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Tag: Regulator

  • Regulator upsets airlines with fleet requirement

    Regulator upsets airlines with fleet requirement

    Attempt by the apex regulator – Nigerian Civil Aviation Authority (NCAA) – to peg the minimum number of aircraft airlines should have in their fleet has triggered debate among operators, industry players and watchers, writes KELVIN OSA-OKUNBOR

    How to improve civil aviation regulations for airlines, ground handling firms and other players in the air travel space is engaging the attention of many countries, including Nigeria, which is sparing no efforts to implement the revised standards and recommended practices of the global umpire –  the International Civil Aviation Organisation (ICAO).

    ICAO, the International Air Transport Association (IATA), Flight Safety International (FSI) and other bodies continue to review safety rules, regulations and other requirements to make air travel attractive and safe.

    To play in the sector, operators are required to meet the minimum requirements spelt out by global and local regulators on the number and size of equipment – aircraft – they should have to carry out flight/cargo operations.

    Across the globe, experts say there are no cut-and-fit templates on the number of aircraft an airline requires to start commercial operations. Regulators require airlines applying for certification to have at least one aircraft, either purchased outrightly or leased.

    Experts say the minimum number of aeroplanes required to establish an airline in any country varies, depending on the size of the flights.

    In the last few years in Nigeria, airline operators were required to have at least three airworthy aircraft before commencing operation. Such an arrangement is no longer tenable, as the regulator has unveiled a fresh template pushing the minimum number of aircraft to six.

    Effective this month, the  Nigerian Civil Aviation Authority (NCAA) expects existing and new operators in scheduled operations to have  atleast six aircraft in their fleet.

    Its Director-General, Captain Musa Nuhu, said  airlines must have strong financial capacity and a minimum of six aircraft to be allowed to operate in the country.

    He said the major problems facing domestic airline operation was lack of capacity to overcome challenges.

    Nuhu said: “The problem is that a lot of the airlines don’t even have the capacity to meet current financial obligations.

    “If you have three aircraft, for instance, and you lose one out of it, it has become a problem to meet up with your operations.Then, you start to have issues of flight delays, cancellations and all that.

    “The number of aircraft you will have will depend on the kind of operations you want to do. You can imagine somebody who comes in with just one or two aircraft and one of the aircraft goes out of business, and sells tickets to the passengers, thinking of what will happen.

    “For you to have six aircraft, it shows you have a very strong financial background for running an airline.

    Read Also: Academy offers financial training programme

    “It is not only for new entrants, but the old ones too have a period by which they have to comply. If everybody has one or two aircraft, we will keep having this recurring problem. We have to avoid that.

    “People will criticise, but every country is different. We have to look at our own peculiar history and try To  come up with solutionS , but regulations are not cast in stone.

    “If the situation changes, the regulation would be reviewed accordingly. Whenever it is necessary, we don’t have to wait for five years before we make amendments.”

    Nuhu further said Nigeria had many airlines but only a few were operating with insufficient number of aircraft. He said with such capacity, it would not go under after a few years, while still having its name in the NCAA registry.

    “There are more aircraft in Nigeria’s registry than the entire West Africa. The number of airlines, air operator certificate (AOC), airports and co. they have, are not as much as we have in Nigeria. It is very huge, complex, and there are huge demands to cope with in the industry,” Nuhu said.

    “From records, about 12 years ago, we had only 16 AOCs; right now, we have 32, out of which 12 are scheduled operators.

    “We cannot keep operating the way we are doing. Changes have to come in and we have started the process.

    “We are acquiring a regulatory software and in the next one or two weeks, we are going to be ready with the software and training of our staff is going to start on their use.

    “We are going to make sure that 80 per cent to 90 per cent of NCAA’s processes are automated and also third parties are going to be automated,” Nuhu said.

    But, the National Association of Aircraft Pilots and Engineers (NAAPE) has criticised NCAA’s  planned regulation of a minimum of six aircraft for start-up airlines, describing it as anti-business.

    Its President, Abednego Galadima said  there was no distinction for commercial airlines and General Aviation with the new regulation, calling on the NCAA to reverse the policy for the good of the industry.

    “The take-off point for six aircraft is huge and prohibitive.The NCAA should maintain the three minimum aircraft for operators. Nobody starts big and even life itself, one starts small. The NCAA should still sustain the three minimum aircraft for operators,” he said.

    Also, Managing Director, 7-Star Hangar, Roland Ahmed, decried the new requirement.

    He said the policy was not well-thought-out and warned that it might hurt the industry.

    He said while the policy was successful in the banking industry, it might fail in the sector, urging the government to look inward to address the situation.

