- Minister of state for aviation, Hadi Sirika, said that the federal government would inject $55 million in 2018 as the upfront grant to finance the startup capital of the new national carrier
- Sirika said the federal government would not fund the entire project, but would provide only the startup capital in the form of Viability Gap Funding (VGF)
- The minister added that institutions have indicated keen interest to fund the national carrier project because of its bankability and profitability profile
The Nigerian federal government on Tuesday, July 24, stated that it would provide $55 million upfront grant in order to ensure the take-off of the new national carrier, Nigeria Air, this year, The Punch reports.
Legit.ng gathered that the federal government providing a breakdown of how the new national carrier would be funded also stated that it was not paying $300 million for 5% stake in the airline, adding that $300 million was the entire cash flow funding requirement of the carrier for a three-year period.
The minister of state for aviation, Hadi Sirika, responding to social media questions raised about the national carrier, which was unveiled last week in London, explained that the funding requirements for the airline were in stages.
“The $8m represents start-up capital for offices, etc. that is required for the take-off. But $300m is the entire airline cash flow funding requirements (aircraft, operations and working capital) for three years (2018, 2019 and 2020). This funding can be in the form of equity or debt. The financial model estimates cash flow requirements as follows: 2018, $55m, $8m is included here; 2019, $100m; and 2020, $145m.
“In order to ensure the take-off of the airline in 2018, government will provide $55m upfront grant/viability gap funding to finance start-up capital and pay commitment fees for aircraft to be leased for initial operations and deposit for new aircraft, whose delivery will begin in 2021.
“The remaining financial injection by the government will be determined by the quantum of equity that the strategic equity partner will bring as a result of the PPP (public private partnership) competitive bidding process. This explanation clearly debunks the claim in the social media that the government is paying $300m for a five per cent equity share.”
The minister added that government’s contribution to equity will be in the form of an upfront grant/VGF.
"Government’s upfront grant/VGF contribution to equity will be funded through either a supplementary budgetary allocation or development financial institutions like AFREXIM Bank, AfDB (African Development Bank), ISDB (Islamic Development Bank), etc., who have indicated keen interest in funding the national carrier project because of its bankability and profitability profile," he said.
Legit.ng previously reported that the Nigerian Civil Aviation Authority (NCAA) has addressed some of the concerns raised by Nigerians over the unveiling on the national carrier, Nigeria Air.
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It was reported that that an official of the NCAA, who pleaded anonymity, said the airline as a legal entity already has a domain name: www.flynigeriaair.ng, which has been reserved and will be made active very soon as part of the project evaluation and marketing process.
He added that the ministry is making moves to have the National Assembly pass a fly Nigeria act. This act will require that anybody travelling on a ticket bought with public funds must travel on a Nigerian carrier unless the route is not served by a Nigerian carrier.
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