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FG, NCAT to forfeit N320m over ‘breach’ of contract

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 Hadi Sirika

Hadi Sirika

• Manufacturer auctions four Nigeria-bound training aircraft
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• Emirates threatens shut down of operations

The Federal Government and the Nigerian College of Aviation Technology (NCAT) risk losing N320 million over a breach of contract.The Guardian, yesterday, learnt that the sum, being part payment in a $20 million contract, was to offset losses incurred by Austria-based manufacturer, Diamond Aircraft.

Diamond, in a letter to NCAT, expressed concern that the college kept mute in the last 14 months, despite the manufacturer selling four of the five unclaimed training aircraft produced for Nigeria at the request of NCAT through contract awardee, Interjet Nigeria Limited.

NCAT blamed the delay in payment on current scarcity of foreign exchange (dollar), denying there had been any breach of agreement.It would be recalled that the re-fleeting contract for 20 new training aircraft dated back to 2014. It was, however, lately engulfed in controversy, as a group petitioned the presidency, alleging the contract sum was inflated, the deal by-passed due process, and was awarded to a company (Interjet) that was non-existent as at 2014.

Meanwhile, the management of Emirates airline has threatened to shut down its operations, citing inability to access forex, high cost of aviation fuel, and poor state of the Abuja runway as reasons.

Emirates’ Regional Manager, West Africa, Manoj Gopi Nair, disclosed this when he visited the Minister of state for Aviation, Hadi Sirika, in Abuja, yesterday.

In a letter made available to The Guardian, yesterday,Diamond Aircraft (DAI) expressed concern over handling of the contract awarded to their “authorised representative and partner in Nigeria, Interjet Limited” on production and supply of three units of DA40 NG and two units of DA42-VI aircraft, via reference letter NCAT 11/652/Vol.1/23.

Rector of the college, Capt. Samuel Caulcrick, said the whole issue is just “delay in payment”, due to dollar scarcity. Caulcrick said: “We already have the contract sum with the Central Bank. The money is there but there is no dollar equivalent. And more so, we are not on the priority list. CBN has assured us that once dollars are available, we would have money to send to them.

“We understand that they (Diamond Aircraft) are in business to make money, and they have gone to market to source for raw materials, and they want their money. Still, they will have to be patient.

Chief Executive Officer of Interjet, Seun Peters, noted that the development amounts to a breach in agreement, for which his organisation is already considering a legal action.

Peters explained that the actual figure of the award was $20 million for 20 aircraft, split in four tranches: 15 of the DA40 and five of the DA42. It was supposed to be five aircraft delivery every 12 months because production takes between five to six months.

He said: “Based on the agreement we had, it was supposed to be 15 per cent of the total sum but what was paid (N320 million) was less than that 15 per cent. Yet, we went ahead in good faith, based on the trust we have in NCAT, to start production.

“So far, we produced five aircraft. Subsequently, we’ve sent several letters to NCAT to come and make further payments, so that they can collect their aircraft. We did not hear from them. Diamond had to take a position since there are demands waiting. And the unique thing about aircraft is that once you produce and it is on ground, the time starts running for maintenance.”

The manufacturer noted that it had never received any formal response from NCAT in regards to earlier letter on the same issue, dated April 9, 2016.According to the letter signed by its Sales Director, Amila Karagic: “In April 2015, we had the DA40NGs ready, however, they were not paid for by NCAT. So, DAI had to sell the aircraft immediately to other customer, in order to recover its investment with additional costs for DAI.

“Also, in the case of the DA42-Vis, DAI had to sell one unit to another customer. Even in this case, DAI suffered several losses, as it had to provide the new customer a full warranty (delivery was in January 2016), although the plane was ready for delivery in June 2015.

“Therefore, we have to charge NCAT €20,000 for the equipment that we had to give free of charge to other customers. Additional costs will also be caused once we have a delivery date for the DA42-VI set, as we will need to re-issue all documents and make the plane airworthy again. We are talking here roughly about additional €10,000. We will have to charge interests, as it is over a year that the plane had waiting for delivery and payment.”



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