Nigeria Air: Memo Reveals Why Ethiopia and Investors Fail to Sign Deal

There are indications that the shareholders in Nigeria Air, the contentious national carrier, have failed to sign any agreement to formalize their involvement in the enterprise.

According to a report provided to the ninth House of Representatives by the Ministry of Aviation, no public-private partnership had been signed by the stakeholders.

Furthermore, the memo presented to the ninth House by the Infrastructure Concession Regulatory Commission during its investigation of the project revealed that shareholders had yet to sign any agreement regarding their stakes due to unresolved issues, including their structure and respective functions in the Nigeria Air.

The national carrier was inaugurated in the latter days of the Buhari administration, which the Green Chamber has called a sham. In his answer, the then-Minister of Aviation, Hadi Sirika, denied any misconduct, claiming that the initiative was not fraudulent or hidden.

Sirika also accused Nnolim Nnaji, the former head of the House Committee on Aviation, of requesting a 5% interest in the airline, which Nnaji denied.

According to reports, an Ethiopian Airlines aircraft was chartered, repainted to bear Nigeria Air’s colors, and flown to Nigeria for a display, after which the aircraft was returned to Ethiopia and repainted to its original color.

The Senate and House had called separate meetings of aviation sector stakeholders in response to the incident.

According to reports, an Ethiopian Airlines aircraft was chartered, repainted to bear Nigeria Air’s colors, and flown to Nigeria for a display, after which the aircraft was returned to Ethiopia and repainted to its original color.

The Senate and House had called separate meetings of aviation sector stakeholders in response to the incident.

Meanwhile, the Ministry of Aviation in a memo to the House, dated June 2, 2023, with Reference Number MCA0008/S.33/T4/22, and signed by the Director of Planning, Research and Statistics, M. R Shehu, said 100 per cent of the stakes had been taken.

The memo partly read, “I am directed to refer to your letter Nos: NASS/9HR/CT.017/121 dated 31st May, 2023, and NASS/9HR/CT.017/122 dated 1st June, 2023 on the above subject and to respond to your request as follows:

“Full disclosure of ownership structure of Nigeria Air: The proposed ownership structure of Nigeria Air Limited is as follows: Ethiopian Airlines Group, 49 per cent, $122,500,000; The FGN, five per cent, $12,500,000; MRS Oil and Gas Company Limited, 31 per cent, $77,500,000; Skyway Aviation Handling Company Plc, 15 per cent, $37,500,000; Total, 100 per cent, $250,000,000.

“All PPP agreements reached and signed with Ethiopia Airline with regard to the Project: There was no PPP agreement signed.

“PPP agreement reached and signed with all other parties: None.”

The memo however contradicted the position of the former Personal Assistant to President Muhammadu Buhari on Digital Communications and New Media, Bashir Ahmad, who tweeted on June 6, 2023 that partnerships and agreements on the national carrier had been signed.

He wrote on his verified Twitter handle, @BashirAhmaad (sic), “NigeriaAir is NOT a fraud, the Aviation Ministry has made a significant progress towards its realisation. Branding unveiled, partnerships and agreements signed, most of the operational certificates issued and operational offices opened. NigeriaAir will fly to make Nigeria proud.”

On the Full Business Case for the Nigeria Air, the memo indicated that FBC is usually prepared by the Transaction Adviser and reviewed by the ICRC for issuance of Compliance Certificate.

Meanwhile, the ICRC, in its memo to the House dated June 6, 2023, with Reference Number ICRC/DG/2/S.15/XII/45, and signed by the Director-General, Michael Ohiani, gave a contrary account of the ownership structure.

The commission, which is leading the negotiations for the deal, stated that Ethiopian Airline has 49 per cent; MRS Oil and Gas Limited, 15 per cent; SAHCO, 15 per cent; Federal Government, five per cent while 16 per cent had yet to be allotted.

The ICRC memo also indicated that the proposal was turned down five times by the Federal Executive Council under the Buhari administration before it was eventually approved the sixth time.

The ICRC gave details of the deal, “The national carrier project was initiated by the Ministry of Transportation in 2016 as part of the Aviation Sector Roadmap, which was approved by Mr President (Muhammadu Buhari). The project was structured to be implemented as a public-private partnership initiative, for which the Infrastructure Concession Regulatory Commission’s regulatory guidance was sought.

“The ICRC provided the required guidance for the implementation of the project in line with the requirements of the ICRC Establishment Act 2005 and the National Policy on PPPS. Following the guidance provided, the following milestones were achieved:

“Constitution of project steering committee and a project delivery team to guide the implementation of the project. Appointment of a Transaction Adviser – this was done in compliance with the Bureau of Public Procurement Act. Lufthansa Technik was first procured but later changed to Airline Management Group/Traniero after obtaining FEC approval. Development and submission of an Outline Business Case by the Airline Management Group in 2018.

“The structure involved the Federal Government of Nigeria holding five per cent equity, while the remaining 95 per cent is held by private partners (the foreign partner who is required to have undertaken at Ieast 10 years scheduled international operations) will hold a maximum of 49 per cent, while the Nigerian partners hold a minimum of 46 per cent.”

The ICRC said its Certificate of Compliance to the OBC confirmed the viability and creditworthiness of the project.

Speaking on the reason why FEC rejected the proposal five times, the ICRC noted, “It is important to note that the OBC was presented to FEC six times before it was approved. This was due to the insistence by FEC that the Federal Government will not contribute any funds to the take-off of the airline as was initially structured. FEC requested that the project should be fully privately financed since it’s viable and bankable,” Ohiani noted.

Documents not signed

The ICRC said after 10 weeks of advertisement, only the Ethiopian Airlines consortium submitted a bid and that the project proceeded to the negotiation stage, based on Section 5 (a) of the ICRC establishment Act 2005.

The section states that if after advertisement in accordance with Section 4 of this Act only one contractor or project proponent applied or submits a bid or proposal, or only one contractor or project proponent meets the prequalification requirements, the ministry, agency, corporation, body may undertake direct negotiation without competitive bidding for any contract to be entered into, pursuant to Section 1 of the Act.

On the reason why the documents were yet to be signed, the memo noted, “Several preparatory meetings were held as a prelude to negotiations between the Ministry of Aviation and other government stakeholders before engaging with the Ethiopian Airlines Consortium.

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