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Nigeria Air: FG disburses N6.25 billion on consultancy, advisers

By Wole Oyebade
03 November 2021   |   4:30 am
The controversial national carrier, Nigeria Air, may see the light of the day before the current administration winds down, with a new take-off date now set for the first quarter of 2022.

Minister of Aviation, Hadi Sirika. PHOTO: AFP

• Budgets N14.7b in three years
• Qatar, Turkish, Ethiopian Airlines identified as technical partners
• Stakeholders split over prospect and priority in pandemic, twilight of Buhari’s govt

The controversial national carrier, Nigeria Air, may see the light of the day before the current administration winds down, with a new take-off date now set for the first quarter of 2022.
 
The fresh optimism, The Guardian learnt, is not unconnected with a recent headway in the search for credible technical partners and financial backings of the Federal Government year-on-year.
 
Indeed, another shot at floating a national carrier, being one of the 2015 electioneering promises of President Muhammadu Buhari, has consistently racked up appropriation votes since 2019 to 2022, now summed up to N14.65 billion.

About 40 per cent of the sum (N6.25 billion) has been channelled to working capital, consultancy and transaction advisers’ fees.
 
Similarly, the grope for technical partners appears to be ending with the Ministry of Aviation and Qatar Airways closing in on a deal, ahead of Turkish Air and Ethiopian Airlines.
 
Aviation stakeholders, who have been waiting for the project, are divided on its prospects. At stake are questions on its sustainability in the post-Buhari era, its uphill take-off in the pandemic age and official indifference to a transparent process.  
 
Inquiries by The Guardian suggested that groundwork on the proposed national carrier had continued unabated behind the scene. An official, who is privy to the charge, led by Aviation Minister, Capt. Hadi Sirika, said, “Nigeria is most likely to have the new airline by 2022 Q1.
 
“Yes, we said the same thing last year, expecting things to have been concluded by the first quarter of 2021. That failed and is behind us now. What is almost certain is the 2022 date.
 


“We are almost through with our choice of technical partners. The public will know at the right time. I can assure you that we are almost there,” the top official said.
 
Findings showed that Qatar Airways is in the lead in a race that has Turkish Air and Ethiopian Airlines (ET). Qatar is a better contender given its strong rating, financial strength, modern equipment and global network. ET may be instrumental in setting up a Maintenance Repair and Overhaul (MRO) facility, according to feelers.
 
Sirika, shortly after coming to office late 2015, launched an aviation development roadmap. Of priority are a new national carrier, airport concession, aircraft leasing company and a MRO.
 
The national carrier is to replace the defunct Nigeria Airways that ceased operations in 2003. The replacement was designed as a Public-Private Partnership (PPP) project with the Federal Government likely to own between five and 10 per cent stake.  
 
In 2018, the national carrier and its christening in London set the minister on a collision course with the Nigerian public. Harsh criticism of the “prodigal” roll-out at the Farnborough Airshow in London was instrumental to “temporary” suspension of the launch, earlier scheduled for December 24, 2018. Contrary to public perception that the logo design had gulped N80 million, the minister said less than N10 million had been spent.
 
Findings then showed that the Federal Executive Council (FEC) did not also warm up to the proposed airline because it had no provision in the 2018 appropriation law. But since then to date, the project has been rattling-up votes, even faster than jet engines burn kerosene.
 
Things started looking up for the legacy project in the 2019 budget, where it was awarded between N8billion and N47 billion, with additional N500 million for its transaction advisers. The 2020 budget had N4.6 billion for its working capital, while the 2021 appropriation added another N1 billion to working capital. The 2022 budget recently proposed to the National Assembly also voted N400 million for the airline, with additional N150 million as consultancy fee.
  

While the airline did not exist prior to or during the pandemic, it was given priority in the N27 billion aviation bailout fund to cushion the devastating effect of the pandemic on businesses.
 
Aviation Consultant, Chris Aligbe, said though the sum of over N14.65 billion vote is huge, “we only need to convert it to dollars to see the actual worth in aviation ventures because our Naira has, sadly, become palm wine powerless.
 
“Because when you talk about the airline industry, flotation, aircraft acquisition – be it leasing or whatever, you are talking in terms of dollars. That billions of naira, how many aircraft can it even buy or lease? Again, you have to take away the cost spent on promotion, transaction advisers, and others because those are not yet investments in the airline. They are preparatory for the investment itself. It is when you do that you have a clear sense of what is actually required and what is being put into it,” Aligbe said.
 
