FG to Raise $250m for National Carrier

Chinedu Eze
The federal government has said it expects to raise about $250 million from the private sector to float it proposed national carrier, which is now at the stage of procurement phase.

This was disclosed by the Ministry of Aviation in a publication titled, ‘Status of the Road Map/PPP Projects’ and made available to THISDAY.

The publication stated that the next steps would involve the commencement of procurement phase by placing adverts for request for qualification in the national dailies and foreign media.

The federal government explained that the establishment of a national carrier would enable Nigeria gain optimal benefits from Bilateral Air Service Agreement (BASA), take full advantage of the Single African Air Transport Market (SAATM) and introduce competition, leading to competitive fares and services as well as to generate employment.

“The national carrier project will be private sector driven, with government holding not more than five per cent of the shares. The private sector consortium may comprise reputable international airlines, such as Qatar Airways, leasing companies, aircraft manufacturers (OEMS), financial and institutional investors,” the publication stated.

It noted that government would provide the required support by creating enabling environment in terms of sustainable policies, allocation of BASA, routes provision, financial guarantees and ensuring fiscal incentives to sustain the success of the airline.

Government explained that the project development phase has been completed with the development of the outline business case (OBC) and subsequent issuance of compliance certificate by the Infrastructure Concession Regulatory Commission (ICRC), adding that the next step would be placement of request for qualification (RFQ) in local and international media.

On aircraft leasing company, the federal government said the leasing company would provide leasing opportunities for Nigerian and African airlines in order to boost fleet size; alleviate the problems of aircraft leasing and the attendant high insurance premium charges.

“The aircraft leasing company has been structured as a joint venture between the government and the private sector and its business objectives will be to initially lease aircraft from international lessors and subsequently sub-lease to African airlines and in the future acquire and own its aircraft.

“Government is considering providing financial guarantee and ensuring fiscal incentives to facilitate the success of the leasing company,” the Ministry said.
Government also said it is at advanced stage in the procurement phase and that a preferred partner has been selected and negotiations would soon commence, adding that the next move would be to commence negotiations with the preferred bidder.

On airport concession, the federal government said the concession of the four major airports in Lagos, Kano, Abuja and Port Harcourt would help fast-track, upgrade and enhance their operational efficiency, profitability and reposition them to operate competitively.

“The project is being structured as a terminal concession under Public, Private Partnership (PPP) arrangement between the government and the private sector, were the private investor will be required to upgrade, manage and operate the airport terminals over the concession period,” the Ministry of Aviation said.

On the status of project development, government said the development phase has been completed with the development of the Outline Business Case (OBC) and subsequent issuance of compliance certificate by the ICRC.

The next step on airport concession would be placement of request for qualification for local and international media.
These three major projects were what the President Muhammadu Buhari said his administration would accomplish in the aviation sector.

Others include establishment of Aerospace University and designation of airports as free trade/economic processing zones.
But as the second tenure of the administration has gone half way through, these projects are still far from being completed.

The Managing Director, Flight and Logistics Solutions, Amos Akpan told THISDAY that there was not much time left for the Buhari’s administration to realise the projects in the aviation sector.
He said if government has money it could realise some of the projects but currently government is broke so it cannot float an airline and that it takes time for the private sector to fund such project because they would look at many variables, including environmental needs, due diligence, risk assessment and environmental assessment.

Akpan said investors would also compare investing in Nigeria and investing in other countries in the continent and make comparison, adding that it would not be easy at this time for the private sector to commit funds in any project in the country.

Akpan said, “The government has more critical areas that contend for the funds available than to use it to float national airline within one year and six months. If they invite private investors, there are procedures those investors need to go through before decision to participate is taken.
“They would carry out risk analysis on the proposed investment portfolio. They will carry out due diligence on the subject of investment. There is also the issue of comparative analysis on the environment, which is best environment amongst available options?”