Archives April 2017

DMO Urges Nigerians to Invest in FG Savings Bond

The Director General of the Debt Management Office (DMO), Dr. Abraham Nwankwo has advised Nigerians to take advantage of the Federal Government’s Savings Bond and invest in the scheme.

Nwankwo said this was necessary in view of the benefits Nigerians stand to gain especially in the areas of poverty reduction, job opportunities in addition to guaranteeing fixed income.

Speaking at a One-day Grassroots Advocacy/Sensitisation Campaign on the Federal Government Savings Bond held in Kano on Thursday, the Director General explained that the new investment opportunity would also guarantee quarterly interest payments.

He said the investment can be used to secure loan facilities, pay school fees and build own houses.

“The Federal Government Savings Bond can be traded at secondary market and is good for savings towards retirement, marriage, school fees and house projects, among other benefits, he added.

Besides, he said the savings bond would also give every Nigerian the opportunity to invest or participate in the programme with a view to enhancing their socio-economic status.

“The minimum subscription amount is N5,000 with additions in multiples of N1, 000, subject to a minimum of N50 million.

“Investors are not required to pay fees or charges to distribution agents when subscribing for the FGN savings bond in the primary market,” Nwankwo added.

In the same vein, the Director, Management Department of the DMO, Dr. Oladele Afolabi urged Nigerians to make the best use of the new opportunity as it is a secure investment with the federal government with no risk of default.

“Interest income is paid quarterly directly into the bondholders account and investors can sell for cash in the secondary market before maturity”, he explained.

The programme, which was flagged off in Kano, would also be extended to other major cities across the country.

Source:© Copyright Thisday Online

GTBank, Stanbic IBTC post N41.5bn, N16.1bn quarterly profits

Guaranty Trust Bank Plc and Stanbic IBTC Holdings Plc posted an increase of 62 per cent and 106 per cent year-on-year, respectively in their profits after tax for the first quarter of the year.

GTBank saw its profit after tax and pre-tax profit rise to N41.477bn and N50.392bn in Q1 2017 from N25.614bn and N30.676bn in the same quarter of last year, according to its condensed unaudited group interim financial statements filed with the Nigerian Stock Exchange on Wednesday.

Analyst at FBN Capital Limited, in an emailed note, attributed the bank’s profit rise to a positive result on the other comprehensive income line of N568m (compared with a sizeable loss of N5.3bn a year earlier).

They said, “The main driver behind the strong y-o-y growth in earnings was a solid performance in net interest income: it grew by 62 per cent y-o-y to N66bn. In contrast, non-interest income (which had boosted the bank’s results through most of 2016 on the back of forex-related gains) was up only by five per cent y-o-y.”

Stanbic IBTC’s unaudited consolidated interim financial statements filed with the NSE showed that its after-tax profit rose to N16.074bn from N7.791bn in Q1 2016.

The group’s profit before tax increased to N18.626bn in the first three months of the year from N10.243bn in the corresponding period of last year.

Its gross earnings stood at N47bn, representing an increase of 35 per cent over the N34.8bn recorded in the comparable period of last year, while total assets rose to N1.2tn from N1.1tn in December 2016.

The Chief Executive, Stanbic IBTC Holdings Plc, Mr. Yinka Sanni, said the group achieved significant growth in profit after tax despite the challenging trading environment, which was characterised by challenges with foreign exchange liquidity, difficult credit environment and an increasing cost of operations.

He said, “We remain positive that economic activities will improve as the Nigerian economy is beginning to show signs of positive outlook due to an increase in the supply of forex to both retail and corporate users and decreasing headline inflation.”

