The Nation Newspaper

Category: Business

  • 2013 Budget: Reps propose $82 per barrel benchmark

    2013 Budget: Reps propose $82 per barrel benchmark

    • Disagrees with Fed Govt over $45b debt, Nigeria to borrow $12b next year

    The House of Representatives has asked that the benchmark for the 2013 budget be increased from $75 to $82 per barrel.

    The joint House committee on Finance, Legislative Budget and Research, National Planning and Economic Development and Loans, Aids and Debt, in a report obtained by The Nation, yesterday, recommended that “the oil benchmark of $75/barrel should be increased to $82/barrel.”

    The Committee’s position followed a review carried out on the 2013-2015 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) of the Federal Government in accordance with the mandate the House.

    One of the reasons the House gave for rejecting the proposed date of October 4 for the presentation of the 2013 budget by President Goodluck Jonathan was that it was yet to study the MTEF and FSP submitted to the House by the Executive.

    According to the report, the increase in the benchmark, “will lead to an increase in oil and gas revenue from N7,250.516 billion to N7, 963.436. The $7 increase in the benchmark will increase federal government’s share of revenue from N3,561.02 billion to N4,137.31 billion.”

    The report further recommended that the revenue target of the Nigeria Customs Service should be increased from N914.366 billion to N1,018.310 trillion, while the target for Federal Inland Revenue Service (FIRS) and Federal Government Independent Revenue (FGNIR), could be retained as proposed in the document. This increase will make Total Non-Oil revenue to rise from N3,298.46 billion to N3,523.82 billion.

    “The deficit portion of the budget should be reduced from N1, 307.19 trillion to N791.26 billion. Internal borrowing should be reduced from N727.19 billion to N381.25 billion, representing 52 per cent decrease. This is to enhance domestic access to credit by the private sector,” the committee stated in the report.

    The joint committee also recommended that measures that will “guarantee the projected revenue increase be adopted.”

    Meanwhile, the House raised the alarm over the mounting debt stock of the country put at $45 billion as at the end of June, 2012.

    But the Director-General, Debt Management Office (DMO) Dr. Abraham Nwankwo told a joint committee on Finance, Legislative Budget and Research, National Planning and Economic Development and Loans, Aids and Debt, while meeting on the 2013-2015 Medium Term Expenditure Framework and Fiscal Strategy Paper yesterday that there was nothing to be afraid of as the debts were within sustainable limits.

    But the committee disagreed with Nwanko wondering why the country is accumulating such huge debts after it paid dearly to exit the debt burden from the Paris Club during the regime of President Olusegun Obasanjo.

    The Joint Committe also summoned the CBN Governor, Sanusi Lamido Sanusi to appear before it within 24 hours for it to conclude its deliberation on the MTEF and FSP.

    The CBN sent a Director and nine Assistant Directors to the meeting of the committee but the committee insisted it wanted the CBN Governor, Sanusi Lamido Sanusi to defend the MTEF before them in person.

    While presenting the debt profile of the country before the committee, the DMO boss revealed the current debt stock of the country stands at a little over $45billion.

    According to him, the external debt stands at $6billion while the internal debt is $39.456billion. The Federal Government has projected to borrow $25billion by 2015, he added.

    While explaining Nigeria’s overall debt profile and expected borrowing between 2013 and 2015 Nwankwo said for 2012, Nigeria external debt is projected at $9,021.53billion while $12,165.10billion is expected to be borrowed in 2013.

    He also stated that by 2014, the country would be borrowing $14,585billion externally while $16,765billion was projected for 2015.

  • How to save domestic airlines, by experts

    How to save domestic airlines, by experts

    How can domestics airlines operation be saved from going insolvent? It is by providing them low interest loans from foreign lenders, some operators have said

    The Chief Executive Officer of Overland Airways, Captain Edward Boyo and the Managing Director of Aero Airlines, Captain Akin George said high interest rates by local lenders were killing airlines.

    Boyo and George lamented the low funding of the sector, which they affirmed is hampering aircraft acquisition

    Boyo said until operators are able to manage the right equipment, in terms of aircraft suitable for some routes, the industry would continue to struggle.

    The airlines, he said would only experience organic growth if the relevant agencies, including the Nigeria Civil Aviation Authority (NCAA), carry out due diligence on would-be airline operators before commencement of flight operations.

