FG Explains Temporary Suspension of National Carrier

The federal government Thursday explained that the national
carrier, which was earlier billed to kick off in December was
suspended temporarily because the process to actualise it was
delayed.

It said the transaction advisers did not complete the process on
the modalities for the ownership of the new airline in time and
government was able to provide sovereign guarantee to acquire 30
aircraft for the take-off of the new airline.

The Minister of State, Aviation, Senator Hadi Sirika, who made
this known, hinted that in recent months, several misinformation,
factual errors, insinuations and fabrications have been peddled in
both social and print media on the Nigeria Air Project.

These, he said, included desirability, inadequate planning,
non-consultation with stakeholders, lack of transparency and
publications of fictitious amounts allegedly spent by government on
the project, amongst others.

He said 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 per
cent 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 aircraft estimated at
$300 million in a staggered payment till 2020.

According to the minister, “Estimated funding requirement for
the establishment of the project is $300 million up to 2020.
Initial start-up capital of $55 million made up of $25 million for
deposit for new aircraft and $30 million for working capital from
June to December 2018.

“Estimated working capital for 2019 is $100 million. Estimated
working capital for 2020 of $145 million 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 and urged Nigerian operators to invest in
the planned airline.

He noted that no foreign company was paid $600,000 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 said 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
(FEC) 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 the 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 the 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
capitalisation 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 the 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.