FG restructuring financing arrangement for Nigeria Air – Sirika

[Edoman]

FG restructuring financing arrangement for Nigeria Air – Sirika
 
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Minister of State for Aviation, Hadi Sirika

Maureen Ihua-Maduenyi

The Minister of State for Aviation, Senator Hadi Sirika, says the Federal Government is working on restructuring the financing arrangement for the national carrier as proposed by the Federal Executive Council.

Sirika said FEC had studied the Outline Business Case report of the project and directed that the financing arrangement should be restructured.

According to the minister, the cost profile for the project as outlined in the OBC report is an estimated funding requirement of $300m with initial start-up capital of $55m as working capital for aircraft leases and deposit for new aircraft; an estimated $100m and $145m working capital for 2019 and 2020 respectively, to be provided by the strategic equity partners who are expected to manage the project.

“The consortium comprising Airline Management Group Limited, Avia Solutions Limited and Tianaero FZE had completed the Outline Business Case Report and the Infrastructure Concession Regulatory Commission reviewed the report and issued OBC Certificate of Compliance. The report had been considered by the Federal Executive Council and the financing arrangement is being restructured in line with FEC’s directive,” the minister said.

He explained that the ministry would restructure the financing arrangements in a manner acceptable to both the government and prospective investors for the take-off of the airline.

He added that apart from commitments in respect of transaction advisory services, design of logo and participation at Farnborough Air Show in London, no other expenditure had been incurred on the Nigeria Air project.

Sirika, who spoke at the 6th stakeholders’ forum, in Lagos, said the fear that the national carrier would go the way of Nigeria Airways had been addressed by the conditions stipulated on the Compliance Certificate issued by ICRC.

He stated that while infrastructure remained necessary for the emergence of a hub, the establishment of a national carrier would give impetus to the development of a hub in Nigeria, adding that almost all hubs had national or strong carriers.

He said the project was not experiencing investor apathy as many international financial institutions, reputable airlines and private entrepreneurs had indicated interest to invest in it.

He said, “No domestic airline has evolved to fill the vacuum left by Nigeria Airways since it ceased to operate more than 15 years ago due largely to wrong business models, low capitalisation and poor governance structure. Only 28 out of Nigeria’s Bilateral Air Service Agreement with 83 countries are active.

“Nigeria Air will give impetus to the emergence of Nigeria as a hub for the West and Central Africa and promote reliable air transport services. It will also support the growth of the aviation industry and domestic airlines through infrastructure expansion, traffic/routes expansion and manpower development associated with the national carrier.”