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Aviation Minister Scores Self 100% On Failed Carrier, MRO, Airport Concessions



Aviation Minister Scores Self 100% On Failed Carrier, MRO, Airport Concessions

President Muhammaudu Buhari was clearheaded in his plan for the air transport sector, for which he appointed an aviator as minister – the first ‘round peg in round hole’ in the 95-year history of aviation in Nigeria. Eight years after, not only has the uneasy tenure failed to deliver on Buhari’s core promise of a new national carrier, the much-vaunted airport concession plan, aircraft leasing agency, maintenance and repair organisation, new airport city projects, aviation university, new condition of service for workers, among others, have plunged the critical sector into turbulence, and blighted achievements in the areas of safety, infrastructural uplift, and revised regulatory framework. Stakeholders reckon that landmines and tough decisions await the next administration. WOLE OYEBADE reports.
President Muhammadu Buhari made a solo pledge to the aviation community pre-2015. It was to deliver a befitting national carrier in the status of Nigeria Airways in its heydays.

Six months into the administration came Captain Hadi Sirika as Minister of States for Aviation, and later, a full-fledged Minister of Aviation. Like Buhari was to the presidency, Sirika was perceived as a breath of fresh air to local aviation administration. He is the first insider to lead the pack, and also turned out to be the longest serving Aviation Minister in the country.

Shortly after his confirmation in 2015, Sirika did hit the ground running with the Aviation Roadmap agenda. At the top is the new national carrier that Buhari promised, followed by the plan to concession airports for efficiency. Also, a Maintenance Repair and Overhaul (MRO) facility, and aircraft leasing company to service local operators. In addition is the creation of aerotropolis at major airports nationwide, among 15 other components of the “aviation transformation and modernisation plan”.

Fast forward seven years later, findings by The Guardian showed some improvements in major airport infrastructure, navigational facilities, and regulatory framework across the agencies. However, most dominant is the gross underperformance of key deliverables in the Aviation Roadmap initiative, with implementation rate still running at 20 per cent, contrary to high appropriation rack up over the years.

More disturbing for aviation stakeholders is the opaque nature of the project implementations, dodgy policy directions, and oddly familiar absence of transparency in the mix.

Progress, against all odds
Indeed, it was a chaotic era in which two major events of devastating proportions hobbled aviation growth globally. COVID-19 happened and shattered all plans and projections by cutting off air transportations for months. Shortly afterwards was the Russo-Ukrainian crisis that disrupted energy supplies, which is one of the major operating components of the air transport sector.
Indeed, it was an era when the U.S. Dollar – the currency of global aviation business – ballooned to N950 against the Naira on the black market end (the most reliable source for forex!). Aviation fuel also hit the N1000/litre mark. Local air travel buckled at the sight of a N200,000 ticket for a 55-minute one-way flight. Operators lost 70 per cent of fleet capacity and some distressed airlines closed shop. Foreign airlines were also hit over stuck funds that climbed to $800 million – the highest in the world after Venezuela. It was an industry in unprecedented disarray!
In between, the air transport sector in Nigeria recorded some cheering moments. Despite the chaos, the industry proved its resilience to weather shocks. Notably, airlines managed to stay in business with new ones coming onboard. Regulators were firm and kept tabs on the safety rules. Service providers also improved on some airports, and aeronautical services got better nationwide.   

Specifically, infrastructure got a significant boost with the eventual opening of the Chinese new terminals in Abuja, Port Harcourt and Lagos – all of which started before 2015. Similarly, Abuja airport got runway rehabilitation. Murtala Muhammed Airport (MMA) in Lagos restored Runway 18L lighting and night operations after 14 years of blackout. The airports also got 10 new fire trucks at a whopping cost of N12 billion. 
The Nigerian Airspace Management Agency (NAMA) was very busy deploying advanced Instrument Landing Systems (ILSs) across nationwide airports to enhance night operations and safe flights even at low air-to-ground visibility.
Besides the upgrade of ILSs, the controversial Total Radar Coverage of Nigeria (TRACON) and Safe Tower facilities also got new equipment, all estimated to worth N36 billion. Similarly, the agency got two mobile state-of-the-art control towers at the cost of N1.7 billion.
Passenger traffic also rose from 12 million to 16 million as of 2022. The airline operators felt the positive impact in the removal of Value Added Tax (VAT) on aviation equipment, the COVID-19 palliative of N5 billion, and recent push back on aeropolitics.

Conspicuously missing on the roll call of achievements, however, are the deliverables contained in the Aviation Roadmap of the President Muhammadu Buhari-led administration.