    He added: “The International Civil Aviation Organisation (ICAO) will not give you the minimum aircraft you have to start with, but individual aviation country would look at its economy, purchasing power, strength and its Gross Domestic Products (GDPs) before coming out with any law or policy for operators.

    “In our circumstance, the feasibility is difficult. We are testing the regulations. Let’s see where it will take us, but I think we may have a rethink at some point and see how we could go about it.”

     Ahmed added that investors were reluctant to do business in the aviation sector because of its negative ratings. He said many airlines were weak and struggling financially, hence, the new regulation of six aircraft to be allowed to operate in the country, was not feasible.

    He said:  “The NCAA says new and old airlines must have a minimum of six aircraft, if that is allowed to stand, it means it is only Air Peace that would operate. We would see how to go around it, but I tell you that it is very difficult. We need to strengthen the airlines, but I tell you that this new act is a killer. I have sat in the management for NG Eagle and it has been over six months that we have been looking for aircraft engines.

    “I have sent over six lease requests for engines,  but no one wants to do business with Nigeria. Our rating is negative and the lessors will tell you that if you would not buy it out rightly, you should leave it. One aircraft engine costs $5 million. Who wants to give you that? And they are saying you should get six aircraft. When you include the airfare, it will cost you $2 million, which is $12 million today. We are buying pounds for N1,200 and dollars at over N900. So, I do not see how the airlines are going to survive this. You might have $12 million for a Boeing 737, but that amount will buy you four classics fresh from C-check, 22 years or less than 25 years old, so why should I go and buy an engine?” Ahmed asked.

    Experts say there is a correlation between the number of aircraft an airline has in its fleet and its capacity to address flight delays and cancellations.

    They say an airline with more aircraft could deploy them on routes rather  than waiting for airplane delayed on any rotation.

    Data from the NCAA indicate that, over half of the domestic flights, between January and March, 2023 were delayed. Of the 18,288 domestic flights within the period, 10,128 were delayed, representing 55 per cent.

     According to the data, Overland Airlines recorded 84 per cent for delaying flights. Azman Airlines and United Airlines trailed Overland, delaying 73 per cent of their flights. Dana Air was behind with 67 per cent while Max Air had 65 per cent of delayed flights.

    Air Peace  followed, delaying 58 per cent of its flights; Arik Air 57 per cent; and Aero Contractors 56 per cent. Ibom Air and Green Africa each had 35 per cent of delayed flights during the period under review.

    Value Jet recorded the least percentage of delayed flights at 22 per cent. As flying remains less than dependable, some passengers say it is important to add some buffer time into your travel schedule to accommodate delays and cancellations.

    In terms of volume, Air Peace delayed 3,754 flights, the highest number of delayed flights in the first three months of the year. The airline also operated 6,521 flights during the period under review, the highest number by domestic airliner.

    NCAA data shows that Max Airline operated 1,565 flights, of which 1,013 flights were delayed, making it the second domestic airline with the highest number of delayed flights in the first quarter of the year.

    Arik Airlines followed with 926 delayed flights out of 1,619 flights it operated while United Airlines delayed at least 910 flights out of its 1,243. Of the 2,312 flights it operated between January and March, state-owned Ibom Air delayed 746 flights.

    Aero Contractors delayed 624 flights out of a total of 1,123. Meanwhile, Overland Airline delayed 605 flights out of 719; Dana Air had 474 delayed flights out of 711 while Green Africa delayed 443 out of its total 1,182. Azman Airline operated 527 flights and delayed 385 during the first quarter of the year. Value Jet had a total of 766 flights. It delayed 248 of that number. The NCAA report also stated that 2,791,591 passengers passed through the nation’s domestic airports in the first quarter of the year, data shows.

    It indicates that of the 2,791,591 passengers, 1,391,560 were inbound and 1,400,031 outbound. The NCAA’s latest data shows that schedule changes and marathon delays are wreaking havoc on passengers’ plans and stress levels, and yet they show no signs of stopping.

    The Nigeria Civil Aviation Regulations (Nig.CARs) 2015, which is being amended, guarantees that passengers get refunds when their flights are delayed or cancelled.

    “Every passenger shall, before purchasing any ticket for a contract of carriage by the air carrier or its agents, be entitled to the full, fair, and clear disclosure of all the terms and conditions of the carriage about to be purchased.

    “The disclosure shall include, among others, documents required to be presented at check-in, provisions on check-in deadlines, refund and rebooking policies, and procedures and responsibility for delayed and/or cancelled flights,” the regulations said.

  • Guinea: Court upholds order against regulator

    A FEDERAL high Court sitting in Abuja, has upheld an order restraining the National Insurance Commission (NAICOM) from suspending Guinea Insurance Plc from underwriting new insurance businesses.

