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Aviation Blog

Nigeria's new flag carrier to be private-sector financed – ch-aviation


Nigeria’s envisaged new national carrier, Nigeria Air (Lagos), is to be private-sector driven and financed, with the government proposing to hold no more than 5% of its shareholding.
This is according to a leaked document of the country’s Federal Ministry of Aviation, which provides a long-awaited first update on the Nigerian Federal Government’s roadmap towards the new flag carrier, which was first announced in 2018.
The document, seen by Economic Confidential, a Nigerian economic news magazine, proposes that a consortium of private investors raise USD250 million to start up the airline, with the government providing financial guarantees and “fiscal incentives”.
“The national carrier project will be private sector-driven, with the government holding not more than 5% of the shares. The private sector consortium may comprise reputable international airlines, leasing companies, aircraft manufacturers, financial, and institutional investors. USD250m approximately is to be raised to start up the airline by private investors,” the document reads.
The government would provide the required support by creating the enabling environment in terms of sustainable policies, allocation of routes, provision of financial guarantees, and ensuring "fiscal incentives to sustain the success of the airline".
The document indicates that the development phase of the project has been completed, with the procurement phase slated as the next step. It says an outline of the business case has been completed. “The next set of steps will involve the commencement of [the] procurement phase by placing [an] advert for a request for qualification in the national dailies and the foreign media," the document reads.
ch-aviation research found that a compliance certificate was already issued on July 8, 2018, by the Infrastructure Concession Regulatory Commission (ICRC), an agency of the Federal Government responsible for the development and implementation of public-private partnership frameworks. The ICRC in 2018 had also completed a feasibility study of the proposed airline.
As previously reported, plans for Nigeria Air were first revealed at the July 2018 Farnborough Air by Aviation Minister Hadi Sirika. Two months later, the government shelved the idea due to objections within its ranks to using public funds to set up the airline. The airline was incorporated as a private entity on July 18, 2018, according to the official document – lodged with the Corporate Affairs Commission of Nigeria – seen by ch-aviation.
Then, in May 2019, Sirika announced the government had now earmarked NGN47.43 billion naira (USD132 million) in the 2019 budget for the proposed airline. The funding was to enable the start-up to launch operations before the introduction of private equity funds.
In November 2020, the Aviation Ministry announced it had again earmarked funds for the establishment of Nigeria Air within its NGN78.96 billion (USD204.9 million) 2021 budget for the implementation of the aviation roadmap, which it said, would be implemented through a public-private partnership. All necessary agreements and arrangements with other partners had been worked out, "making 2021 the year the new national carrier would be realised," Sirika had said.
According to project information on the ICRC website, the new flag carrier would start with a domestic and regional airline service with a narrow-body fleet and early-on add international services to Europe and the US with B787s or A350s.
The launch of Nigeria Air (Lagos), the nation’s new national carrier, has been postponed to the first quarter of 2022 following delays caused by the COVID-19 pandemic, says Aviation Minister Hadi Sirika.
Speaking to reporters in Abuja following a meeting of the country’s Federal Executive Council (FEC), he said the government was committed to establishing a national carrier, but that initial plans for a 2021 debut had been delayed by the health crisis.
However, he said, the project was “still in top gear” and more information would be available in the next few weeks.
“We are coming back to the council, hopefully in the next two weeks, to present the memo on the national carrier. We went to the council to approve the outline business case for the carrier; then, the council raised some questions and asked us to go and look at the memo again and bring it back. So, once it comes back and the outline business case is approved by the council, we will go to the full business case which…
Nigeria’s government on November 2, 2020, approved a NGN4 billion naira (USD10.3 million) bailout for domestic airlines to mitigate the adverse effects of the COVID-19 pandemic.
This was announced by Aviation Minister Hadi Sirika during a three-day public hearing in Abuja on the repeal and enactment of civil aviation bills aimed at enhancing the operations of the Nigerian Civil Aviation Authority (NCAA), the Nigerian Airspace Management Agency (NAMA), the Accident Investigation Bureau (AIB), the Nigerian College of Aviation Technology (NCAT), the Nigerian Meteorological Agency (NIMET), and the Federal Airports Authority of Nigeria (FAAN).
Sirika said the government had also approved an additional NGN1 billion (USD2.5 million) in funding to aviation agencies to “cushion the sorry state of most of them, which has made payment of salaries difficult for many of them”. He added all funds would be released soon.
Aviation Senate Committee Chairperson, Smart Adeyemi, said the amount earmarked for airlines was insufficient and urged the federal government to budget for more.
Nevertheless, it would have been welcome news for Nigeria’s beleaguered carriers, many of whom…
This article is only available for ch-aviation PRO subscribers.
Nigeria’s Federal Government has earmarked NGN47.43 billion naira (USD132 million) in the 2019 budget for the proposed national airline Nigeria Air (Lagos), the country’s aviation minister, Hadi Sirika, has announced.
The government approved the funding for the project over the course of this year as part of the 2019 Appropriation Bill, which President Muhammadu Buhari signed into law on May 28 before starting a second five-year term in office on May 30.
“President Muhammadu Buhari directed that the viability gap funding for the project be provided for in the 2019 Appropriation, which the National Assembly had graciously done,” Sirika said, according to Nigeria’s Punch newspaper.
The funding will enable the start-up to launch operations before the introduction of private equity funds, the minister explained.
Sirika added that alleged disagreements over the project in the cabinet of ministers, the Federal Executive Council, as reported on May 23 by the transportation minister, Rotimi Amaechi, had been misrepresented in the media.
Amaechi had said, according to ThisDay, that “on the national carrier, the cabinet is…
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