The Nigerian national carrier is inching towards fruition as the Federal Government at the weekend received the Outline Business Case (OBC) of compliance certificate from the Infrastructure Concession Regulatory Commission (ICRC).
The OBC was developed by a consortium of transaction advisors which comprised of the Airline Management Group Ltd, Avia Solutions Ltd and Tianerro FZE. They were appointed in March 2018 by the government.
Receiving the OBC certificate from the ICRC, the Minister of State, Aviation, Sen. Hadi Sirika, assured that the process towards procuring the national carrier was detailed and transparent and the airline will be profitable in the first three years in operation.
He said the new airline will commence operation on December 19, 2018 with five aircraft, to gradually grow capacity to 30 aircraft in five years.
The OBC specified that government should inject $8.8m in viability gap funding and the upfront grant required to leverage private sector investment going forward. It also specified $300m capital injection in three years by the operators of the national carrier for sustainability.
The minister assured that in spite of government’s $8.8m gap fund, the management and business decisions of the national carrier will be 100 per cent determined by the private sector managers.
“The government will step in to cover the viability gap funding, and thereafter, it will ease out. But even with the gap funding, the government will never get involved in the management of the national carrier,” he said.
“All things being equal, on December 19th, 2018 we will have the first set of airplanes flying this airline. It will make profit in three years after operations. We will make the investments and follow the business plan through private sector management,” Sirika assured.
Speaking further on the investment plan, he said the airline will get to the 30 aircraft mark in five years but will begin with five aircraft on the day of its launch.
“We will unveil the name, logo, colour scheme, the structure, the type of airplane and everything about the national carrier at the Farnborough International Public Airshow coming 18th of July, 2018 in London. We will also place the order of the aircraft at the event,” he said.
On the viability of the national carrier, he said with 180 million people, Nigeria has a huge population to support aviation. “This airline will take advantage of the Bilateral Air Service Agreement (BASA) we have with over 70 countries. It will also take advantage of the Africa Single Air Transport Market. It will be the best player if we get it right. If we don’t, it will become a threat to us. I believe we are on the right track,” the minister explained further.
On competition, he said the national carrier is not intended to kill business but to encourage competition.
Before handing over the OBC to the minister, the ICRC acting DG, Engr. Chidi Izuwah, warned that if the terms of the OBC were violated, the ICRC will revoke the certificate and invalidate the whole process.
The certificate also states that the airline will require the government to put forward viability gap funding but will leverage private sector financing to be able to deliver a profitable airline, Izuwah said, adding that this is key because starting an airline is capital intensive.
The national carrier is a bankable business, and the government will get a strategic partner who will invest in it. When we get through the bidding process, more facts will emerge, he noted.
“The new national carrier won’t be like others in the past. We have made it clear in our certificate that the national carrier will have a strategic world class equity partner who will manage, operate and make the management operations.
“We’ve also made it clear in our certificate that there will be no contribution of government to the decisions of the company.
“The management will have the clear hand to run it as bankable business with zero government management control. If these conditions are violated, we invalidate the certificate and the process,” he stated.
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