Nigeria Air took off, landed in court 
Perhaps one of the biggest flops of the era is the handling of the national carrier project vis-à-vis the embedded ‘national’ over private interests.
Having been prepared as a worst kept secret, the national carrier project got off to a shaky start with the controversial christening and unveiling of the logo at the London Farnborough Airshow in July 2018. The launch was meant to draw foreign investors ahead of the December 23, 2018 commencement of operation.
Back home, the project soon ran into budgetary constraints, as it had no place in that year’s budget. The December 23 take off was aborted. But from 2019 to date, budgetary votes have continued to mount for Nigeria Air.
By 2022, the national carrier had racked up to N14.65 billion, out of which N6.25 billion was penciled for working capital, consultancy and transaction advisers’ fees. The minister said only N400 million had been approved out of the lump sum.
For the 2023 budget, another N1.3 billion, with N700 million as ‘working capital’ and N200 million as consultancy fee, also went to the national carrier for which the government was meant to own only a five per cent stake.

In November 2022, after five years of foot-dragging, Ethiopian Airlines (ET) – the biggest African carrier – got into the narrative as the “preferred” technical partner ahead of the December 2022 take-off date (the fifth that had been proposed). ET was actually the only airline that showed interest in the globally publicised invitation to bidders!

But unimpressed by the alleged tacit “giveaway” of Nigerian national carrier to fellow African competitor, local operators approached the court, technically throwing spanner into the works of Nigeria Air.   

A Federal High Court sitting in Lagos, in November ordered all parties involved in the proposed national carrier to maintain the status quo, effectively truncating the December take-off date as pledged by the minister.

The court gave the order upon receiving the application of Airline Operators of Nigeria (AON), urging the court to stop the national carrier deal and withdraw the Air Transport Licence (ATL) already issued to Nigeria Air by the Federal Government, through the Nigerian Civil Aviation Authority (NCAA).

Operators, like Air Peace, United Nigeria, Azman, and Top Brass, claimed that the firm that served as Transaction Adviser for the transaction was incorporated in March, last year, and alleged that the company was linked to the aviation minister. The local airlines further alleged that the ATL issued to Nigerian Air did not pass through normal security clearance.

Concession of major airports amid controversies
In 2016, the Federal Executive Council (FEC) approved the concession of airports in the country, beginning with the big four in Lagos, Abuja, Port Harcourt and Kano. Not until last year did the Minister announce the preferred and reserved bidders for the concession of three major airports – Lagos, Abuja and Kano.
The process has also not been spared of controversies. One of the bidders for the Murtala Muhammed International Airport (MMIA), Lagos, Sifax Group of Companies Limited, has filed a suit seeking disqualification of two preferred bidders – Tav Airports Holding Company and GMR Airport Limited.
Similarly, aviation workers’ unions have registered their displeasure against the Federal Government’s plan to concession four major international airports, coupled with the new agenda to demolish aviation agencies’ offices in Lagos.
The workers, under the aegis of National Union of Air Transport Employees (NUATE), Air Transport Services Senior Staff Association of Nigeria (ATSSSAN) and the Association of Nigeria Aviation Professionals (ANAP), said details of the concession plan have shown it as self-serving and anti-Nigeria.

Aircraft leasing company, MRO, aviation varsity
This week, at the Extra-Ordinary FEC meeting presided over by Vice President Yemi Osinbajo, the government ratified the establishment of a leasing company, a vital component of the aviation roadmap, which would allow existing investors and new entrants to lease equipment at affordable rates.

Sirika highlighted the significance of the aviation leasing company, stating, “Today in Council, something very significant happened in the world of civil aviation. Part of our roadmap, the aviation leasing company, has been established and approved by Council.”

An elated Sirika said: “So, I’m glad to see the full business case has been approved by the FEC. So the roadmap is gradually coming to 100 per cent completion. Therefore, entrepreneurs and civil aviation will have access to lease equipment at affordable rates within our country, Nigeria, and this is part of our roadmap.”

While there is no mention of the Maintenance Repair and Overhaul (MRO) facility at all, Hadi Sirika last year assured that the Federal Government was committed to setting up a University of Aviation which will commence on September 26, 2022.

He said President Buhari had concluded all the necessary preparations for the establishment of the African Aviation and Aerospace University in Abuja. Sirika said the institution, which would be the first of its kind in Africa, will commence with 20 pioneer students with a BSc in Aviation Business and BSc in Meteorology in view and by 2023, the University would start an MSc in Air Transport Management programme.

“For this year’s (2022) academic session, we are going to start BSc Aviation Business and BSc in Meteorology, then each of the courses will start with 20 students for now and by 2023 the University will start MSc in Air Transport Management,” Sirika had said.

Just yesterday, the minister announced that the commencement date of the university has been shifted till September 2023 – four months after the expiration of the President Buhari-led administration.