    Most operators, he said, often ran into problems because they do not do an analysis of the expected yield in their operations, arguing that the inability of operators to understand the cost benefit analysis in the sector, has led to the collapse of many airlines.

    He said: “Airline operators must get their economics right before venturing into services and ensure that issues such as maintenance, personnel, market capacity and revenue management must be taken into consideration.

    On government’s role to grow the industry, Boyo said: “Government should continue to invest in improving security and ensure that there is improvement in oversight capacity and regulatory services. Government should implement waivers on taxes and import duties on aircraft’s spares.

    “Government should also consider the establishment of aircraft hangar, and ensure that there is a deliberate policy aimed at growing the domestic market. The government must implement the domestication of the Cape Town Convention, which ought to make it easier for lessors of aircraft to repossess their airplanes and also facilitate the acquisition of modern ones less cumbersome for Nigerian airlines.”

    On his part, George said: “Without trying to make the issues complicated, airlines need to have access to funding. It is pure and simple. If government could do that, the problems will soon be over for domestic carriers and their managers.

    “If you have access to funding to sort out your problems, you need to reduce your costs. The main costs are the government taxes. Once that is taken out, government could go a step further by improving infrastructure at the airports. Infrastructure itself is cost to the airlines; if government could improve that it takes out the other costs.

    “If we have access to funding to do our business, we make more money, reduce the cost of operations, and then the equation is balanced. The idea is that everybody wants this to happen overnight, it is not going to work that way.

    “What government needs to do is to ensure that measures put in place to improve the business and operating environment for airlines must be long lasting. Not quick fixes. That will not solve the problems of the aviation sector.

    “In Nigeria, we like to do things over and done with, when we rush for quick fixes we tend to forget that whatever we do affects our neighbours. And that is why the ministry of aviation must take a holistic look at how to generally improve the industry,” he stated.

    He said everybody would wish that aircraft maintenance is done in Nigeria, because of the cost implications, which also allows operators to bring in the expertise into the country. And when you get technically minded-people, when you go back home, it not only affects aviation, it also affects the country as a whole. Our aim is to increase the pool of Nigerian airlines with the required technical expertise to carry out aircraft maintenance locally.

    “But, it will always remain a high cost business, because aviation is not cheap, and we should not be looking at everybody doing aircraft maintenance at home. That is not to mean that it should also be made unnecessarily expensive and that is what we are doing at this time. Make it relatively not too expensive, but the business the airlines that have the capacity could make some profit from.

  • Anxiety as Fed Govt restructures FAAN

    Anxiety as Fed Govt restructures FAAN

    Uncertainty pervades the aviation sector as fear of possible job loss grips personnel of the aviation agencies with the on-going restructuring at the Federal Airports Authority of NIgeria ( FAAN), Nigeria Civil Aviation Authority (NCAA) and the NIgeria Airspace Management Agency (NAMA).

    The uncertainty came on the heels of the redeployment of personel carried out last week. Some Directors and General Managers were moved from NAMA to NCAA and the Accident Investigation Bureau, as well as the Nigeria College of Aviation Technology( NCAT), in Kaduna.

    The restructuring, it was learnt, was part of the institutional reforms to enhance efficiency and service delivery in the sector.

    Although, a few letters of redeployments have been distributed to the affected personnel, there are indications that a major shake up, expected to affect all the agencies is underway. This has caused tension and panic among the workforce.

    Meanwhile, FAAN yesterday announced the restructuring of the organisation in line with the transformation agenda of the Federal Government.

  • ‘World needs 600m jobs’

    ‘World needs 600m jobs’

    Hundreds of millions of new jobs will be needed to keep up with world population growth by 2020, the World Bank said in a report that highlights the importance of jobs to development.

    As populations surge in Asia and Sub-Saharan Africa, the number of positions will need to increase by 600 million over 2005 levels, the report said.

    The global economic crisis poses a challenge to that goal as some 200 million people remain unemployed, including 75 million under the age of 25.

    The World Bank said the most influential development gains can come from jobs that not only provide a source of income to workers, but also make cities function better, connect with global markets, protect the environment, foster civic engagement and reduce poverty.