Source:© Copyright Punch Online

FG Savings Bond: Opening up the Capital Market to Ordinary Nigerians

If you are an ordinary Nigerian looking for where to invest your little savings, just approach any stock broker in the country and ask whether they are authorised to sell the Federal Government Savings Bond (FGNSB). If you get a Yes answer, tell them you’re interested in investing your little cash-as little as N5,000 and you’ve become an investor and a player in the capital market. It is that simple and fast.
That is the magic of the new initiative of the Debt Management Office, DMO, called the FGNSB. It is a new way to invest for the ordinary Nigerians and small scale investors who may be excluded from operations at Nigeria’s Capital Market.

Retail investors looking to invest in the FGN Savings Bond only need a minimum of N5,000 to invest. Subsequent investment over N5, 000 will be in multiples of N1,000. Meaning that you cannot invest N5,500 or N12,700. It’s either N6, 000 or N13,000 or N30,000. The maximum amount a single retail investor can invest in the FGN Bond is N50m.
The bonds were rolled out on March 13 and for the first time, the popular common man in Nigeria got the opportunity to become an investor; a player in the country’s capital market. Over 75 percent of the bonds traded were from small investors who would have either kept their little cash in the bank where returns will be zero or at best insignificant, or use them to purchase some items to avoid wasteful spending.

An elated Abraham Nwankwo, Director General of DMO, whose office midwifed the deal, said: “The FGN Savings Bond, the first of its kind in Nigeria, was opened to investing public by way of offer for subscription over a five-day offer period starting from Monday, March 13, 2017 to March 17, 2017 and N2, 067,961,000 was raised from the retail market at 13.01 percent coupon. “

He said about 2.067 billion units were allotted to 2,575 people, stressing that the bond is for the retail investors and is being issued to ensure that all Nigerians participate. The bonds will be issued monthly and it would run for five offer days.
At 13 percent coupon, a small investor could not wish for a better deal; it is far above what a bank deposit of equal amount would guarantee. Moreover, the interest would come every quarter to all investors. The government is issuing the savings bonds targeted at ordinary Nigerians of all income groups, giving them the opportunity to earn an income through saving and investing.

Apart from personal benefits to investors, the bond is also expected to help promote the savings culture of Nigerians, many of who don’t save in banks because of very low-interest rates. Unlike bank deposits, the bond earns you an interest that will be paid quarterly directly into your bank account.
The bond is safe and is backed by the full faith and credit of the federal government. Government bonds hardly default, so you are nearly 100 per cent sure that you will get your money back in full along with the interest. This bond is not just for the rich or comfortable, it is available for the low income also. With as little as N5,000 you can invest in the bond.
In a country where citizens love festivities and elaborate celebrations, the savings bond is a prudent way to save towards marriage, funerals, holidays, school, project, retirement and others. The bond can also be used as collateral to get a loan from a bank.

The bonds have a tenor of two and three years respectively, and that means you can either invest in a savings bond with duration of two years or one with duration of three years. The interest rates are determined by the DMO, and they will be paid quarterly into your bank accounts while the principal will be paid at maturity, depending on the tenor of your bond.
The FG Savings Bond is quite innovative in the way it makes the capital market all-inclusive. It is a unique and fascinating way to deepen the capital market in a way that it caters to all segment of society and makes everyone a stakeholder in the economy.
Commenting on the listing of the bond, Executive Director, Capital Markets, NSE, Haruna Jalo-Waziri said the Exchange was elated to list the bond, which he called an “innovative investment offering” that caters to the retail segment of the Nigerian capital market. He said the take-off of the bond “underpins the efforts of the Federal Government to continue to work with stakeholders to deepen the capital market whilst delivering value to investors at all income levels.”

Moreover, the FG Savings Bond will go a long way in creating better awareness of Nigeria’s capital capital. Nigeria’s capital market has suffered from the financial literacy of potential domestic investors and closing that gap has been a special project of the Central Bank of Nigeria, CBN, the Nigerian Stock Exchange, the Security and Exchange Commission, SEC and other stakeholders. The FG Savings Bond, because it is targeted at retail investors, has the potential to deepen the level of awareness about the Nigerian capital market.
Yakubu Dogara, Speaker House of Representatives is one political leader who must be impressed by the FGN Savings Bond. Dogara had for long lamented a situation where a large chunk of the nation’s resources or capital is heavily concentrated in the hands of few chief executive officers. His grouse is that such skewed situation would widen the inequality gap, eliminate the middle class and plunge more people into abject poverty, thereby posing serious threat to the sustenance and survival of democracy.

