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AVIATIONCOVER

FG Approves N47 Billion for Nigeria Air Project

Nigeria Airways

The Federal Government has approved the sum of N47 billion for the take off of Nigeria Air.

The Minister of State for Aviation, Sen. Hadi Sirika, said the money is already in the 2019 budget recently passed by the National Assembly.

The Nigeria Air project was suspended about eight months ago.

Hadi Sirika, at the weekend, said, “President Muhammadu Buhari had directed that the Viability Gap Funding (VGF) for the project be provided for in the 2019 Appropriation; which the National Assembly has graciously done.”

The VGF is $155m or about N47.43bn at N306/$1 official exchange rate at the Central Bank of Nigeria (CBN) rate.

In September, 2018, the Federal Government announced the suspension of the planned National Carrier, Nigeria Air indefinitely. Sirika had briefed newsmen then on the status of the project. Although he said government took the decision to suspend the procurement of aircraft for Nigeria Air at the Federal Executive Council (FEC), Sirika did not give specific reasons for the suspension.

However, the minister, in a statement from Mr. James Odaudu, the Deputy Director, Press and Public Affairs, last weekend, reacted to media reports that the FEC had disagreed over the modalities for establishing the national carrier. The media had quoted Minister of Transportation, Mr. Rotimi Amaechi, to have given the indication of the disagreement.

Amaechi gave reasons last week as to why the proposed national carrier was suspended by the FEC. During his valedictory press briefing, Amaechi said the cabinet could not reach a consensus on the architecture of the national carrier.

The transport minister said while some cabinet members wanted some form of government’s investments to start the national carrier, some ministers said it should be 100 per cent private- sector floated from the onset; a situation that led to a stalemate.

“On the national carrier, the cabinet is divided on the issue of modality. There are those who believe that the Federal Government should invest and then we can sell the equity later,” he said.

No disagreement among FEC members – Sirika

However, the aviation minister said Mr. Amaechi might have been quoted out of context as there was no disagreement among FEC members since the president had directed for the VGF to be included in the budget.

Daily Trust reports that during the fifth aviation stakeholders’ forum on November 8, 2018, Sen. Sirika had said the VGF of $155m was required in accordance with the Outline Business Case (OBC) to enable the airline take off and crystallise before private equity funds would be introduced.

On the whole, he said the OBC had prescribed $300 government funding requirement for three years after which the government should begin to sell out and retain just a fraction of the equity.

These comprise $55m initial startup capital made up of $25m for aircraft deployment and $30m for working capital from June to December, 2018.

Another $100m was estimated to be spent in 2019 to provide buffer for the investments if the private sector will come in; perhaps this will now happen in 2020.

The minister, at the meeting, explained that with the planned $25m deposit, aircraft manufacturer, Boeing, had indicated interest in providing 30 aircraft, starting with 15. Perhaps this may happen now that the money is provided for in the 2019 budget.

The minister also listed the prospective investors in Nigeria Air as Islamic Development Bank (IsDB), African Development Bank (AfDB), Boeing, Airbus, Qatar Airways, among others including the governments of France and the US.

Shortly after its name was unveiled at the Farnborough International Air Show in London on July 18, 2018, experts began to project the gains of the airline for Nigeria.

Prof. Hassan Oaikhenan of the Economics and Statistics Department, University of Benin, in a News Agency of Nigeria (NAN) interview, had said the national carrier had the potential to boost the nation’s economy if professionally managed.

Oaikhenan advised the Federal Government to ensure that structures were put in place to guarantee the sustainability of the new national carrier.

The announcement was coming 15 years after the liquidation of Nigeria Airways. Sirika had said at the event that it was a business, and not a social service.

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