Performance rating: Poor
But the minister has given a verdict of 100% delivery of the aviation road map – without the takeoff of the national carrier, airport concession (despite endorsement of bidders), MRO, airport cities. Fillers from the stakeholders did not agree with his self-appraisal.
The Aviation Safety Round Table Initiative (ASRTI), in a recent poll, scored the President Muhammadu Buhari-led administration’s performance in the air transport sector only six per cent success rate in over seven years.

The rating was benchmarked on key performance indices like the aviation roadmap, critical issues identified by the stakeholders and recommendations made to the government since assumption of office.

ASRTI, a think-tank group, estimated that only six per cent of the agenda has so far been implemented successfully; 42 per cent still in the progress, while 52 per cent others remained unscratched in almost eight years.

Aviation Security Consultant, Group Capt. John Ojikutu (rtd) noted that there are about 12 items in the minister’s Roadmap, “but none of them seems to be up to 20 per cent in completion”.

Ojikutu noted that the 16 million yearly traffic would not even qualify as an achievement. “The Vision 2020 projected 20 million passengers traffic by year 2020 but unfortunately, in 2019, the passenger traffic was 16 million, and COVID-19 could not be an excuse for not attaining 20 million in 2020.

“We are in 2023, two years after COVID-19 had been declared ended in Nigeria, and we are still in the pre-COVID figures. The airfare is higher than pre-COVID. About 70 per cent of the air travelling passengers are government and corporate officials whose airfares are paid by their employers.

“The question now is, are the employers financially buoyant today to be able to be paying for the airfares of their officials to increase or sustain the passenger traffic figures? Only time can tell,” Ojikutu said.

Aircraft engineer, Andrew Sunday, is one of those disappointed with the state of the industry. Sunday said though the minister enjoyed good support from stakeholders, “attempts to implement unpopular and outdated ideas were his undoing”.

He said: “I’m surprised that he awarded himself a 100 per cent score for the Roadmap. Sadly, he came in as an insider and professional, but clearly missed the runway and crash-landed on his promises to the industry at large. It’s so painful for some of us who love him so much, to witness these episodes of unfulfilled promises. He should score three over 10, because on the overall, aviation is worse off than he met it,” Sunday said.

Where are the governing boards of agencies?
Indeed, one of the issues that agitated aviation workers the most is the conspicuous absence of statutory governing boards of directors for five aviation agencies. President Buhari had six years ago, approved replacements for the former boards but the new ones were not inaugurated, allegedly in preference for “a one-man” leadership at the helm.
The responsibilities of the board include fixing the terms and conditions of service for employees, reviewing yearly reports of the management for submission to the President, presenting yearly budget estimates of the agency to the minister, record-keeping, and auditing the agency among others.
Former scribe of the National Union of Air Transport Employees (NUATE), Olayinka Abioye, said besides the Roadmap “been a colossal disaster as the items became distorted with variations, wasteful, and avoidable controversies”, the tenure also treated the worker with disdain.
Abioye noted that workers are the lubricant of the industry, and despite their grievances over the years, they remained steadfastly devoted to the provision of seamless services.
“As the maxim says, a disgruntled worker is an accident waiting to happen. It is disheartening that under the watch of the minister, workers service conditions nosedived arising from the failure of the Executive and the Ministry to secure for these workers the only ingredient that could add value to their lives and working conditions. This non-provision and approval of functional service conditions worsened following the arbitrary and unwholesome refusal, failure and reluctance of the supervising Minister of Aviation to inaugurate Federal Government approved Governing Boards for aviation agencies.
“The establishment Acts of these agencies provides for the existence of these Boards, who see to the day-to-day running of the agencies in consonance with the Act establishing them. And without the existence of these Boards, the Minister becomes the alpha and omega, de facto and de jure controller of the agencies and that’s where we have found ourselves in these past eight years, where probity, accountability, and transparency had taken the back seat.
“It is very frustrating for CEOs to be running helter skelter all over the ministry waiting to secure one approval or the other from the minister for days. I have witnessed occasions where the minister became the spokesman for the CEOs at several fora whereas the CEOs were present. Very humiliating, to say the least!” he said.
President of the group, Dr. Gbenga Olowo, said it was regrettable to find the “national carrier a stillbirth, MRO as unborn, and airport concessioning inconclusive”.

Olowo added that the government, however, did well in the area of regulatory bodies, with the status upgrade of the Nigeria Civil Aviation Authority (NCAA) and expansion of the Accident Investigation Bureau (AIB) into National Safety Investigation Board (NSIB).

He, however, said that: “the failure to establish some aviation agency boards as stated in the Civil Aviation Act (CAA) violates Section 29:1 of the Civil Aviation Act, as contained in Section 11:1 of the 1999 Nigerian Constitution.

“The New Airport Terminal Building in Lagos, commissioned by the President last year, was said to have had no apron for parking, ditto for the one in Abuja obstructing the control tower. The light rail line in Abuja does not connect to the airport terminal building either. Were there no plans before these projects were executed?