The Speaker had, at different fora, made it clear that the skewed distribution of wealth is even more worrisome because the flow of resources from Nigerian citizens to multinational companies operating in the country makes them rich. “Unfortunately, these same companies, rather than invest in the NSE and grow the economy of Nigeria, would rather repatriate their profits 100 percent to their own countries without investing a dime back to the system,” he said.

Thus, the savings bond is government’s way of affirming its faith in the capital market, and at the same time widening access to the market, while deepening the savings culture of all Nigerians.

Source:© Copyright Thisday Online

CBN targets exchange rate stability, naira now 380/dollar

The Central Bank of Nigeria on Sunday said it would continue to introduce measures to stabilise the foreign exchange market.

It also said that various forex initiatives it had introduced in recent weeks were beginning to yield results with stability recorded in the naira exchange rate.

The central bank had opened various windows to meet the demand for forex by Small and Medium-scale Enterprises, dividend remittances abroad as well as investors and exporters.

The spokesperson for the CBN, Mr. Isaac Okorafor, said the bank put in place the measures to ease the difficulties being encountered by the SMEs and other segments of the economy.

He said SME operators no longer needed to patronise or source for forex through unofficial windows.

According to him, the move has helped to reduce pressure on the Bureau De Change segment of the market.

Okorafor urged all participants in the forex market to cooperate with the CBN and abide by the regulatory guidelines aimed at ensuring hitch-free operations in the market.

It is uncertain if the naira stability will be sustained.

Some experts have doubted the CBN’s ability to wage the currency war against speculators.

The regulator has, however, assured market participants that with the external reserves currently at $30bn and crude oil hovering above $50/barrel, it will sustain the regular dollar injections.

Meanwhile, the naira closed flat at 380 against the United States dollar on Sunday, the same amount it touched on Friday, having reached 390/dollar on Thursday.

After touching an all-time-high of 520/dollar in February, the CBN had increased forex supply into the market to enhance the naira.

As a result, the naira appreciated to 375/dollar in March. However, following some speculative activities and other market dynamics, the local currency fell to 410/dollar two weeks ago.

Last week, the naira reversed the loss and rose to 380/dollar after the CBN increased forex supply.

Currency analysts told our correspondent on Sunday that the naira would record a very slight gain this week even as the CBN steps up its interventions in the market.

A currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, said, “I think the naira may not appreciate significantly above 380/dollar. If there is a slight decline in forex supply, it may do around 385/dollar.

“For now, the naira may not gain significantly further than the 380/dollar until when the CBN chooses to shift the exchange rate for the invisibles.”

Source:© Copyright Punch Online

How to invest in FGN savings bond

The FGN savings bond was introduced into the market on March 7, 2017 as a result of market restructuring that saw the upward review of the minimum subscription for treasury bills and bonds in the primary market from N10,000 to N50m. This means that investors or group of investors that cannot come up with the minimum subscription of N50m will have to buy from the secondary market, or subscribe to the FGN savings bonds that have much lower minimum subscription requirements of N5,000 minimum.

READ: Understanding the FGN savings bonds
Before I proceed further, I want to make further clarifications regarding some terms based on questions and feedback I have received so far. The primary market is where you buy directly from the issuer. It is like buying drinks directly from the manufacturer (wholesale). You do that by going through your bank, stock broker or discount house. The secondary market is where you buy from someone who bought from the primary market and wants to re-sell (retail). It is like going to a supermarket to buy drinks – you are buying from someone who bought from the manufacturer.

