billion to the federal government between 2015 and 2018, amid poor airport infrastructure, absence or obsolete landing aids and inadequate manpower development, findings have revealed.

These revenue generating agencies include the Federal Airports Authority of Nigeria (FAAN), the Nigerian Civil Aviation Authority (NCAA) and the Nigerian Airspace Management Agency (NAMA), which are mandated by law to pay 25 percent of their gross earnings to the federal government’s Consolidated Revenue Fund (CRF).

Data obtained from the aforementioned agencies showed that while in the last three years, NCAA remitted about N17 billion to government; NAMA paid N15 billion, while FAAN paid N13 billion.

While NAMA and the NCAA refused to make available full details of remittance to the government, payments by FAAN showed that in 2015, FAAN paid N4,151,496,255. 29; in 2016 it paid N2,565,736,042.80; 2017 it also paid N3,511,824,344.60 and in the first three quarter of 2018, it paid only N2,034,849,312.27, making it a total of N12,943,905,954.96.

Reacting to these payments, the President of Air Transport Service Senior Staff Association (ATSSSAN), Mr. Ilitrus Ahmadu, called for a review of the 1999 Constitution as amended such that the funds would be deployed for the development of airport infrastructure, provide navigational aids and modernise airport terminal facilities, saying when the funds are paid to government they are never used to fund any project in the industry.

He said, “I think there are infrastructural issues begging for attention in the industry, which this money could be used to solve, so why ask FAAN to remit this money to the government? If government allowed FAAN to use this money to provide essential facilities it can monitor if the agency is judiciously utilising the money. This is not excess generated funds that government is demanding from these agencies; they are mandated to pay 25 per cent of their budgeted revenue to government.

“NCAA needs a lot of money for human capital training and establishment of some facilities, including the Nigerian College of Aviation Technology (NCAT), Zaria which needs funds to upgrade its facilities to the global standard as the International Civil Aviation Organisation (ICAO) recognized it as excellence training centre.

“For now the school is not conducive for training, it needs more money to upgrade it to top training institution it ought to be.”

However, a senior FAAN official said that it is only in Nigeria that airport agencies are meant to pay money to government, saying that in other parts of the world, airports use the money generated to develop the airports.

The source said, “In other parts of the world, airports do not collect money to pay to government; that is why our situation is pathetic. Our model of airport management is different from any other in the world. Most of the money we earn we use to bribe government officials at the ministry just for them to approve the projects we want to do to improve the airports.

“They are not interested in the maintenance of the airports. Sometimes they order for irrelevant projects to be done at the airports but you cannot question them. That is how bad it is.”

Furthermore, the FAAN official said airport facilities would improve if the ministry could allow FAAN to use 20 per cent of its revenue to develop the airports.

“The people who manage the airports are not held accountable for what happens at the airports because they are not the ones that take the decision on how the facilities are run. If FAAN is given financial autonomy it will improve the airport infrastructure and become innovative like other airport management companies around the world,” he said.

The Managing Director of Aviation Consulting Company, Mr. Tayo Ojuri, lamented that government does not give the agencies subvention; yet it collects 25 per cent of the revenues the agencies pay into Single Treasury Account (TSA).

According to him,“In a situation where the government decides to cut the budget all the time, it means the government hasn’t realised yet that aviation is an economic catalyst. There is never enough money. But I believe commercialising these airports will drive inflow and being able to input that money that is realised from the airport to develop capital projects within the airport. This will actually be revenue generating.

“Ghana Airport Company Limited is a commercial entity, it is free from government interference as it can take a loan and do anything it wants to. FAAN is still tied too much to the government. Management of the airports is still tied to government bureaucracy and this is where the challenge is. So, moving forward, we need to commercialize the airports and it will function in line with best international practices.”

An official from NAMA also said that government has judiciously been removing agencies’ monies “and NAMA does not spend any money that has not been budgeted. We strictly follow the rules but we don’t talk about the money they take from us.”

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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