    According to a statement by the Guinea Insurance Team Lead, Corporate Communications, Hanson Ufot said the order was given  last week in suit No: FHC/ABJ/CS/151/2019 filed by the insurance firm against NAICOM on February 6, 2019.

    The statement read: “At the resumed hearing on Monday, Ebere Okonkwo, counsel to Guinea Insurance Plc, informed the court that the commission did not appear in court despite being served the Motion on Notice and a copy of the court’s order dated February 8, 2019, restraining the Commission from taking any step whatsoever against Guinea concerning the “compliance with directives contained in the letter dated January 28, 2019”pending the hearing and determination of the Motion on Notice”

    “The Court ordered both parties to maintain status quo ante and consequently adjourned the suit to February 26, 2019 for further hearing of the Motion on Notice.

    The Court had given an order restraining NAICOM from suspending the company from writing new businesses in the suit filed on February 6.

    The court, in a ruling by Justice I. E. Ekwo, granted an order against the commission on February 6, 2019.

    The order reads: “An order of mandatory injunction restraining the defendant, whether by itself, or assigns, successor-in- title, personal representative, agents or privies or any other person or body of persons (however described) acting for it or at its instance or behest, from enforcing or taking any steps whatsoever, including, without limitation, writing letters, issuing directives and/or instructions of the plaintiff or any other person or entity; or taking out publications or any other acts; with intent, (or, in respect of such acts having) the likelihood or potential, to halt, stop, disrupt, frustrate or defeat; or in any way, other way whatsoever, undermine or negatively impact the operations and / or business of the plaintiff; for any reasons whatsoever arising from, connected to, based upon or touching  or concerning the compliance with the directives contained in the defendant ‘s letter of 28th January, 2019 pending the hearing and determination of the motion on notice.”

     

     

     

     

  • NTC: Regulator to change sector’s face

    The Senate has passed the National Transport Commission (NTC) Bill. ADEYINKA ADERIBIGBE examines the bill’s journey of the bill, which is expected to change the face of transportation.

    Ten years after the idea of the National Transport Commission (NTC) bill was mooted, the Senate has passed it into law. Its passage may pave the way for organic changes to the regulatory framework of a sector critical to the nation’s economic development.

    Although it was first sponsored in 2008, the bill, whose current version was sponsored by Senator Andy Uba and read for the second time on October 7, 2015, made it through after a clause-by-clause consideration.

    Though the bill is still awaiting President Muhammadu Buhari’s accent, there is no doubt of its being signed, as it is meant to revolutionise a sector, which needs new operational paradigm.

    Senate Committee Chairman on Land Transportation, Senator Gbenga Ashafa said the bill would, no doubt, “revolutionise and bring the needed sanity and fresh air to the sector”.

    According to him, the Commission will not only regulate transport inter-modality, it will also lift the sector’s contribution to the nation’s Gross Domestic Product (GDP), which for a decade has stagnated at less than four per cent yearly.

    He said: “With this bill, we would successfully create a multi-modal transport sector economy and a safety oversight regulator for the entire sector. This is very good for business as it brings standard and structure to the transport sector while also increasing the revenue of government.”

    Ashafa’s enthusiasm is not misplaced, having worked assiduously with other members of the committee and stake holders to berth the best possible version of the bill into law.

    “The National Transport Commission when signed into law is capable of setting the transport sector on the path of positive development,” he said, adding: “the Joint Senate Committee on Land Transport, Marine Transport and Aviation Transport worked with the understanding that this is one of the priority economic bills of the eighth Senate and therefore, ensured that all inputs from stakeholders were considered and the best possible version of the bill was presented to the Senate.”

    The question on the lips of stakeholders, especially transportation experts is why it took Nigeria 58 years to realise the desirability of the commission. They opined that the nation had for so long been shortchanged by successive administration that had failed to establish the commission and help sanitise a sector that is extremely critical to the nation’s economic development.

    Last year, Minister of Power, Works and Housing Mr Babatunde Fashola questioned the rationale behind the delay. “The question was not whether the commission is desirable, but why it has taken so long in coming,”he said.

    Across the three modes land -(motorised and rail), water and air, the absence of a commission to serve as the regulator and policy formulator had turned transportation into an all comers’ game, with the Federal and state government abandoning the space for unorganised private operators to dominate and set the rule.

    Under the new bill, the Nigerian Shippers Council (NSC) has been proposed to be upgraded in status to the NTC, to extend its regulatory roles to all other sectors of transportation system.

