Nigeria Air to be floated this year after sum of $120m approved for new airline in 2019 budget

PLANS to float the national carrier Nigeria Air have been resuscitated after the federal government approved N47.43bn ($120.22m) to fund the project over the course of this year with the signing into law of the 2019 Appropriation Bill.

In July last year at the Farnborough Air Show in Kent in the UK, aviation minister Hadi Sirika, revealed plans to float a new national carrier called Nigeria Air. Pointing out that the airline was due take off in December 2018, Mr Sirika said that following extensive negotiations with several international airlines and aircraft manufacturers, it would fly to 80 different destination and have a fleet of 30 aircraft.

However, in September last year, the government announced that the plans were being put on hold because of objections from the economic management team (EMT) chaired by vice president Professor Yemi Osinbajo. Apparently the EMT recommended that the Nigerian government should not set up a national carrier with public funds, unless a budget had been approved for the project, which was accepted by the cabinet and approved by the National Assembly.

Yesterday, Mr Sirika said: “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.”

In November last year, Mr Sirika told stakeholders at an aviation forum that a viability gap funding (VGF) of $155m was required for the Nigeria Air project. He explained that the VGF was in line with the outline business case that would enable the airline to start operations before the introduction of private equity funds.

A viability gap fund is a grant that is made available to finance the ongoing operations or future development of a project that is not currently provided by cash, equity or debt. Projects that mostly enjoy such kind of funds are the ones with longer gestation periods.

Mr Sirika insisted that federal executive council was not divided over the mode of implementation of the national carrier project. Transport minister Rotimi Amaechi had stated at his valedictory press briefing in Abuja last Thursday that members of the federal cabinet had different beliefs and positions as regards the establishment of a national carrier for the country but was quick to state that the project had not been abandoned.

Mr Amaechi had said: “There are also those who believe that no and from day one, they say let us get investors in and give them the franchise of Nigeria Airways or Air Nigeria or whatever is called. That is where we are and that is what held it down but as for whether it is still in our plan, it is and has not been abandoned.”