    “A good job can change a person’s life, and the right jobs can transform entire societies. Governments need to move jobs to centre stage to promote prosperity and fight poverty,’’ the World Bank President, Jim Yong Kim, said.

  • MfBs groan under huge tax burden

    Microfinance banks are battling MfBs huge tax burdens and botched attempts to get tax holidays from the government, The Nation has learnt. According to the annual reports of some of the banks, huge taxes is common to all the entities.

    For instance, Lift Above Poverty Organisation (LAPO) Microfinance Bank Limited paid N1.1 billion tax to government in 18 months. Also, Unical Microfinance Bank Limited, Calabar, Cross River, paid N7 million tax per annum to government.

    Many of the operators in Lagos, who spoke under cover, said they have tried to meet the government on the issue, but to no avail. They said MfB operators were mostly affected, due to various taxes imposed on them by the government.

    The Managing Director of LAPO Microfinance Bank Limited, Godwin Ehigiamusoe, said quite a large number of the banks were having problems with taxes. He urged the Federal Government to consider microfinance banks in terms of tax payment so they could reach a good number of the low income earners.

    He said: “Microfinance banks that are supposed to support poor people are subjected to the same tax regime of an oil and gas company. If you look at our financials, we paid a tax of N1.1 billion cash for 18 months to the Federal Government, because of what tax people call tax commencement or tax registration.

    “Our appeal is that because of the peculiar nature of microfinance, and because of the peculiar nature of those who benefit from microfinance banks, they should be given some consideration or rebate in terms of tax. This can translate to a bigger loan to reach a large number of people,” he added.

    Also, the Managing Director/CEO of Unical Microfinance Bank, Edim Obim, advocated that government should grant microfinance banks tax relief to consolidate and provide financial services to those at the grassroots.

    Reacting to the development, Chairman, National Association of Microfinance Banks, South West Lagos (NAMLAG), chapter, Olufemi Babajide, confirmed that microfinance banks have not enjoyed tax holiday from the governments, adding that the sub-sector had approached government but nothing positive came out of it.

    He said: “Microfinance banking is a new business. We should have tax holiday for at least 10 years so that we can establish well and serve the low income earners better. The government of Western Australia recently granted payroll tax rebate to small businesses operating in that country.

    “Such small businesses with nationwide group payrolls of up to $1.5 million in the 2012/13 financial year would receive a full rebate of their WA payroll tax liabilities, with a maximum value of $41,250.

    “The rebate is part of the measures the Western Australian government has put in place to reduce the tax burden on small businesses, which are the backbone of the economy. This will help ensure that the country remains an attractive place to do business.

    “If this is replicated in Nigeria, particularly in the microfinance sub-sector, the same advantage or benefit will be achieved,” he said.

  • Ex-Commissioner criticises Fed Govt on flooding

    Ex-Commissioner criticises Fed Govt on flooding

    The Federal Government has been criticised for not addressing the flood ravaging the nation.

    The National Legal Adviser, Action Congress of Nigeria (ACN) and former Lagos State Commissioner for the Environment, Dr Muiz Banire, said the Federal Government was shirking its responsibility.

    Banire, who spoke at the award night of the Nigerian Institute of Building (NIB), in Ikeja, last week, said the government has, over the years, turned deaf ears to entreaties to build dams to store excess storm water and dredge our rivers, especially rivers Niger and Benue, to create cavity to hold water.

    The former commissioner, who bagged a high performance award at the dinner, observed that accusing Cameroon of inundating the nation with flood water from her Lagdo Dam is misplaced.

    He said Nigeria ought to have built her counterpart dam for water retention since the 80s, but didn’t even when Cameroon built hers in 1982.

    He accused the Federal Government of insensitivity to the plight of the people, stressing that until the government mad the welfare of the people its priority, the public would continually be exposed  to avoidable danger and unnecessary hardships.

    He warned that the number of people killed and displaced, and the properties destroyed will be on the increase, unless necessary measures are taken, as the effect of climate change will continue to affect the intensity of rainfall and water will always find its level. Thus all mitigative and adaptive measures must be taken to tackle the effects of climate change, while emergency management machinery should be made ready all the time, he stressed

    Banire said the respite Lagos State is enjoying today is because the state has since 2007 made construction and cleaning of drainage channels a priority.

