New national carrier to gulp $308.8 million as take-off cost

•  FG receives certificate to establish national airline
• Carrier to be private sector driven-Minister

A new start-up airline to be handed over to Nigeria as national airline would gulp $308.8 million according to the Minister of State for Aviation, Hadi Sirika.

Sirika made the disclosure while receiving the Outline Business Case Certificate of Compliance for the establishment of the airline from Mr Chidi Izuwah, the Director General, Infrastructure Concession Regulatory Commission (ICRC) at the weekend in Abuja.

The Minister said that the presentation of the Certificate was a testament on how far the project had gone, adding that the proposed airline would gulp $8.8million preliminary cost and $300 million as take-off cost.

He stated that the Nigerian government was not fully funding the airline as it has adopted midwifing it via the option of a Public Private partnership (PPP), to deliver a national carrier that would stand the test of time and be world class in operation and management.

Sirika equally disclosed that Nigeria will receive the first set of five airplanes for the airliner on December 19, 2018, just as he noted that the carrier will make profit in three years after operations.

“We will make the investments and follow the business plan through private sector management.

“We intend to get a 30 aircraft market in five years. But we will begin with five aircraft on the day of lunch. It was not clear whether an order has been made for the aircraft, but the minister in May met a team from Boeing in Abuja.

“At Farnborough International Public Airshow coming July 18, 2018 in London, we will unveil the name, logo, colour scheme, the structure and the type of airplane about the national carrier.

“We will also place the order for the aircraft at the event,” he said.

Sirika explained that the government would step in to cover the funding gap at the onset and ease out thereafter.

He said the government would not get involved in the management of the national carrier.

He said Nigeria’s population of over 180 million people is huge enough to support aviation, adding that the airline would take advantage of Bilateral Air Service Agreement (BASA) that the country had with over 70 countries.

According to him, it will also take advantage of the Africa Single Air Transport Market and will be the best player if the government gets it right.

“But if we don’t, it will become a threat to us. But I believe we are on the right track.

The minister also gave an assurance that the national carrier would not kill the domestic airlines operating in the country.

The Director General of ICRC, Izuwah, said the presentation of the Certificate of Compliance was an official green light to proceed with the procurement process.

He explained that the government would bring its contribution to kick-start the airline, adding that the amount of equity the partners would hold would determine government contribution.

According to him, start-up cost over the next three years is about $300 million, but pre-start-up is $8.8 million.

“The rest of the investment will be equity injection which will happen in tranches because you do not need all the monies at once. External capital injection also depends on the profitability of the airline.

“Though, you need that initial government financial to make it take off, but what is important is that the national carrier will be entirely private sector controlled”.

“There will be zero government interference. But if that happens, it invalidates the certificate and the entire process.

“This is a bankable business, and the government will get a strategic partner who will invest in the national carrier and when we get through the bidding process, more facts will emerge.

“The government will have to spend the pre-start-up cost like the brand name, the office and other start up.

“It will be a world class airline with domestic, regional and international operations,” he said.

The Outline Business Case Certificate of Compliance for the establishment of the airline presented to Sirika by Izuwah, (ICRC) said it reviewed the Project Structuring Report (PSR)/Outline Business Case (OBC) submitted by the Federal Ministry of Transportation (Aviation) for the Establishment of a National Carrier via a Joint Venture ((V) PPP arrangement.

 It noted that based upon an assessment and review of the PSR/OBC, Market Study and all other information available, this Certificate confirms that the submission is in substantial compliance with the ICRC Act, 2005 and the National Policy on Public Private Partnership.

 The certificate was granted on the condition that the Federal Government demonstrates her commitment to leverage private sector capital and expertise towards the establishment of the National Carrier through the provision of an upfront grant/Viability Gap Funding (VGF) to fund aircraft acquisition/start-up capital.

 The FGN also agrees to zero contribution to airline management  decisions and zero management control by the government, adding that  any attempt to impose government control over the management of the airline invalidates this certificate and the entire process.

 “In view of the fact that the mitigating conditions for the project may change over time, this Certificate is valid for 12 months from the date indicated below. This certificate is therefore issued to enable the Ministry commence an international open competitive bidding process to procure a world-class strategic investor to manage, operate, maintain and invest in the National Carrier”, the certificate reads.

Wole Shadare