Daily Watch – NNPC goes next week, Air fares shoot through the roof

4th March 2016

  • Nigeria will carry out a major overhaul of the NNPC next week, the Minister of State for Petroleum Resources and Group Managing Director, NNPC, Dr. Ibe Kachikwu, has said. According to Kachikwu, the government has started resolving the governance issues in the oil and gas sector as well as at the NNPC. Explaining the restructuring exercise by the Federal Government in the oil sector, the minister said, “We are starting first with simple governance issues, those that are not contentious, that are very rapid and that deals a lot with the transformation of the national oil company. Kachikwu added that the petroleum sector under his watch, would rapidly review the contracting cycle of projects from two years to six months in the upstream, stressing that efforts are in top gear to review the existing Production Sharing Contracts, which is long overdue.
  • As negotiations continue for the final resolution of the N780 billion in fines slammed on MTN Nigeria by the NCC, MTN has announced that it has set aside $600 million (N118.2 billion at CBN official rates) for the fine settlement. This announcement was contained in the MTN group’s financial results for the year ended 31 December 2015. According to MTN, while negotiations with the regulatory authorities are ongoing, for the purposes of the results announcement, MTN Nigeria recorded a R9,287 million provision for the fine at the end of the reporting period. The provision for the fine at the end of the reporting period negatively impacted the group’s EBITDA which decreased by 8.6 percent and headline earnings per share (HEPS) also fell by 51.4 percent to 746 cents. MTN also said that it may list its Nigerian unit on the stock exchange in Lagos once it has resolved the fine with the authorities.
  • There has been an almost 100 percent increase in the price of air fares from Nigeria to other countries as a result of the shortage of American dollars, and a scarcity of aviation fuel in the market. British Airways, which previously charged N250,000 or less, for an economy class return ticket from Lagos to London when the exchange rate was N150 to a dollar, now charges N500,700. KLM, which previously charged below N150,000 for a Lagos – London economy class return ticket, now charges N244,950 while Arik Air charged N217,000 for the same destination. On the American route, British Airways which previously charged below N400,000 for an economy class return ticket to Atlanta, now charges N683,000, while Air France charges N500,000. United Airlines charges N467,900 and KLM charges N449,900.