Business
AMCON Takes Over Arik Air
The Assets Management Corporation of Nigeria (AMCON) said it has taken over the operation of Nigeria’s largest domestic carrier, Arik Air.
AMCON spokesperson, Mr Jude Nwauzor, confirmed the development to newsmen in Lagos, yesterday.
Nwauzor said the airline would now be managed by Capt. Roy Ilegbodu, an aviation expert, under the receivership of Mr Oluseye Opasanya (SAN).
He said the government decided to intervene because Arik Air is immersed in heavy debt burden that was threatening to ground its operations.
“For some time now, the airline, which carries about 55 per cent of the load in the country, has been going through difficult times that are attributable to its bad corporate governance and erratic operational challenges.
“Others are inability to pay staff salaries and heavy debt burden,among other issues, which led to the call for authorities in the country to intervene before the airline goes under like many before it,’’ he said.
Nwauzor said the move underscored government’s decision to instill sanity in the nation’s aviation sector.
According to him, the development will afford the airline to go back to regular and undisrupted operations, avoid job losses, protect investors and stakeholder funds as well as ensure safety and stability in the already challenged aviation sector.
Ilegbodu assured both staff of the troubled airline and all other stakeholders that his appointment at Arik would, among other objectives, enhance the value of the airline.
He said it would also improve customer experience and sustain the safety, reliability of the airline.
“As a matter of fact, Arik Air has been in a precarious situation largely attributable to its heavy financial debt burden, bad corporate governance, erratic operational challenges and other issues.
“This required immediate intervention in order to guarantee the continued survival of the Airline.
“Yesterday, Arik temporarily suspended its flight operations to the John F. Kennedy International Airport, New York, United States, claiming that the two Airbus A330-200 aircraft dedicated to the route have been taken to France for C check at the same time.
“Equally more than eight aircraft are currently grounded at the tarmac making it difficult to meet their routine commercial flights,’’ Ilegbodu said.
Also, the Minister of State for Aviation, Sen. Hadi Sirika, in another statement obtained by The Tide source, said government believed that the take-over would eventually help the troubled airline.
Sirika said: “We believe that this takeover is timely and will stabilise the operations of the airline.
“This will enhance the long term economic value of Arik Air and revitalise the airline’s ailing operations as well as sustain safety standards, in view of the airline’s pivotal role in the Nigerian aviation sector,’’ he said.
The minister further pledged that the ministry would support the new management of the airline.
According to him, all necessary steps have been taken to ensure that there will be no undue disruption of the airline’s regular business operations or activities of stakeholders, on account of the recent changes in its leadership.
Reports says that the operatives of the Economic and Financial Crimes Commission (EFCC) also on Wednesday stormed the airline’s office at the Murtala Muhammed Airport, Lagos and also grilled its Chairman, Mr Joseph Arumemi-Ikhedi for several hours.
Business
Electricity: Bands BCDE Suffer No Power
As DisCos struggle to meet the required 20 hours power supply to “Band A” customers following shortage of gas which has hindered power generation since January, customers on Bands B, C, D, and E are left with no light, according to The Tide’s source.
The source learnt that the distribution companies were concentrating more on the Band A customers to keep their Band A feeders from being downgraded.
Band A customers enjoy a minimum of 20 hours of electricity daily.
On April 3, the Nigerian Electricity Regulatory Commission announced that subsidies would no longer be paid for the electricity consumed by Band A customers.
The electricity tariff for Band A customers was revised upward from N68 per kilowatt-hour to N255/KWh.
1 kWh is the amount of energy that could be used if a 1,000-watt appliance is kept running for an hour. For example, a 100-watt light bulb operating for 10 hours would use 1 kWh.
After the power subsidy was removed, the NERC directed the 11 DisCos to release their lists of Band A customers, who must get at least a 20-hour supply daily.
The regulator and the Minister of Power, Adebayo Adelabu, emphasised that there would be sanctions should the distribution companies fail to supply Band A customers with 20 hours of electricity.
The DisCos were also mandated to inform customers whenever they failed to meet the required minimum service level.
NERC said where a DisCo failed to deliver on the committed level of service on a Band A feeder for two consecutive days, the DisCo should, by 10 am the next day, publish on its website an explanation of the reasons for the failure and update the affected customers on the timeline for restoration of service to the committed level.
It stated that if a customer’s service level improves to at least 20 hours, they should be upgraded from lower service bands to Band A, adding that if the DisCo fails to meet the committed service level to a Band A feeder for seven consecutive days, the feeder will be downgraded to the recorded level of supply by the applicable framework.