Brokers usually deal with both primary market and secondary market transactions. That means you do not have to look for another broker when you want to trade in the secondary market, unless you have reasons to. For example, the broker also has a minimum amount they sell to the public based on who their target clients are. It is possible that the minimum amount the broker is ready to accept is too high for you. In that case, you need to look for another broker that will accept the amount you have. If you still cannot find one, then you may have to save up until your money is enough. There are investment products you can use to save monthly until you arrive at the amount you want.

Investing in FGN savings bond

Investing in FGN savings bond is as simple as visiting one of the stock broking firms accredited by the Debt Management Office and fill out the required forms. The DMO is responsible for issuing bonds on behalf of the Federal Government. You can download the current list by visiting the DMO website, You will be required by the stockbroker to open an account with them so that you can deal through them (if you do not have a stockbroker who is already is accredited). Whether you end up opening the account or not, you will be better informed than someone sitting at home asking questions but doing nothing. Taking that first step seems to be the biggest challenge people have.

Investing in fixed income securities is virtually risk-free, so there is no point analysing endlessly an investment that carries no risk. It does not make sense. What should concern you is how to enter, how to exit and how investing in bonds fits into your financial goals and plan. You must have a reason for wanting to invest in bonds. Once you are clear, just step forward and take action. Any additional questions you may have will be answered by the broker.

FGN savings bond is issued by the DMO on behalf of the Federal Government of Nigeria, targeted at low-income earners to encourage savings and to earn income (interest) at competitive rates. The interest earned on FGN savings bond is tax free. This means you can grow your money faster.

Interest earned from FGN savings bond is paid quarterly – every three months – into your account as indicated in the submitted subscription form. The interest is calculated per annum (year). This means if you invest N100,000 in FGN savings bond at 13 per cent, you will be paid N13,000 per year. That means every three months, you will get a credit alert of N3,250, which adds up to N13,000 per year. If you think the interest is too small, you need to increase your investment. That may require you to start saving more and consistently rather than spend on things that will not improve your future. If you are focused, you can keep growing your money to the point that your interest is enough to feed your family.

Minimum subscription for FGN savings bond is N5,000 with a maximum of N50m. Some brokers may not accept N5,000 as stated earlier. You will be told the minimum they accept. If you do not have enough money, you can check with another broker. You can simply call them to find out rather than go door to door. Also, it is better to save up your money to a reasonable amount before you invest in bonds because if the interest is too small, you will be discouraged.

The tenor of FGN savings bond is two to three years. The interest rate is determined by the issuer and is usually stated in the offer for subscription adverts. Offer for subscription is open to the public and it takes place every month, and usually lasts for a week. During that time, you can visit your stockbroker to fill out your subscription form and fund your account. After close of subscription, you will be notified if your subscription was successful. You can decide to take part in every subscription or add your money together and subscribe once in a while. It is important you have a goal you are working towards so that you invest with a plan and focus.

If you want your money to grow faster, you can add your interest to your savings account and use it to buy another bond later, rather than spending the money. If you grow your interest big enough, it becomes another source of income you can fall back on in future, in the event you lose your job or your pension income is not enough to support you.

Source:© Copyright Punch Online

Unilever Nigeria’s Profit Hits N2.8bn in First Quarter

Unilever Nigeria Plc has announced improved financial performance for the first quarter (Q1) ended March 31, 2017. The results showed increases in both top and bottom-lines, raising expectations of stakeholders for a better performance at the end of the current year.

Unilever reported a revenue of N22.172 billion for Q1 of 2017, showing an increase of 32 per cent compared with N16.782 billion in the corresponding period of 2016. Cost of sales rose by 47 per cent from N10.749 billion to N15.879 billion, making the company to end the period with gross profit of N6.293 billion as against N6.033 billion in 2016.

