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Business News

Reps raise concern over Aviation Ministry’s debt profile

The House of Representatives may disapprove Hadi Sirika’s new $461 million loan request for facility upgrades in Nigerian airports. This is because the aviation ministry earlier borrowed $500 million for the same purpose.

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Aviation contribution to GDP drops by 38.86% in Q3 2020 - NBS, uae, Hadi Sirika, Minister of Aviation lists

The House of Representatives has raised alarm over the debt profile of the Aviation Ministry.

While the Minister of Aviation, Hadi Sirika, is planning to secure a $461 million loan to “reconstruct and upgrade facilities in selected Nigerian airports,” the House is worried about the increasing debts of the ministry.

Sirika had made known his plans to secure the fresh credit facility for the ministry. And this will be in addition to the $500 million already borrowed by the aviation ministry for the same purpose, outside the 2019 budgetary allocation of N47.5 billion.

During the 2019 budget defence by the ministry, and its allied agencies, the Chairman of the House Committee on Aviation, Nkeiruka Onyejeocha (APC, Abia), said the move by the minister amounted to biting more than they can chew since they were already indebted, and especially as its “2018 budget was only implemented at a paltry 11 per cent.”

Although she expressed concern over the condition of airport facilities in Nigeria, she noted that the government might have failed to plan; was wrongly advised by the bureaucrats; or never accurately assessed its needs.

“I think our problem in this country is not with budgeting but implementation. It is sad that we are still grappling with only 11 per cent implementation of the 2018 budget.

“I’m also concerned about the minister’s new borrowing request of US$461 million, in addition to the US$500 million already borrowed.

“These are outside the 2019 budgetary allocation of N47.5 billion. I think we need to be careful over borrowing what our children will spend their life time repaying.”

Sirika’s stance on the loan request

While responding to questions directed at him, the minister allayed fears by members of the committee, saying the new loan request, saying the airports and aviation market are all viable and productive, as the ministry intends a Private Public Partnership (PPP) with future concessionaires.

According to Sirika, the new loan, when procured, would be used in rehabilitating facilities at the Abuja, Lagos, Kano and Port Harcourt airports.

According to the minister’s submission, of the N26.9 billion budgeted for the ministry in 2018, only N3.1 billion was released out of which N2.9 billion was spent.

Sirika attributed the 11 per cent 2018 budget performance to lack of planning with regard to the ability to adequately fund the budget.

Famuyiwa Damilare is a trained journalist. He holds a Higher National Diploma (HND) in Mass Communication at the prestigious Nigerian Institute of Journalism (NIJ).Damilare is an innovative and transformational leader with broad-based expertise in journalism and media practice at large. He has explored his proven ability in the areas of reporting, curating and generating contents, creatively establishing social media engagements, and mobile editing of videos. It is safe to say he’s a multimedia journalist.

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Economy & Politics

CBN extends Covid-19 forbearance for intervention loans by another 12 months

CBN will continue to charge an interest rate of 5% for its intervention loans for another 1 year.

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New CBN guidelines ban MMOs, PSPs, Operators from receiving diaspora remittances

The Central Bank of Nigeria has announced an extension of its regulatory forbearance for the restructuring of its intervention facilities by another 12 months.

In a circular signed by Dr. Kevin Amugo, the Director of Financial Policy and Regulatory. the apex bank said it will continue to charge its borrowers an interest rate of 5% per annum as against the 9% originally offered. The CBN had on March 20th reduced the interest rates on its intervention loans from 9% to 5% as part of its response to the economic crunch brought on by Covid-19 induced lockdowns.

The CBN also offered to rollover moratorium granted on all principal payments on a case by case basis. All credit facilities had been granted a one-year moratorium starting from march 1, 2020 when the pandemic first gripped Nigeria.

See excerpt from Circular

“The Central Bank of Nigeria reduced the interest rates on the CBN intervention facilities from 9% to 5% per annum for one-year effective March 1, 2020, as part of measures to mitigate the negative impact of COVID-19 Pandemic on the Nigerian economy.”