    This will undoubtedly synch with the position of the Minister of Transportation Mr Rotimi Amaechi, who at the public sitting three years ago, canvassed such position for the NSC.

    According to Amaechi, the Ministry had resolved that the bill so recognise the NSC to put paid to dupplicating responsibilities, which may arise if another  regulatory agency is created.

    Though the Ministry’s position had initially been opposed by the Nigerian Ports Authority (NPA), which sought the creation of another body to avoid the blurring of  technical/operational responsibilities once the NSC is upgraded and its roles merged or enlarged, it seemed the ministry had had its way, but should it?

    NSC’s function

    Besides being established to promote the interest of shippers, and the establishment of shippers associations across the country, the Shippers Council law authorises in Section 3 that it should advise the government of the federation, through the Minister on matters relating to “the structure of freight rate, availability and adequacy of shipping space, frequency of sailings, terms of shipment, class and quality of vessels, port charges and facilities and other related matters, negotiate and enter into agreements with Conference Lines and non-Conference Lines, ship-owners, the Nigerian Ports Authority and any other bodies on matters affecting the interests of shippers; consider the problems faced by shippers with regards to coastal transport, inland waterways transport and matters relating generally to the transportation of goods by water and advise government on possible solutions and to provide a forum for the protection of the interest of shippers on matters affecting the shipment of imports and exports to and from Nigeria”, among others.

    Shedding more light, Founder Safety Without Borders (SWB) Patrick Adenusi said being a body set up to protect the interest of Nigeria, especially at a time when the nation has no national carrier, the NSC is not in the best position to advance the cause of transportation sector and become a regulator of the industry.

    “I don’t think merging NSC or adapting it to the status of the NTC is best for the industry,” he said. Questioning the rationale for the establishment of any other agency, Adenusi said in an era of recession when government expenses is increasing, establishing another agency would only serve to bloat government’s expenditure.

    “What we would end up having is to have some Nigerians that would not be productive but collect salaries and increasing government’s burden.”

    Rather than setting up another agency, Adenusi canvassed that the Ministry should play its role as the policy formulator and implementor.

    There’s nothing the NTC wanted to do that the Ministry couldn’t achieve. “If the Federal Government gets away with the NTC, what that means is that similar agency must be created by the states. In a situation where many states are owing upwards of a year salary, how many can sustain another agency?”

    Bureaucracy

    Another transportation expert, Dr Tajudeen Bawa’ Allah, said the government must be careful and “not allow bureaucracy to kill its good intention for the industry”.

    Bawa’Allah, who was the first Dean, School of Transportation Studies, Lagos State University (LASU), said, while the dichotomy being sought by the government, which seeks to separate the executing body, which is the policy formulating body is welcome, efforts must be made to ensure that bureaucracy does not kill the dream.

    The don, who faulted the merging or upgrading of the NSC to NTC, said the mandate or functions of the former, is at variance with the proposed duties and functions of a regulator which is the latter.

    Rather than “engaging in a cut and paste, which adapting the NSC would amount to, one would advise that the government revisit the report of the National Transportation Coordinating Committee (NTCC), headed by Prof Adeniyi, and draw from it,” Bawa’Allah said, adding, “We are not short of ideas, we are just short of putting all these ideas to productive use. If we don’t, the same bureaucracy that killed the National Sports Commission would kill the National Transportation Commission”.

    Bawa’Allah, who served on the board of the NTCC, said rather than rushing into creating the Commission, the government needs to come up with a policy framework to guide the agency in its operation. “There is nothing on ground for the NTC to work on. Let’s start by drawing up a national policy on transportation. The transportation industry has no policy and that is the foundation. I would urge the government to revisit the NTCC report and several of such reports since 1960.”

    Another expert, who preferred not to be mentioned, said transportation policy is the foundation upon which any implementation on the sector would rest.

    “It is the policy that would draw up the functions of the Federal Ministry of Transportation and those of the 36 states and Abuja, as well as that of other inter-ministerial boards, departments or agencies within the entire gamut of the transportation industry as well as other contiguous ministry like the Ministry of Works among others.”

    Now that the bill has been passed, Bawa’Allah, however, said NTC should be allowed to live. He said the NTC would pave the way for the deregulation of the transportation sector. “The bill when passed would be a plus to the government,” he said.

    ‘Game changer’

    Contrary to scepticism that NTC could just be a drain pipe, a train logistics expert Edeme Kelikume said a transport commission may eventually emerge as a game changer and major “value-adding agency of the government. “If the Nigeria Communications Commission (NCC) could become a major net contributor to the GDP, revolutionising the Global Satellite Communication (GSM) licences and democratising telephone services by making communication accessible to all Nigerians, one could see the NTC achieving same for the transportation sector,” he added.