Sales and distribution expenses went up by 23 per cent, while market and administrative costs fell by 22 per cent from N3.355 billion to N2.596 billion in 2017. However, finance costs increased by 32 per cent to N724 million, from N545 million. Profit before tax (PBT) improved by 53 per cent from N1.419 billion to N2.80 billion, while profit after tax (PAT) went up from N1.041 billion to N1.603 billion.

The company said it remained a consumer and customercentric business, as it continues to meet varying needs of Nigerians.

“The company will not relent in its efforts to satisfy its consumers. As a company, we will continue to deploy best practice marketing strategies, with high level of operational intensity; in our continued investment in commercial and factory operations to expand our capacity and grow our market share,” the company said.

In their assessment of the results, analysts at FBN Quest said compared with their estimates, Q1 sales were ahead by 17 per cent while PBT and PAT were ahead by wider margins, mainly due to the positive surprise on the sales line.

“On an annualised basis, while sales are tracking ahead of consensus full year estimate of N76 billion by 16 per cent, PBT and PAT are ahead by 87 per cent on average. Although forex exchange sourcing for raw material importation remains a challenge, any adverse effect has been offset by positives seen in the topline. We continue to believe that the larger consumer goods companies (like Unilever) are benefiting from weaker competition and thus able to grow market share,” they said.

Last week, Unilever announced plans to raise N63 billion via a rights issue and FBN Quest said: We believe the company intends to de-leverage its balance sheet and partly raise funds for planned local manufacturing capacity expansion for its personal care business in the South-West region.”

Source:© Copyright Thisday Online

Stocks Investors Beat Inflation amidst Bearish Trend

Amidst the bearish trend at the stock market, capital growth recorded by some companies at the end of first quarter (Q1) beat inflation figures and fetched investors positive return on their investments. While the Nigerian Stock Exchange (NSE) All Share Index, which is the benchmark gauge for the equities market performance ended the Q1 with a decline of 5.1 per cent, most of the other sectoral indices recorded worst decline. Similarly, most of the stocks are in red, with some recording depreciated above 30 per cent.

When the Nigerian Bureau of Statistics (NBS) released the inflation rate for March, it was 17.26 per cent, meaning that most investors in the stock market are counting losses. However, THISDAY checks revealed that some of the investors have witnessed positive returns on their investments amidst the rampaging bears. These investors recorded returns that are higher than the inflation rate, meaning that they are still recording positive returns on their investments.

Investors in Beta Glass Company Plc recorded the highest return of 46 per cent, followed by Airline Services and Logistics Plc with 42.4 per cent. Those in United Bank for Africa Plc (UBA) witnessed a growth of 28.2 per cent, while Okomu Oil Palm Plc fetched its investors 24.4 per cent. Stanbic IBTC Holdings Plc ended the March with 20 per cent, which is higher than the inflation rate.

Some market operators said more stocks would provide positive returns to investors once the operating environment improves following efforts by the government. Market analysts are also not surprised that stocks of UBA and Stanbic recorded positive growth in Q1 given their financial results for 2016. Both financial institutions recorded high profit growth compared to other banks. Stanbic IBTC recorded a growth of 51 per cent in profit while that of UBA rose by 32 per cent.
The Group Managing Director and Chief Executive Officer of UBA, Kennedy Uzoka, had attributed the impressive results to focus on operational efficiencies.

“Given the operating environment in 2016, I am very pleased with our profitability – an impressive 32 per cent growth in PBT to N91 billion – whilst we have also focused keenly on operational efficiencies, illustrated by the reduction in our cost-to-income ratio.” Uzoka said.
He had assured stakeholders of better further performance, saying “As we implement our Customer First Philosophy, we are approaching 2017 with real optimism, especially with the outlook remaining positive in many of our markets, where we benefit from our increasingly diverse revenue streams. We reiterate our pledge to delivering excellent service to our customers, and remain committed to creating superior and sustainable return for our shareholders.”