    Addressing the participants as the chairman of the award of the Institute of Building, Banire urged them to take concrete steps to enlighten the government and the people about their role as builders, articulate the differences between their training and that of other professionals in the built industry.

    He said many people are not aware of the institute and its role, adding that the lack of awareness has created room for quacks from other professions to take over their jobs. He said the supplanting of professionals by quacks, might be largely responsible for the frequent collapse of buildings.

    He said building collapse may not necessarily result from the use of inferior materials, stating that the application of the materials is another issue which requires technical -know -how.  He advised them to conduct a research into building collapse and submit the report to the authorities.

    President, Nigeria Institute of Building Chuks Omeife, praised Banire for his comments on the plight of the institution and his advice on the way forward.

    He noted that his contribution to the built environment, especially his exploits in the ministries of Transportation and the Environment, won him the award.

    The several beautification parks and massive drainage works, he added, have huge positive impact on the state and the people.

  • GE, GEL to supply power to Port Harcourt refinery

    GE, GEL to supply power to Port Harcourt refinery

    To resolve the recurrent power supply challenge to the Port Harcourt Refinery Company, a subsidiary of the Nigerian National Petroleum Corporation (NNPC), Genesis Electricity (GEL) in partnership with General Electric (GE) of United States, have commenced the implementation of gas-fired Captive Power Project (CPP) to guarantee quality and uninterrupted electric power supply to the refinery.

    Speaking during a courtesy call on the Group Executive Director, Refining and Petrochemical, NNPC, Mr. Anthony Ogbuigwe at the NNPC Towers Abuja, the Regional Sales Director, Middle East Africa, Cees-Jean de Maaker of General Electric, assured the readiness of the partnership to provide reliable and qualitative electric power supply to the refinery facility.

    De Maaker stated the excitement of GE to partner with a professional and competent local company such as Genesis Electricity Limited. He said that GE is committed to ensuring full technical support across the spectrum of power plant installation, commissioning and subsequent long term management of the operations of the Genesis Electricity’s captive power plant investment.

    The Chief Executive Officer of Genesis Electricity, Mr. Akinwole Omoboriowo said that the objective of the partnership is to provide sufficient power supply to the Port Harcourt Refinery, to guarantee efficient operations of the refinery. He assured Ogbuigwe that it has commenced the deployment of the best power technology in the world to refinery and would keep to the schedule of the arrangement.

    He said that the GE would install power plants, operate and maintain the power plants over several years, adding that part of their obligation is to train young engineers.

    Ogbuigwe said the NNPC looks forward to the day when power supply to the PHRC would be stable and expressed confidence in the ability of the public private initiative to deliver on the mandate. He noted that the power project was close to the heart of the NNPC and implored the GE to justify the confidence reposed in them.

    Other members of the team were Felix Achibiri, a Director of Genesis Electricity, Jasper Ogbonna, Vice President – Finance, Genesis Electricity, Longinus Okereke of General Electric and Amina Lawal, Assistant Legal Officer of Genesis Electricity.

  • Ilorin Emirate won’t back planned sale of praying ground

    Ilorin Emirate won’t back planned sale of praying ground

    The Ilorin Emirate Descendants Progressive Union (IEDPU) has dissociated itself from the insinuation making the rounds that the Kwara State government intends to sell the Muslim praying ground and other parcels of land in the metropolis.

    It is being rumoured that the state government had sold the Muslim praying ground for infrastructural development.

    But the President of IEDPU, Justice Saka Yusuf, said the union was neither connected to such unfounded allegations nor believed it.

    According to the retired chief judge, the union has never raised such accusation because there was no need.

    “We never said that. We couldn’t have said such a thing. IEDPU never said the government wanted to sell the praying ground and the Emir’s palace. Who will the government sell them to and for what purposes? May be the politicians are at work again”, he said.

    Justice Saka emphasised that the union is non-partisan and will not lead any group that will embarrass the government of Alhaji Abdulfatah Ahmed or Senator Bukola Saraki.

    He said that the misunderstanding that ensued over the urbanisation law was as a result of unnecessary communication gap adding that IEDPU’s utmost concern was the interest of Ilorin Emirate and not that of being a watchdog of the government. “Whatever happened, he said “was never a planned affair, but expression of our people’s apprehension”.