    Kelikume is already looking forward to the time when the NTC would unlock the sector, deregulate its operations and draw fresh funds into government’s coffers. That time, he says, may just be months away.

     

  • US regulator fines JPMorgan $2.8m over asset breach

    JPMorgan Chase & Co, has been fined $2.8 million by the Financial Industry Regulatory Authority (FINRA) for violating United States rules on securities trading by customer.

    According to settlement papers, JPMorgan failed to properly segregate customer securities from its own assets because of systematic coding and design flaws and a lack of supervision.

    The bank will settle charges that a broker-dealer unit lacked sufficient controls to safeguard customer securities from several countries over more than eight years, a U.S. regulator said on yesterday.

    The FINRA said the violations occurred from March 2008 to June 2016, and stemmed in part from defective electronic systems that JPMorgan inherited from Bear Stearns Cos, the investment bank it bought in May 2008 in a government-arranged fire sale.

    JPMorgan did not admit or deny wrongdoing in agreeing to settle. Brian Marchiony, a spokesman for the New York-based bank, in an email report to Reuters said there were no findings that any client accounts were harmed.

    FINRA cited as examples how the improper safeguarding of Italian securities for nearly two years and Nigerian securities for four years created respective deficits of $146 million and $120 million. The fine reflected JPMorgan’s “extraordinary” cooperation in addressing the violations, and its practice of setting aside excess deposits to protect customers from losses, FINRA said.

  • PenCom: regulator or operator?

    PenCom: regulator or operator?

    •It must be compelled to render account of its interim committee’s activities in FGPL

    IT is astonishing that snce the National Pension Commission (PenCom) took over First Guaranty Pensions Ltd (FGPL) on August 12, 2011, it has not held any Annual General Meeting (AGM) contrary to the provisions of the Companies and Allied Matters Act (CAMA). AGMs are supposed to be held at least once in a year. What this implies is that for this period, there has not been any audited account for the firm. Indeed, the company’s original owners are alleging that its fortunes have dwindled and that the company is being badly run.
    If this is true, it is sad indeed.
    PenCom took over FGPL sequel to a target examination barely a month after the regulator had affirmed it as the most performing pension fund administrator (PFA), thus making the takeover curious.
    Expectedly, the matter has been the subject of litigation in several courts. Interestingly, PenCom and others that have taken FGPL’s owners to court have lost on all fronts so far. FGPL took the commission to the Federal High Court, Abuja, in 2011, alleging a breach of procedures by it. It said what PenCom ought to have done was to send its observations on the target examination to the company’s directors who would then submit same to the shareholders to vote on, and the result would determine the company’s fate; not a takeover by PenCom.
    The court gave an ex parte order stopping all actions based on the target report, pending the determination of the substantive suit. This was communicated to PenCom. But, curiously, the regulator, which received the court’s order on August 12, 2011, dissolved the FGPL board and appointed an interim committee in its stead on August 15, 2011. However, on June 12, 2012, the court found merit in FGPL’s argument and quashed the target report in its entirety. Indeed, Justice D.U Okorowo upbraided PenCom for contempt of the order of the court and ordered that all parties should revert to the status quo ante.
    The judgment was followed by all manner of subterfuges.
    Instructively, the matter was of such concern that the Attorney-General of the Federation at the time, Mohammed Adoke, wrote letters to PenCom to respect the court’s judgment or show evidence that it had secured a stay of execution. Even the incumbent AGF and Minister of Justice, Abubakar Malami, had intervened to no avail.
    There are other reasons why the real motive for FGPL’s takeover becomes the more questionable. Whereas the firm was on the verge of securing new accounts, including those of the Lagos State government, Central Bank of Nigeria (CBN), among other juicy accounts, when PenCom took it over, PenCom has, regrettably, not added a single account to what it met on ground. Indeed, it is now feared that the company might have lost its market share in the course of this intervention. It has not been able to pay any dividend since then, either.
    There is an urgent need to compel PenCom to hold an AGM. The true position of the financial status of the company must be ascertained at least in the interest of the shareholders, and, more importantly, the contributors. It is not enough for the regulator to say that FGPL is doing well, when its books are not available for scrutiny. Neither can the regulator say it cannot conduct AGM because of the cases in court, having cherry-picked which aspects of a judgment to respect and which to disobey. The commission should know what to do, especially in the absence of a stay of execution of the judgment of Justice Okorowo nullifying its target report.
    The new pension scheme came into being to enable retirees have a blissful retirement. What is playing out with FGPL may make this lofty dream a mirage. While it is doubtful if the regulator has any right to take over FGPL in the first place, it becomes the more puzzling whether this can be in perpetuity as it is fast turning out in the instant case.
    We cannot deny PenCom the right of appeal that it is exercising in this matter, having lost serially in various courts, either by itself or through some other parties that had gone to court over the same or related matters. But questions can be asked over its handling of the company’s affairs in the last five years, especially as this can make the difference between life and death for millions of Nigerians who had chosen FGPL as their pension fund administrator.

