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Air Operators of Nigeria (AON) Rejects Ethiopian Airlines’ 49% Equity Stake in Nigeria Air

AON the umbrella body of all the domestic airline owners in Nigeria, has expressed concerns over the proposed partnership between the Federal Government and Ethiopian Airlines.

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Nigeria Air

Air Operators of Nigeria (AON), the umbrella body of all the domestic airline owners in Nigeria, has expressed concerns over the proposed partnership between the Federal Government and Ethiopian Airlines.

The Federal Government had partnered with Ethiopian Airlines to launch a national career for Nigeria named “Nigeria Air”.

According to the Air Operators of Nigeria (AON), the agreement was tantamount to opening Nigeria’s domestic market to a foreign carrier; a development they said could ‘decimate” the local airline industry and lead to capital flight.

The domestic airline operators expressed this opposition yesterday at the House of Representatives in Abuja.

Investors King had earlier reported that the Nigerian Government has reached an agreement with Ethiopia Airlines to own a 49% stake in Nigerian Air Limited, while Federal Government retained 5% and Nigerian investors got the remaining 46%.

While speaking on behalf of AON, the CEO of Top-Brass Aviation, Mr Roland Iyayi noted that the agreement with Ethiopian Airlines could adversely affect the business of the domestic airline operators. 

He stated that the government of Ethiopia owns 100% of the stake in the company, hence, giving 49% ownership to Ethiopia Airlines means selling Nigeria’s right to a foreign entity.

Ajayi also added that the Ministry of Aviation did not carry the local airlines along before and during the process. 

However, the Minister of Aviation refuted Ajayi’s statement. He stated that the bidding process went through due process before Ethiopia Airlines was selected as the preferred bidder.

Hadi Sirika further clarified that Ethiopian Airlines has the money and substantial technical expertise being the best Airline in Africa for more than four consecutive years. 

Meanwhile, at another event, the spokesperson for AON and Chairman of United Airlines Nigeria, Prof Obiora Okonkwo noted that Nigeria Air is a “camouflage of interest”.

“The decision to set up a national carrier in partnership with Ethiopian Airlines is a policy somersault. The people in government have continued to demonise the local operators…there is nothing Nigeria in this Nigerian Air,” he concluded. 

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Business

Oil and Gas Dealers Threaten Withdrawal as 70% of Downstream Businesses Collapse

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Eternal Oil - Investors King

The downstream oil sector in Nigeria faces a looming crisis as oil and gas dealers, represented by the Natural Oil and Gas Suppliers Association of Nigeria (NOGASA), issue a stern warning of potential service withdrawal.

In a recent resolution following their executive committee meeting in Abuja, NOGASA expressed grave concerns over the collapse of approximately 70% of businesses in the industry due to the harsh operating environment.

President of NOGASA, Benneth Korie, highlighted the dire situation, emphasizing the challenges faced by oil marketers in funding operations amidst soaring bank interest rates.

Korie underscored the overwhelming burden faced by operators who are compelled to acquire funds at exorbitant interest rates upwards of 30%, exacerbating financial strain and hindering business viability.

The primary demand voiced by NOGASA is the pegging of the foreign exchange rate at N750/$ to facilitate refinery operations and stimulate the production of refined products domestically.

Failure to address these pressing issues, Korie warned, could result in the withdrawal of services by NOGASA’s over 200 members starting from the next month.

The downstream oil crisis coincides with heightened anticipation for the release of refined petroleum products from the Dangote and Port Harcourt refineries, seen as critical for alleviating supply shortages nationwide.

However, amidst forex crises and inflationary pressures, operators in the oil and gas sector confront mounting economic challenges, necessitating urgent government intervention.

As Nigeria navigates through turbulent economic waters, stakeholders eagerly await decisive action from authorities to salvage the downstream oil sector from imminent collapse and avert potential disruptions in fuel supply chains.

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Business

Developers Reject Federal Government’s Cement Price Reduction Agreement

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Real estate developers across Nigeria have voiced their strong disapproval of the recent agreement between the Federal Government and cement manufacturers to reduce the price of cement to a range between N7,000 and N8,000 per 50kg bag.

This decision has been met with skepticism and criticism from key players in the built industry.

Dr. Aliyu Wamakko, the President of the Real Estate Developers Association of Nigeria, expressed his concerns, stating that the proposed reduction would not bode well for the economy.

He pointed out that cement is a fundamental component of construction and lowering its price to such levels would not be conducive to addressing the country’s housing deficit, currently estimated at 28 million units.

Wamakko referenced an earlier commitment by the Chief Executive Officer of BUA Cement, who pledged to reduce the price of cement to N3,500 per bag by January 1, 2024.

He questioned why the current negotiation was proposing prices significantly higher than what was promised earlier.

Other stakeholders echoed similar sentiments, emphasizing the need for more affordable building materials to enable the construction of housing units accessible to low-income earners.

They criticized the reliance on imported materials and advocated for the exploration of locally sourced alternatives.

The discontent among developers underscores the challenges posed by rising construction costs and the implications for housing affordability and development in Nigeria.

As discussions continue, stakeholders are urging a reevaluation of the proposed cement prices to better align with the goal of addressing the country’s housing needs.

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Nigerian Breweries Records $99 Million Foreign Exchange Loss, CEO Reveals

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Nigerian Breweries - Investors King

Nigerian Breweries, a subsidiary of Heineken NV, has faced a setback as it disclosed a $99 million foreign exchange loss in its recent financial report.

The revelation was made by Hans Essaadi, the CEO of Nigerian Breweries Plc, during an investor call held in Lagos.

Essaadi attributed the loss to a myriad of economic challenges gripping Nigeria, including the drastic devaluation of the naira and cash scarcity resulting from the nation’s demonetization program.

He explained that the mainstream lager market witnessed a significant decline due to consumers’ inability to afford products like Goldberg after a hard day’s work.

The naira’s depreciation, losing approximately 70% of its value against the dollar since June, has exacerbated inflation to almost 30% in January.

These economic upheavals have placed immense strain on household incomes, especially in a nation where a significant portion of the population lives in extreme poverty.

Despite recording a 9% increase in revenue to 599.6 billion naira, Nigerian Breweries reported a staggering net loss of 106 billion naira for the fiscal year 2023, a stark contrast to the 13.18 billion naira profit from the previous year.

In response to the ongoing challenges, Nigerian Breweries aims to source more raw materials locally to mitigate foreign exchange risks.

The company has also implemented higher product prices effective February 19th to navigate through the turbulent economic landscape.

Despite the bleak financial report, Essaadi affirmed Nigerian Breweries’ commitment to weathering the storm, expressing confidence in the company’s portfolio, processes, and personnel to navigate the challenging market conditions ahead.

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