Source:© Copyright Thisday Online

Forte Oil Grows Profit by 98% to N1.9bn in First Quarter

The hope of shareholders of Forte Oil Plc to receive dividend at the end of the current financial year has brightened as the company reported improved results for the first quarter(Q1) ended March 31, 2017.

Shareholders of the oil firm did not receive any dividend for 2016 due to a 50 per cent decline in its profit. However, going by the Q1 results, there is light at the end of the tunnel. Forte Oil reported a profit after tax (PAT) of 1.9 billion in Q1 of 2017, showing a jump of 98 per cent from N1.0 billion recorded in the corresponding period of 2016.

In all, Forte Oil recorded a revenue of N33 billion, down 7.3 per cent from N35.67 billion. Cost of sales was reduced by 11.7 per cent from N30.8 billion to N27.2 billion, while distribution expenses was reduced by 45 per cent from N911 million to N501 million, leading to a growth of 20.8 per cent in gross profit to N5.8 billion, from N4.8 billion in 2015.

Operation expenses declined by 9.8 per cent to N2.8 billion, from N3.1 billion, net finance cost rose by 37 per cent from N1.1 billion to N1.6 billion. The company posted post tax profit of N2.0 billion, up 57.5 per cent from N1.3 billion. A reduction in tax by 52 per cent from N300 million to N200 million made the profit after tax to grow fast to N1.9 billion in 2017, compared with N1.0 billion in 2016, showing a jump of 97.5 per cent.
In bid to reduce its finance cost, Forte Oil Plc last year raised N9 billion bond under its N50 billion bond issuance programme, to refinance existing short term commercial bank loan obligations. The funds were also meant to refinance its retail outlet expansion.

The Group Chief Executive Officer, Forte Oil, Mr. Akin Akinfemiwa had said: “With the raising of this initial capital which has been fully underwritten shows the confidence the investing public has in Forte Oil Plc as an investment of choice. This bond programme being the first in the downstream sector, is testament to Forte’s position within the downstream sector and allows the company to actualise the vision of the Board to continue to provide value to its shareholders regardless of the economic climate.

Also speaking on the bond issuance, the Group Executive Director, Finance and Risk Management, Forte Mr. Julius Omodayo-Owotuga said: “This series provides us with the necessary liquidity to actualize our growth strategies and positions the company for the years ahead. The pricing of this debt instrument demonstrates the markets’ belief in us and the pricing would help reduce our borrowing cost and increase profitability in the short and long term.”

Source:© Copyright Thisday Online

CBN introduces ‘Form X’ for SMEs, naira closes at 410/$

The Central Bank of Nigeria has introduced “Form X” for the Small and Medium-scale Enterprises seeking to purchase foreign exchange from the apex bank.

The CBN said the decision was part of its commitment to increase forex liquidity and improve access by the SMEs and retail businesses to forex.

The Acting Director, Corporate Communications, CBN, Mr. Isaac Okorafor, who confirmed this on Monday, said that the measure was intended to ease documentation challenges usually encountered by this category of businesses.

He further explained that the new form, which must be completed by all the SME applicants required the applicant to fill the form with a supporting application letter as well as beneficiary invoice and bank wire transfer.

The objective of the new guideline, he added, was to remove obstacles usually encountered by those whose forex needs for either visibles or invisibles were as small as or less than $10,000.

He reiterated the apex bank’s determination to continue to ensure adequate supply of forex for genuine transactions in the coming days.

The introduction of the ‘’Form X” was coming barely one week after the CBN opened a special forex window for the SMEs.

Meanwhile, the naira closed at 410/dollar on the parallel market on Monday, the last day of the Easter holidays.

Despite the series of dollar supplies into the various segments of the forex market by the central bank, the naira had closed at 410 against the United States dollar from Friday to Sunday, fuelling concerns about the CBN dollar interventions.

Earlier, the local unit had also closed at 410/dollar consecutively from last Tuesday to last Thursday.