  • Cloudy horizon for telcos, regulator, subscribers

    Cloudy horizon for telcos, regulator, subscribers

    Amid the monetary policy and dwindling oil revenue, things may be tough for the telecommunications sector in 2015, reports LUCAS AJANAKU.

    These are certainly not the best of times for the country. The prices of crude oil in the international market, Nigeria’s economic mainstay, have witnessed an unprecedented dip of more than 40 per cent in so short a time. There appears to be no end in sight to the woes of the economy as the oil cartel to which the country belongs, the Organisation of Petroleum Exporting Countries (OPEC), has refused to bow to pressure to cut supply to ease the pressure on demand.

    Nigeria’s national currency, the naira, has been on a free fall after the Central Bank of Nigeria (CBN) had frittered away the national foreign exchange (forex) reserves in a most unsustainable attempt at defending it. At his wit’s end, the CBN Governor, Godwin Emefiele announced the devaluation of the naira by eight per cent.

    The apex bank also directed that all importations involving electronics, finished products, information technology (IT), generators, telecommunication equipment, and invisible transactions would henceforth be funded from the interbank foreign exchange market only, a development telcos say will hurt efforts at expanding capacity by unwittingly increasing cost.

    Its Director, Trade & Exchange Department, O.I. Gbadamosi, via a circular to all authorised dealers, said the policy was to maintain the existing stability in foreign exchange market and strengthen the various policy measures, already initiated by the CBN.

    He said: “The importation of electronics, finished products, information technology, generators, telecommunication equipment, and invisible transactions importations shall henceforth be limited to the interbank market only.”

    The telecoms industry thrives on importation of most of its inputs. The naira devaluation will inevitably put more pressure on the ability of the operators to expand capacity and upgrade existing infrastructure.

    Executive Vice Chairman, Nigerian Communications Commission (NCC), Dr. Eugene Juwah, said to get a seamless, hitch-free service delivery in the country, between 70,000 and 80,000 base transmission stations (BTS) would be required. Currently, there are about 29,000 BTS serving both the licencees of the four global system for mobile communication (GSM) and one code division multiple access (CDMA) operator.

    With this scenario, quality of service (QoS) is expected to dominate the telecoms space once again this year. This is because the operators will not be able to grow their network while the quest for subscriber acquisition will continue.

    Country Manager, Ericsson Nigeria, Kamar Abass said it will be a dangerous precedent for any regulator to attempt to bar any operator from taking more customers onto its network. NCC agrees no less as it has insisted that at the core of its mandate is telecoms access provision to all.

    Customers Service Executive at MTN Nigeria, Akinwale Goodluck said the directive of the CBN will only worsen the woes of the industry. For one, about 80 per cent of the cell sites across the country run on generators as major source of power while power from the national grid is stand by. Generators, IT equipment and telecoms equipment are among the list of items the CBN has prohibited from direct importation except via interbank foreign exchange market only. Goodluck argues that going through the interbank forex market will add between six and seven per cent to cost. The government’s policies are bound to impact negatively on service delivery and put the regulator once again on the spotlight as it will be helpless.

    Chief Executive Officer, MainOne Cable Company Nigeria Limited, Ms. Funke Opeke said both the telcos and the consumers are unwittingly under pressure arising from the currency devaluation.

    Opeke who was former Chief Technical Officer (CTO) of MTN Nigeria spoke on the sideline at a telecoms forum in Lagos, said: “Well the declining value of the naira is definitely putting pressure on margins for telecoms operators. As you know, a lot of the technology inputs into the sector are imported, so they are dollar-denominated and most operators have long term supply service contracts.”

    According to her, with these supply service contracts entered into on a long term basis and the “value of your naira receivables against the dollar not at par puts a lot of pressure”.

    She said consumers will also feel the pinch of the inflationary trends as they would not have so much disposable income to spend on telecoms.

    “So, it is a two-sided equation. I think we are all hoping that there will be additional stimuli instituted by the government to try to advance the economy a little bit faster to stimulate spending in all the sectors aside from oil so that the economy can quickly recover,” she said.

    On whether a sustained unease on the economy could ultimately dovetail to an increase in telephone end user tariff, she said it was too early for any operator to contemplate that as all the telcos would strive to avoid that.