In their efforts to meet up with the service level, the source gathered that some of the DisCos were gradually resorting to diverting the little allocation they get to the Band A customers.
This is in spite of the fact that the gas constraints that have hindered power generation since the beginning of the year have yet to be addressed.
Many communities said they could not boast 30 hours of power supply since January, a development the government blamed on the refusal of gas companies to supply gas to power-generating companies due to heavy debt.
Recall that recently, the IBEDC spokesperson, Busolami Tunwase, explained that, “One of the primary factors is the low supply of gas to generating companies, which has led to a gradual decrease in available generation on the grid.
Business
‘Inappropriate Insider Dealing’ Earns Julius Berger NGX Sanction
Authorities at the Nigerian Exchange (NGX) have sanctioned Julius Berger Nigeria (JBN) Plc for engaging in inappropriate insider dealing in shares.
According to a document obtained by The Tide’s source, JBN, Nigeria’s leading construction company, was sanctioned for “insider dealing during closed period”.
Incorporated in 1970, Julius Berger, Nigeria, which was incorporated in 1970, became a publicly quoted company in 1991 and has more than 10,000 shareholders.
NGX Regulatory Company (NGX RegCo), the self regulatory organisation (SRO) that regulates activities at the NGX, stated that JBN breached certain provisions of the listing rules and was thus sanctioned accordingly.
According to NGX RegCo, JBN violated provisions on “closed period”, in breach of the construction company’s commitment to adhere to listing rules and standards.
The NGX had tightened its rules and regulations to checkmate boardroom intrigues and block information arbitrage that tend to confer advantages on companies’ directors.
The amendments expanded the scope and authority of corporate financial reporting while eliminating gaps that allowed companies to sidetrack relevant rules in stage-managing corporate compliance.
The enhanced framework provided clarity and greater disclosures on directors’ trading in shares, corporate liability for accuracy and compliance of financial statement, dissuade bogus dividend payment and other sundry boardroom’s maneuverings that tend to favour insiders.
The amendments came on the heels of noticeable increase in violations of rules on ‘closed period’, a period when directors are banned from trading in the shares of their companies.
Rule 17.17 of the NGX disallows insiders and their connected persons from trading in the shares or bonds of their companies during the ‘closed period’ or any period during which trading is restricted.
This period is mostly at a period of sensitive material information, like prior knowledge of financials, dividends or major corporate changes, which places directors and other insiders at advantage above other general and retail investors.
A review of the disclosure violations at the stock market had shown that all violations in 2021 were related to violation of Rule 17.17 on ‘closed period’.
Under the amendments, in addition to the provisions of relevant accounting standards, laws, rules and requirements regarding preparation of financial statements, companies are now required to include several specific declarations on securities transactions by directors, changes in shareholding structure, self-assessment on compliance with corporate governance standards and internal code for directors on securities transactions among others.
Business
Nigerian Breweries To Suspend Operations In Two Plants
Nigerian Breweries Plc says it is planning for a company-wide reorganisation which include the temporary suspension of operations in two of its nine breweries.
It said this is part of a company-wide reorganisation as part of a strategic recovery plan aimed at securing a resilient and sustainable future for its stakeholders.
The Business Recovery Plan includes a rights issue and a company-wide reorganisation exercise which includes temporary suspension of two of its nine breweries and an optimisation of production capacity in the other seven breweries, some of which have received significant capital investment in recent years.
These measures include relocating and redistributing employees to the remaining seven breweries and offering support and severance packages to those that become unavoidably affected.
The company said this move is essential to improve its operational efficiency, financial stability and enhance a return of the business to profitability, in the face of the persistently challenging business environment.
In letters signed by the company’s Human Resource Director, Grace Omo-Lamai, and addressed to the leadership of the National Union of Food, Beverage & Tobacco Employees (NUFBTE) and the Food Beverage and Tobacco Senior Staff Association (FOBTOB), the company informed both unions that its proposed plan would include operational efficiency measures and a company-wide reorganisation that includes the temporary suspension of operations in two of its nine breweries.
As a result, and in accordance with labour requirements, the company invited the unions to discussions on the implications of the proposed measures.
Recall that the company recently notified the Nigerian Exchange Group (NGX) of its plan to raise capital of up to N600 billion by way of a rights issue, as a means of restoring the company’s balance sheet to a healthy position following the net finance expenses of N189 billion recorded in 2023 driven mainly by a foreign exchange loss of N153 billion resulting from the devaluation of the naira.
Speaking on these developments, the Managing Director/CEO, Nigerian Breweries, Hans Essaadi, described the business recovery plan as strategic and vital for business continuity.
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