Air Nigeria: FG refutes claim of intended payment $300m for 5% equity

The Federal Government has refuted claims in some quarter insinuating that government was to pay $300 million US dollars for a five per cent stake in the newly unveiled Air Nigeria, describing it as malicious falsehood.

Debunking the claims on Tuesday in Abuja, the Minister of State for Aviation, Hadi Sirika while responding to issues raised about the national carrier said the government was providing startup capital for the airline.

According to a statement released by the Ministry’s Deputy Director of Press, Mr. James Odaudu stated that government is not funding the entire project.

Sirika said: “While we provide the clarifications below for record purposes, only delivering a world-class national carrier is good enough for Nigerians, this will stop the export of jobs and exploitation of Nigerian air travellers. We are not deterred but we are focused on our target and mission.”

According to him, “government is just providing startup capital in the form of an upfront grant/viability gap funding. Once the strategic equity investor is in place, they will be expected to build on the initial investment made.”

The Minister revealed that “$8 million represents startup capital for offices etc required for takeoff. But $300 million 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 ($55 million – $8 million is included here), 2019 ($100 million) and 2020 ($145 million).

Sirika further explained that “In order to ensure take-off of the airline in 2018, the government will provide $55 million upfront grant/viability gap funding to finance startup capital and pay commitment fees for aircraft to be leased for initial operations and deposit for new aircraft whose delivery will begin in 2021.”

He said the strategic investor will only become known after the public-private partnership procurement process is completed.

Sirika stated that shares to be sold after one year of operations, stressing that the company’s shares will be sold through an initial public offering after which the government will own five per cent equity.

“Government’s equity share held in trust for Nigerians will be devolved to Nigerians via an IPO. “The government will retain only 5% equity, the list of shareholders then will be available to SEC and the Nigerian Stock Exchange.

“The rest of the 95% equity of Nigeria Air Limited will then be owned by the strategic equity investor and the general public.