    She said: “I think its early days. Given where the industry is, everyone will like to avoid that (tariff increase) because in an environment where consumers are also under pressure, they can least afford those increases. But perhaps for us as Nigerians, it is also an opportunity to look at other areas where we can grow our economy and add value and provide services out of Nigeria on a global basis and to earn revenue andforeign exchange. There are other economies in the world that have done that successfully and we really need to be more aggressive in trying to push for new frontiers in our economy.”

    One other issue that may take front burner this year is the propriety or otherwise of compelling the four major carriers-MTN, Airtel, Globacom and Etisalat, to list on the Nigeria Stock Exchange (NSE) to allow for their broader ownership by the citizens and share in their annual huge profits, most of which are repatriated to South Africa. Nigeria remains the cash-cow of MTN while the country contributes immensely to the African operations of Bharti Airtel.

    All the four except Globacom are listed in Johannesburg Stock Exchange, The Stock Exchange, Mumbai (BSE), Delhi Stock Exchange (DSE) and the National Stock Exchange (NSE) all in India and Abu Dhabi Securities Exchange in the United Arab Emirates (UAE) respectively. In spite of these, there is no law barring them from cross-listing their shares in Nigeria.

    Coordinating Minister for the  Economy and Minister of Finance, Dr. (Mrs.) Ngozi Okonjo-Iweala, last year said  government,  the Securities and Exchange Commission (SEC) and the NSE had set-up a working group that is in discussion with big firms such as telecommunications, consumer goods, as well as oil and gas to list on the bourse.

    She said: “We are already talking with the Minister of Communication Technology, with the DG SEC and the CEO of NSE. We actually have a working group that is talking to big companies-MTN, and other telecommunications, consumer goods, industry and others. Even the power sector, oil and gas, we are trying to persuade them to list because this is the way we can deepen our capital market.”

    She said although the government was exploring the option of incentivising the telcos to encourage them to list on the local bourse, the government would resort to other measures to get the companies listed if  the persuasive measures failed to take them to the floor of the NSE.

    The Chief Executive Officer, NSE, Oscar Onyema said the bourse is making progress in its bid to get the carriers listed in the country.

    Onyema told Bloomberg that discussions “have moved from them (the telcos) not wanting to list, to them looking at how to deal with the issues that would make it unattractive to list.”

    He said the NSE is “gaining traction,” in trying to entice more firms to place initial public offerings (IPOs) to reflect the health of the economy. He spoke on the sidelines of the World Federation of Exchanges (WFE) in Seoul, Korea.

    Minister of Communications Technology, Dr. (Mrs) Omobola Johnson said the telecoms sector now contributes about 9.5 per cent to the nation’s gross domestic product (GDP). According to the rebasing of Nigeria’s economy, the telecoms sector is a major contributor to the GDP.

    Onyema said though none of the operators have come with proposal to list its stock, the carriers did raise “structural issues” topping them from IPOs, adding that the bourse is working with the Federal Government to address any shortcomings.

    “Some don’t need to raise capital, but some do. If any one of the four carriers wanted to raise capital on the NSE, I don’t see that not being successful,” the SEC CEO said.

    Stakeholders in the industry have urged the National Assembly to enact a law that would make blue chip firms such as the telcos and oil majors to cross-list on the Nigerian bourse.

    CEO, Teledon Group, Dr. Emmanuel Ekuwem said if the telcos list on the local bourse, it will be in their best interest. According to him, opening up the space for individual and corporate Nigerians to be part-owners of the companies will not only engender liquidity, it will also give Nigerians a sense of belonging.

    He said the spate of wilful vandalism of telecoms equipment would be a thing of the past as the would-be-vandals would start to see themselves as co-owners of the assets.

    The embrace of Business Process Outsourcing (BPO) by the telcos too has raised fears about job security in the sector. At the twilight of last year, some of the telcos offloaded the yoke of tower management by selling them off. All the four carriers, except Globacom, have sold their towers in the country.

    Regional tower management specialist IHS Holding, bought 2,136 towers from Etisalat, it also bought more than 9,000 from MTN.

    Mobile operators are exploring ways to reduce the heavy investment needed in maintaining and improving their networks at a time when customers are expecting faster speeds over 3G and 4G services. The deal is part of a plan by Etisalat to improve the quality of its network performance and accelerate roll out of 2G and 3G coverage across the country.

    Its CEO, Mathew Wilsher said the partnership with IHS is designed to promote network sharing, ensure higher quality, sustain reliable mobile services, lower overall costs and also promote a cleaner environment through reduced diesel usage and increased investments in alternative energy solutions.