Credit facilities, availed through participating banks and OFIs, were also granted a one-year moratorium on all principal payments with effect from March 1, 2020.

Following the expiration of the above timelines, the CBN hereby approves as follows:
1) The extension by another twelve (12) months to February 28, 2022 of the discounted interest rate for the CBN intervention facilities;

2) The roll-over of the moratorium on the above facilities shall be considered on a case by case basis.

What this means

Companies who secured intervention funds from the CBN or through any of its on-lending banks will continue to service the loans at an interest rate of 5% per annum instead of 9%.

  • They can also get another year of not needing to pay back the principal sum collection. However, they will need to apply.
  • Whilst this move helps the small businesses continue to manage their cash flow, it means the CBN will record a reduction in its income extended under such facility.
  • Regulatory forbearance is a widely adopted concept during an economic crunch and it is meant to help stimulate businesses. These pronouncements if implemented will only affect those who borrow from the CBN or BOI but those who do not will miss out.
  • Download the circular here.

 

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Energy

LNG boss tasks FG to begin the monetization of Nigeria’s gas

Mr Attah has urged the FG to take the gas sector more seriously as the future of Nigeria’s energy lies with it.

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The MD and CEO of Nigeria LNG Limited Mr. Tony Attah has tasked the Federal Government to begin the revamping and monetization of the Gas sector in Nigeria.

He made this statement while making his presentation at the 2nd virtual Nigerian Gas Association (NGA) Industry Multilogues, with the theme: “Powering Forward, Enabling Nigeria’s Industrialization via Gas.”

Mr. Tony Attah drew the attention of the audience to the hidden treasure in the Nigerian Gas industry which he believes is not getting enough attention from the government.

On the future of gas as an alternative energy source, Mr. Attah stated that the developed world is already keying into gas as an alternative to crude oil. Gas has proven to be a cleaner and more sustainable alternative.

He exclaimed that Nigeria is very rich in gas and yet poor in energy. Nigeria is the 9th country with the largest gas reserves in the world but makes very little use of it.

Mr. Attah went further to paint a clear picture of the promise of investing in gas using the success achieved by Qatar. Qatar is currently the largest LNG exporter in the world.

We just touched on a quick case study of Qatar. Someone mentioned Qatar already from a poor fishing country to a gas giant and it took just 10 years, which is why we, as Nigeria LNG, firmly believe in the conversation and the narrative about the declaration of the decade of gas.

“We believe it is possible. If you look at Qatar from 1995, when they really went into gas development, we were just two years behind Qatar. So, Qatar’s first LNG was in 1997.

Nigeria’s first LNG was in 1999, just two years behind. But then, within 10 years, because of the deliberateness of the government and focus on gas, they have gone to 77 million tonnes and we are at best, 22 million tonnes,” Attah said.

Mr. Attah stressed further the importance of the gas sector in Nigeria’s future. He recalled that the Nigerian Government declared 2021-2030 as the decade of gas. He pleaded with the government to take the sector more seriously as the future of Nigeria’s energy lies with it.

Gas is the future. That future is now, and just as the Minister of State has made us to realize, gas is food in fertilizer. Gas is transport as you saw in the Auto gas project that was declared.

Gas is life, as a matter of fact, for cooking, for heating, for existence. Gas is development in manufacturing, gas is power. Gas is everything. “We think it’s time for gas. It’s time for Nigeria to diversify and that is why we fully support the decade of gas,” he said.

What you should know

  • Early last year, the director of the Department of Petroleum Resources (DPR) Mr Sarki Auwalu confirmed that Nigeria’s proven gas reserve stood at 203.16 trillion cubic feet.
  • Nigeria has the 9th largest gas reserves in the world. It is also the 6th largest exporter of gas.
  • The Federal Government declared the year 2021–2030 as the “Year of the Gas“. It pledged to finally kick start the development and commercialization of Nigeria’s huge gas reserves.

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