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Air Nigeria: FG refutes claim of intended payment $300m for 5% equity

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Aviation minister

THE Federal Government has refuted claims in some quarter insinuating that government was to pay $300 million US dollars for a five per cent stake in the newly unveiled Air Nigeria, describing it as malicious falsehood.

Debunking the claims on Tuesday in Abuja, the Minister of State for Aviation, Hadi Sirika while responding to issues raised about the national carrier said the government was providing startup capital for the airline.

According to a statement released by the Ministry’s Deputy Director of Press, Mr. James Odaudu stated that government is not funding the entire project.

Sirika said: “While we provide the clarifications below for record purposes, only delivering a world-class national carrier is good enough for Nigerians, this will stop the export of jobs and exploitation of Nigerian air travellers. We are not deterred but we are focused on our target and mission.”

According to him, “government is just providing startup capital in the form of an upfront grant/viability gap funding. Once the strategic equity investor is in place, they will be expected to build on the initial investment made.”

The Minister revealed that “$8 million represents startup capital for offices etc required for takeoff. But $300 million is the entire airline cash flow funding requirements (aircraft, operations and working capital) for three years (2018, 2019 and 2020).

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“This funding can be in the form of equity or debt. The financial model estimates cash flow requirements as follows 2018 ($55 million – $8 million is included here), 2019 ($100 million) and 2020 ($145 million).

Sirika further explained that “In order to ensure take-off of the airline in 2018, the government will provide $55 million upfront grant/viability gap funding to finance startup capital and pay commitment fees for aircraft to be leased for initial operations and deposit for new aircraft whose delivery will begin in 2021.”

He said the strategic investor will only become known after the public-private partnership procurement process is completed.

Sirika stated that shares to be sold after one year of operations, stressing that the company’s shares will be sold through an initial public offering after which the government will own five per cent equity.

“Government’s equity share held in trust for Nigerians will be devolved to Nigerians via an IPO. “The government will retain only 5% equity, the list of shareholders then will be available to SEC and the Nigerian Stock Exchange.

“The rest of the 95% equity of Nigeria Air Limited will then be owned by the strategic equity investor and the general public.

“At that point, Nigeria Air Ltd becomes a public company subject to SEC, NSE and relevant CAMA rules for public companies” he stated.

“Once the Request for Qualification and Information Memorandum document is completed for the procurement phase, these documents will be released to the public for an open competitive international bidding process to select a minority strategic equity partner who will invest and operate the national carrier. The public will know more.”

The Minister observed that: “For the national carrier, only the Development phase has been completed and all the information about this phase has been transparently disclosed on the PPP Disclosure Portal of the regulator the Infrastructure Concession Regulatory Commission (no private party has been selected, final financial requirement not completed only business case funding estimate is available, final equity structure not in place yet”.

He added that “As part of efforts to make airlines viable in Nigeria, the ministry is making moves to have the National Assembly pass a fly Nigeria act. This act will require that anybody travelling on a ticket bought with public funds must travel on a Nigerian carrier unless the route is not served by a Nigerian carrier.

“However, as part of discussions with major Aircraft Manufacturers, the Government will pay deposits for brand new aircraft and the manufacturers will support Nigeria Air in getting very good dry lease aircraft coming directly from C checks and certified by the original manufacturers.

“These aircraft lease period will be for an initial period of 5 years with an early termination option after 4 years. By the time the new aircraft are ready, they will be replacing the leased aircraft.

“Till all the aircraft are owned by the airline. This is how Emirates Airlines started with two leased aircraft from Pakistan Airlines until it was able to buy her own aircraft. According to the manufacturers, the new aircraft will start coming through from 2021.

“However, with your private funds, you can do as you like. Many countries including America has such as Act. This National carrier is for us as a nation, and it should be our pride and joy. Let’s try and contribute positively to the success of Nigeria Air,” Sirika concluded.

The post Air Nigeria: FG refutes claim of intended payment $300m for 5% equity appeared first on Tribune.

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