    IHS has installed a large number of alternative energy sites across the country in addition to the construction of a state-of-the-art Network Operations Centre (NOC) with 99 per cent on its own sites.

    IHS has further committed to investing $100m in the towers acquired, on advanced generators, efficient batteries and alternative energy solutions to reduce diesel consumption and improve efficiency of grid use.

    IHS will also own and manage over 6,540 towers in the country and market services on the towers promoting tower sharing and co-location to help drive network improvements, better service to subscribers and economic growth.

    For Airtel, it will sell 4,800 towers and then lease them back from American Tower for 10 years, the two companies said in a joint statement.

    American Tower in a filing to the Securities and Exchange Commission in the U.S. had said the total consideration for the deal is expected to be $1.05 billion.

    “The agreement will allow Airtel to focus on its core business and customers, enable it to deleverage through debt reduction and will significantly reduce its on going capital expenditures on passive infrastructure in Nigeria,” Bharti said in a statement released to a stock exchange in Mumbai.

    American Tower Cor is an independent telecommunications and broadcast real-estate company which owns, operates and develops about 70,000 towers for cellphone companies and television stations. This deal will mark American Tower’s first foray into Nigeria. It already has operations in Ghana, South Africa and Uganda. Bharti and American Tower expect to close the deal during the first half of this year, subject to regulatory approvals, the company’s joint statement said.

  • Regulator mulls enforcement framework for governance code

    The Securities and Exchange Commission (SEC) is considering the enforcement framework for the reinvigorated Code of Corporate Governance for Public Companies, which was recently upgraded from a moral-suasion based voluntary code to a mandatory code.

    A reliable source at SEC told The Nation that the approval of the compulsory code of corporate governance by the board of SEC cleared the way for the implementation and enforcement of the provisions of the code.

    According to the source, SEC is working out a framework that will allow for smooth but effective transition from the moral-suasion and voluntary regime to compulsory compliance regime.

    The source said SEC might consider a three-step framework that includes notification of all stakeholders about the new status of the code, enlightenment of the general investing public on the new status and the implementation timeline and enforcement of compliance.

    “SEC as a responsible and considerate regulator would engage the stakeholders in the market. The timeline between the notification and deployment of compliance machinery would be used for stakeholders’ engagement,” the source said.

    The source added that SEC would also write deficient companies to notify them of areas of deficiency and request for compliance plan.

    A new provision to the code of corporate governance stipulates that “compliance with the provisions of this code shall be mandatory”  while another amendment states that companies will be liable to a fine of N500, 000 at the first instance of notification and subsequently additional fine of N5, 000 for every day that the violation persists.

    Besides, the stipulated fines, the new provision also give SEC unfettered power to apply “any other sanction” it “may deem fit in the circumstance”.

    “Any company/entity that violates the provisions of this Code shall be liable to a fine of N500, 000 at the first instance and a further sum of N5, 000 for every day the violation persists and or any other sanction as the Commission may deem fit in the circumstance,” the amended code stated.

    The code, according to the amendments, will now be described as a framework that is expected to facilitate sound corporate practices and behavior and it should be seen as a dynamic document defining minimum standards of corporate governance expected particularly of public companies with listed securities.

    The application of sanctions and penalties would scale up the code to same level of statutory rules being made by SEC under the mandate of the Investment and Securities Act (ISA) 2007. Already, publicly quoted companies are required to include in their annual report and accounts a compliance report on codes of corporate governance. The Code of Corporate Governance for Public Companies sets the minimum acceptable standards for quoted companies. Launched in 2003, the code of corporate governance was reviewed and re-launched in 2011, with several changes to reflect the globally acceptable practices.

    Some salient points in the code included board composition, remuneration, independent director, shareholding disclosure, insider knowledge, meeting and whistle blowing.

    Under board composition, the code stipulates that members of the board of directors should not be less than five and the board should comprise a mix of executive and non-executive directors, headed by a non-executive chairman. The majority of directors should be non-executive directors, at least one of whom should be independent director. The positions of chairman of the board and chief executive officer shall be separate and held by different individuals. To safeguard the independence of the board, not more than two members of the same family should sit on the board of a public company at the same time.

    The code requires that the remuneration of the chief executive officer as well as other executive directors should comprise a component that is long-term performance related and may include stock options and bonuses which should however, be disclosed in the company’s annual reports. Executive directors are not allowed to be involved in the determination of their remuneration. Executive directors should not receive the sitting allowances or director’s fees paid to non-executive directors.

    Every public company is expected to have a minimum of one independent director on its board. An independent director is a non-executive director whose shareholding does not exceed 0.1 per cent of the company’s paid up capital and is not a representative of a shareholder that has the ability to control or significantly influence management.