He added that if the airline could come up in Q1 2022, the administration would still have sufficient time to demonstrate its strength to the Nigerian public. “If it gets the right partner, with minimal investment from the government and it is doing well in about six months, Nigerians will not bother about how late or early it came.”
 
Former Commandant of Lagos Airport, in the 90s, Group Capt. John Ojikutu (rtd), agreed that strength of the national carrier will be tested by the genuineness in its buildup, especially the business plans and its transparency, than its promptness.
 
Ojikutu said it is not enough for the Federal Government to own only five per cent of the stake, without a full disclosure on the 95 per cent balance.
 
“If Qatar is coming as an investment partner, what is the value of its investment? Would Qatar also be technical partners or who are the technical partners? Who are the other national investors in the national carrier and what shares would they take? What shares would be available to the national or the public in what we are calling a national carrier?
  
“The N14.6 billion that was received as votes from the government was used for what purpose? Would that be the value of the shares without knowing what is the capital of the airline? If we don’t have positive answers to all these, we may end up with an airline like Virgin Nigeria (VN) that was secretly formed in Aso Rock and secretly defunct at Murtala Muhammed Airport (MMA) Lagos,” he said.
 
To make the airline truly national, Ojikutu advised federal and state governments not to take more than 10 per cent stake. By extension, appropriate 40 per cent to foreign technical/investors partners, while credible Nigerian investors and the general public take 20 per cent and 30 per cent, in that order.
 

He, however, frowned on partnering those airlines that are already competing with Nigeria on its Bilateral Air Service Agreement (BASA) routes.
 
“Using Qatar, Turkish or any Middle East, EU, and U.S. Airlines that are on our BASA routes, in any partnership, cannot profit the airline. Get technical partners from Australia, New Zealand, Canada, and so on.”
 
Former President of the National Association of Nigerian Travel Agencies (NANTA), Bankole Bernard, said the progress report was a sufficient reason for Nigerians to rally behind the project.
  
Bernard said that some things ended badly and shouldn’t foreclose another try. He noted that the add-on values of a national carrier in the diplomatic community, airfares regulation and industry development, should make the project worth the wait.
 
Assistant Secretary of the Aviation Safety Round Table Initiative (ASRTI), a think-tank group of the sector, Olumide Ohunayo, however, believes that the decision on a legacy asset shouldn’t have taken forever — where handlers are clear-headed and not building for selfish interest.
 
He cited the case of Ibom Air, for instance, was the dream of the Akwa Ibom State governor, Emmanuel Udom. And in about four years of his administration, the state took to the skies, surpassing expectations in two years of its operations.
 
This month in Europe, Italy floated a new national carrier, ITA Airways. The new carrier was unveiled less than 24 hours after the former national airline, Alitalia collapsed, ending years of aerial woes and debt crises.
 
Already, ITA Airways has acquired the assets of Alitalia for $104 million, inviting other Italian brands to be a part of the new carrier that will be 100 per cent Italiano. ITA plans to turn the corner by “right-sizing” the fleet, staff and routes. The airline will operate a fleet of Airbuses for efficiency. The first set of 52 aircraft will enter operation early 2022, and would have increased to 105 by 2025.   
 

Ohunayo said that is how to do it on a national scale. He advised that instead of the Federal Government forcing another “principality” airline on an already crowded airspace, and helping it start a race minutes ahead of other competitors, attention should go to making the environment conducive for the private sector.
 
“With the rate at which they are going, what will happen is forcing it (national carrier) down our throats and keeping it as a problem for another government and Nigerians in future. With the lawmakers’ directive to withhold NG Eagle’s Air Operating Certificate (AOC), you can see how politicised the industry has become. For years now, we have also been pumping money into an unborn airline.
 
“For me, the span for the national carrier is too short and no longer feasible within this administration. What is being done is to force it on us, out of self-desire than a national desire. Truly, our local airlines only need more participation, cooperation, protection and assistance in policies and linkages with international investors to blossom.
 
“That is how to build strong flag carriers that are now the in-thing among world countries. With our minister standing by one airline, it already gives it an edge over others, which is not good for other long-term investors and operators in the industry. We really don’t need a carrier that is owned by the government,” Ohunayo said.