    Justice Saka explained that the urbanisation law, as enacted by the government was not properly understood by the people. he urged the government to do more of public enlightenment through well publicised public hearing and sensitisation on its policies.

    “There is no doubt that the law is well intentioned. It is meant to address salient issues of urban development and revenue generation but lack proper input from the community.”

    He said the challenge now is for the Assembly to expedite action on the amendment of the law in good time in order to reduce the people’s apprehension. According to him “we are watching how far the government will go. I’m very confident that the Senator and the Governor will do something positive”.

  • Institute seeks bill’s passage

    The Registrar of Certified Institute of Shipping (CIS), Dr Alex Okwuashi, has urged the Senate to reopen deliberation on the bill that seeks to charter the institute.

    Okwuashi made the appeal in Lagos last week. He said that the institute and other stakeholders are very optimistic that the Senate would not abandon the bill.

    “All efforts are being made by the institute to get the Senate to revisit the bill so that it could be passed into law. The strategic importance of maritime to the nation has made this Bill very important.

    “The CISN Bill was originally gazetted in 2011 under the chairmanship of Hon Okey Ude, the erstwhile chairman of the House Committee on Marine Transport, but was inexplicably dropped. It was slated to be chartered with the Cabotage Act in 2003 and in 2010.

    “The bill was brought up again when the House Committee on Marine Transport reiterated the need for the institute to be chartered,’’ he said.

    Okwuashi recalled that the bill was also dropped in Dec. 2010 when it was sent to the Senate for final passage because the legislative year had ended.

    He called on all stakeholders, including the Nigeria Ports Authority (NPA), Nigerian Maritime Administration and Safety Agency (NIMASA) and the Ministry of Transport, to support the institute in its bid for professionalism.

    “It is believed that if the institute is chartered, it will help to bring sanity in the way and manner shipping is done in Nigeria,” the rector said.

    The Bill is being sponsored by the CIS, the Nigerian Institute of Shipping and other maritime stakeholders.

    “The bill is a very large industry bill and also very strategic because Nigeria is a maritime nation,’’ he said.

  • FCT area councils share N2b revenue, SURE-P allocations

    FCT area councils share N2b revenue, SURE-P allocations

    The six Area Councils of the Federal Capital Territory (FCT) have shared N2.053 billion revenue allocation for August 2012 from the Federation Account Allocation Committee and the Subsidy Reinvestment and Empowerment Programme (SURE-P).

    The allocation represents an increase of N267 million or 15 per cent over the preceding month’s figure of N1.786 billion.

    The Minister of State for the FCT, Oloye Olajumoke Akinjide, who made this known during the FCT Area Councils Joint Account Allocation Committee meeting in Abuja, said the FCT Administration would next week commence biometric audit of all the workers in the Area Councils.

    “We have gone through the procurement processes and have engaged a consultant to undertake a biometric audit of all workers in the Area Councils. We want to ensure that the workers in the Area Councils are genuine and also make sure that they are qualified for the positions they are holding,” said Akinjide, who chaired the monthly FCT Area Councils Joint Account Allocation Committee meeting.

    On the revenue allocation, she explained that Value Added Tax (VAT) accounted for the lion’s share of N1.054 billion of the total allocation to the six Area Councils – Abaji, Abuja Municipal, Bwari, Gwagwalada, Kuje and Kwali.

    The FCT Area Councils had received VAT of N796.29 million for the month of July 2012.

    The minister disclosed that the statutory revenue allocation was N675.20 million, SURE-P (N113.54 million), refund by the Nigerian National Petroleum Corporation (N23.10 million), FCT Administration’s 10 per cent Internally Generated Revenue (N145.92 million) and exchange rate gain of N41.86 million.

    Of the N2.053 billion revenue allocation, the FCTA disbursed N836.24 million to the FCT Universal Basic Education Board (UBEB) for primary school teachers in the six area councils; N95.04 million to FCT Area Councils Pension Board (ACPB) being 15 per cent pension fund as statutorily required, and N20.53 million to FCT Area Councils Service Commission being one per cent training fund, also statutorily required.

    The net revenue allocation of N1.101 billion was shared by the Area Councils, with Abuja Municipal receiving N239.46 million; Gwagwalada, N192.25 million; Bwari, N187.60 million; Abaji, N175.93 million; Kuje, N165.38 million; and Kwali, N141.24 million.