Amidst the negative impact of Coronavirus on the revenue of Aviation industry in Nigeria, Travel agencies in the country are in dire need of financial aid to remain operational and not loose their International Air Transport Association (IATA) licensees.
Why it matters: The travel agencies have been recording decline in ticket sales and reservations for international and continental flights. Nairametrics had reported that the agencies experienced 50% drop in ticket sales and reservations for international routes, and with a recent statement from the agencies body, financial incentives are needed to survive the challenges brought upon them by the Coronavirus pandemic.
IATA had disclosed that International bookings in Africa are down roughly 20% in March and April, domestic bookings have fallen by about 15% in March and 25% in April.
President, National Association of Nigeria Travel Agencies (NANTA), Bankole Bernard, explained that some businesses are on the edge of collapsing if the government doesn’t intervene with soft loans.
He said the operators need interestad-free loan to enable them keep their IATA license.
Bernard also stated that the IATA need to help deter the payment period for their license, “NANTA is putting a position to IATA to look at how we can defer our payment from the mandatory two weeks window to a month and above.
“Therefore, we need the government’s support in form of bailout granting us access to soft loans in the form of interest-free loans and overdrafts to enable us to meet up with our obligations to IATA. Our IATA licence is at risk if we are not able to remit to IATA and we have never got into default and we don’t want to go into default.”
Bad time for aviation business: Air transport business going through a decline in Nigeria, so the plea from NANTA is expected as the country’s Aviation Industry has been projected to lose N160.58 billion and 2.2 million jobs in 2020 as the Coronavirus continues to spread. The confirmed cases of Coronavirus in Nigeria is now 25, while two have been discharged.
But the challenge isn’t limited to Nigeria alone, as the Aviation Industry in Africa and globally is losing revenue to the pandemic. African airlines had lost $4.4 billion in revenue as of March 11, 2020. And the African industry has been projected to lose more.
While in the International Aviation market, airlines are also experiencing revenue loss, one of which is Lufthansa. The airline reduced all passenger flights by 95%.
Chief Executive Officer of Lufthansa, Carsten Spohr, said, “The longer this crisis lasts, the more likely it is that the future of aviation cannot be guaranteed without state aid.
“The spread of the coronavirus has placed the entire global economy and our company in an unprecedented state of emergency. At present, no one can foresee the consequences.”
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.
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.
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.
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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