Deposit Money Banks lacked naira liquidity to bid for the $100m offered for sale by the CBN last Thursday.

Banks were unable to buy over $39m out of the $100m offered for bid by the apex bank.

The CBN is reportedly planning to raise dollar sales to the BDCs to $40,000 from the present $20,000, which will improve liquidity and help support the local currency.

Source:© Copyright Punch Online

AMCON takes over three more Arumemi-Ikhide’s firms

The Asset Management Corporation of Nigeria has taken over Rockson Engineering Limited, Ojemai Investment Limited and Ojemai Farms, two firms linked to the former Chairman of Arik Air, Sir Joseph Arumemi-Ikhide.

According to the corporation, Rockson Engineering is indebted to it to the tune of N107bn; Ojemai Investment, N1.9bn; and Ojemai Farms, N8.6bn.

Arik Air’s total debt is also put at about N387bn.

The Head of Corporate Communications, AMCON, Mr. Jude Nwauzor, confirmed the takeover of the firms to one of our correspondents in Lagos on Wednesday.

In an affidavit deposed to by the Receiver Manager of Arik Air, Mr. Oluseye Opasanya, before a Federal High Court in Lagos, the airlines’s total indebtedness was put at N387bn.

According to the affidavit, in addition to about N375bn owed locally, the airline also owes aviation authorities in the West Coast of Africa about $6.5m and Lufthansa Technik Group about €31m.

A breakdown of Arik’s debt within the country showed that the airline owes N418m as arrears of unpaid insurance premium for its airplanes, due on February 10, 2017.

According to the document, a demand letter from the National Pension Commission also showed that the airline failed to remit pension contributions of its employees despite making the necessary deductions from their salaries, and so owes the commission the sum of N4.586bn.

Other debts by the airline are N28.364bn to Zenith Bank Plc; N9.447bn to Access Bank Plc; N632m to Amadeus Marketing Nigeria, an aviation service provider; and N3.8m to Marriot Hotel and Best Western Hotel for the accommodation of its engineers and members of staff.

It was also revealed that the erstwhile management of the airline obtained N2bn to retrofit from AMCON without documentation.

The affidavit alleged that the former management of Arik was basically gambling with the lives of millions of people that patronised the airline, because it did not care about safety as critical issues such as having a simulator to ensure that Arik pilots undertook mandatory training as required to improve their efficiency, were non-existent.

It added that the airline had inadequate equipment to facilitate its operations, which was reflected by the insufficient laptops available at its check-in counters to conduct basic checks.

Nwauzor stated, “The airline uses a minimum of 48 tyres every month, but when AMCON took over, there were no spares.

“As a matter of fact, the salaries of the expatriate and local staff of Arik were unpaid, while the airline owed premiums on its insurance policy because the previous management of Arik took insurance on a monthly basis instead of annually in accordance with aviation global best practices for the insurance of aviation assets.

“Arik operations would have been grounded indefinitely if AMCON did not intervene as the insurance policy of Arik was to lapse on February 10, 2017. As of that date, Arik owed a total of N418m in arrears of unpaid premium, just as its employees’ health insurance had also expired and as a result, the pilots and other members of staff of the airline were to halt operations as well.”

He added that AMCON took over to underscore the government’s decision to instil sanity in the nation’s aviation sector and prevent a major catastrophe, adding that it underestimated the rot in the airline’s system before the takeover.

According to him, the government has so far spent about N1.5bn since AMCON took over in February to revive the airline, which he said was on the verge of shutting down.

“Even if we had given the former management the next 25 years, they will still not have been able to get out of debt. The National Assembly wanted AMCON to move in, liquidate the company and recover the debts owed. That option is still open to us,” Nwauzor added.

The court document stated that among other shortcomings, Arik operated without any pattern of corporate governance, had a very poor business judgment, poor record keeping and lacked proper accounting and auditing.

Source:© Copyright Punch Online