Nigeria’s new flag carrier to be private-sector financed

Nigeria’s envisaged new national carrier, Nigeria Air (Lagos), is to be private-sector driven and financed, with the government proposing to hold no more than 5% of its shareholding. This is according to a leaked document of the country’s Federal Ministry of Aviation, which provides a long-awaited first update on the Nigerian Federal Government’s roadmap towards the new flag carrier, which was first announced in 2018. The document, seen by Economic Confidential, a Nigerian economic news magazine, proposes that a consortium of private investors raise USD250 million to start up the airline, with the government providing financial guarantees and “fiscal incentives”. “The national carrier project will be private sector-driven, with the government holding not more than 5% of the shares. The private sector consortium may comprise reputable international airlines, leasing companies, aircraft manufacturers, financial, and institutional investors. USD250m approximately is to be raised to start up the airline by private investors,” the document reads. The government would provide the required support by creating the enabling environment in terms of sustainable policies, allocation of routes, provision of financial guarantees, and ensuring “fiscal incentives to sustain the success of the airline”. The document indicates that the development phase of the project has been completed, with the procurement phase slated as the next step. It says an outline of the business case has been completed. “The next set of steps will involve the commencement of [the] procurement phase by placing [an] advert for a request for qualification in the national dailies and the foreign media,” the document reads. ch-aviation research found that a compliance certificate was already issued on July 8, 2018, by the Infrastructure Concession Regulatory Commission (ICRC), an agency of the Federal Government responsible for the development and implementation of public-private partnership frameworks. The ICRC in 2018 had also completed a feasibility study of the proposed airline. As previously reported, plans for Nigeria Air were first revealed at the July 2018 Farnborough Air by Aviation Minister Hadi Sirika. Two months later, the government shelved the idea due to objections within its ranks to using public funds to set up the airline. The airline was incorporated as a private entity on July 18, 2018, according to the official document – lodged with the Corporate Affairs Commission of Nigeria – seen by ch-aviation. Then, in May 2019, Sirika announced the government had now earmarked NGN47.43 billion naira (USD132 million) in the 2019 budget for the proposed airline. The funding was to enable the start-up to launch operations before the introduction of private equity funds. In November 2020, the Aviation Ministry announced it had again earmarked funds for the establishment of Nigeria Air within its NGN78.96 billion (USD204.9 million) 2021 budget for the implementation of the aviation roadmap, which it said, would be implemented through a public-private partnership. All necessary agreements and arrangements with other partners had been worked out, “making 2021 the year the new national carrier would be realised,” Sirika had said. According to project information on the ICRC website, the new flag carrier would start with a domestic and regional airline service with a narrow-body fleet and early-on add international services to Europe and the US with B787s or A350s.