*Invites Nigerian Operators to Invest in Planned Airline
The federal government on Thursday explained that the national carrier which was earlier billed to kick off this December was suspended temporarily because the process to actualise it was delayed.
Government said the transaction advisers did not complete the process on modalities on the ownership of the new airline in time and government was able to provide sovereign guarantee to acquire 30 aircraft for the take of the new Airline.
The Minister of State, Aviation, Senator Hadi Sirika who made this known yesterday disclosed that Lufthansa, which was the first approved transaction adviser was rejected due to its outrageous demands which included opening an escrow account, refusal to pay tax and demand for 75 percent up front payment.
Sirika who spoke at the 5th aviation stakeholders’ forum in Abuja also disclosed that another major factor that stalled the process was the inability of the federal government to provide sovereign guarantee for the procurement of 30 airplanes estimated at 300 million dollars in a staggard payment till 2020.
He however said that government is determined to birth a new national airline and urged existing Nigerian operators to also invest in the airline, which would be significantly established under public ownership, thus giving access to ordinary Nigerians to buy shares in the company.
According to the Minister, “Estimated funding requirement for the establishment of the project is 300 million dollars up to 2020. Initial start–up capital of 55million dollars made up of 25 million dollars for deposit for new aircraft and 30 million dollars for working capital from June to December 2018.
“Estimated working capital for 2019 is 100 million dollars, estimated working capital for 2020 of 145 million dollars to be provided by the Strategic Equity Partners who are expected to manage the project.
“Already, IsDB, AfDB, AFREXIM, US-EXIM, Standard Chartered Bank, Boeing, Airbus, COMAC/CCECC, BOAD, China-Exim, Qatar Airways, Ethiopian Airlines, Deutche Infrastructure Finance, French and US Governments have indicated interest in the project.”
He explained that the name of the national carrier ‘’Nigeria Air‘‘ was obtained by engaging the general public through social media campaign where over 400,000 persons engaged within one week of campaign on facebook.
He noted that no foriegn company was paid 600,000dollars for the design of the logo as speculated, adding that due process was followed in the branding, which included obtaining ‘’No Objection’’ Certificate with Ref. No.BPP/RPT/18/VOL.1/075 from the Bureau of Public Procurement for the sum of N50,893,000.00 and payment for these services is yet to be made.
He however, assured that the consortium comprising Airline Management Group Ltd, Avia Solutions Ltd and Tianaero FZE had completed the Outline Business Case (OBC) Report and ICRC reviewed the report and issued OBC Certificate of Compliance, adding that the report has been presented to the Federal Executive Council for consideration to move to the Procurement Phase and then Full Business Case (FBC).
Speaking on the transparency of the Process, Sirika said
“The processes fully complied with the Public Procurement Act, 2007 and the ICRC Act, 2005; the aviation sector roadmap was presented to Stakeholders for inputs and buy-in at several fora; a project implementation management structure comprising inter- ministerial Project Steering Committee and Project Delivery Team were constituted to oversee project implementation as earlier highlighted.
“The processes fully complied with the Public Procurement Act, 2007 and the ICRC Act, 2005; the aviation sector roadmap was presented to Stakeholders for inputs and buy-in at several fora; a project implementation management structure comprising inter- ministerial Project Steering Committee and Project Delivery Team were constituted to oversee project implementation as earlier highlighted.
“The appointment of Transaction Advisers followed due process culminating in Federal Executive Council Approval after 13 months.”
On the justification and desirability of national carrier, the minister said no domestic airline has evolved to fill the vacuum left by Nigeria Airways since it ceased to operate more than 15 years ago due largely to wrong business models, low capitalization and poor governance structure.
In addition he noted that only 28 out of Nigeria’s Bi-lateral Air Service Agreements (BASAs) with 83 countries are active on national carrier.
“The national carrier is needed to give impetus to the emergence of Nigeria as hub for the West and Central Africa, promote reliable air transport services, support the growth of the aviation industry and domestic airlines through infrastructure expansion, traffic/routes expansion and manpower development associated with the National Carrier, create employment and compete with foreign airlines for a share of international routes through competitive pricing thereby reducing capital flight,” Sirika added.