“We expected the government to have done at least 60 per cent and leave the rest to politics. To us at ASRTI, following our indices, we scored the administration below par. We didn’t see the national carrier. We started acquiring non-profitable airports from state governments, and some governments still want to develop their own. And we said no. How about the existing ones that are unprofitable?

“The Murtala Muhammed Airport (MMA), Lagos that is supposed to be our number one airport has been neglected. The one added by the Chinese, recently, some foreign airlines rejected it. How can we deliver a facility that operators don’t want? So, who is delivering facilities for who? No airline growth, no airport growth because I didn’t see a hub developed,” Olowo said.

Caveat emptor!
The president added that it behooves the incoming administration to critically review the aviation roadmap and make amends with the foreign airlines, to return air transport to the path of growth.
Aviation analyst, Olumide Ohunayo, said the current administration has demystified the age-long agitation for having aviation professionals at the helm of its affairs.

“Now we have realised the need for a change; to bring people from outside the industry but people with good flair for economics and commerce. What is actually lacking in our industry is that ability to attract FDIs and the need to push for the commercialisation of the industry and its agencies,” he said.
Ohunayo explained that with aviation agencies struggling with inefficiencies, each minister that comes on board has been loading those agencies with all manner of irrelevant staff.
“The staff structure is killing professionalism; we must address it. Again, we must get to the point of ICAO’s statute that says that revenue generated in aviation must be reinvested to develop infrastructure and delivery of quality services. We need sincerity of purpose. That much we lacked and you can see why all the concessions are failing.
“For me, we should return to those days when we had the Minister of States for Aviation, under transport, for accountability purposes and avoidance of dictatorial tendencies. I only pity the next minister of aviation because there are so many landmines that have been put in place for him or her failure. And all of them are coming from the Roadmap that is enmeshed in all manner of controversy just because the handlers put their private interest before national benefits,” Ohunayo said.

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NNPC Welcomes FG’s Decision To Remove Fuel Subsidy




The Nigerian National Petroleum Corporation (NNPC) Limited has welcomed the decision of the President Ahmed Bola Tinubu-controlled Federal Government to remove fuel subsidy.

In a press conference in Abuja on Monday, Mele Kyari, the Group Chief Executive Officer (GCEO) of the corporation charged with harnessing Nigeria’s oil and gas reserves, said the corporation was pleased with the decision of President Tinubu to remove the fuel subsidy.

“We welcome the decision of Mr. President to announce that the subsidy on PMS is over, and this has really been a major challenge for NNPC’s continued operations. We have been funding subsidy from the cash flow of the NNPC since the government is unable to defer the cost of subsidy that is due to the corporation,” Kyari said.

Burdened by the financial cost of importing fuel, Kyari said that the removal of this subsidy will free up funds to make it more commercially viable and do great work for the country.

“And we believe that this will be able to free resources for the NNPC to continue to do the great works that this company will do for our country, and it will allow us to function as a very commercial entity, and we welcome this development,” he said.

The Group Chief Executive Officer has assured Nigerians of the supply of petroleum products, informing Nigerians of an abundance of the products, particularly “Petroleum Motor Spirit product in our country, and there is no reason to panic.”

He urged Nigerians not to engage in panic buying as there would be no potential changes in the prices of petroleum products.

He promised that normalcy in the supply chain would be restored as soon as possible.

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Refinery: We’ll Ask Dangote To Sell Forex At Good Rate — Emefiele



…Says CBN, govt helped him build a refinery
…Raises interest rate to 18.5 %lAs NACCIMA, IPMAN, and others react

With the Dangote Refinery set to deliver its first products in July, the governor of the Central Bank of Nigeria, CBN, Mr Godwin Emefiele, said yesterday that the refinery would be persuaded to sell foreign exchange earnings to banks at a good rate.

Speaking at the end of the 291st Monetary Policy Committee, MPC, meeting in Abuja, Emefiele said his team would engage the promoter of the refinery, Alhaji Aliko Dangote, to ensure that Nigerians benefitted from the venture, adding that the CBN, the Federal Government and, indeed, the country helped him set up the refinery.

The CBN boss expressed optimism that the refinery would ease the foreign exchange scarcity in the country, noting that with local refining, about 20 per cent cost of the total cost of importing petroleum products could be saved, thereby reducing prices in the long run. He, however, said it was time to exit the fuel subsidy regime.

His words: “By the time the Dangote Refinery comes on stream, the price at which it (fuel) will be dispensed will be lower than what it is when we spend dollars to import because there will be no freight cost, no storage and all other logistics expenses.
“So we will be lucky to be having about 20 per cent savings from refining locally, rather than importing.

“But the important thing is that we have reached a point, whether we like it or not when we must exit subsidy.
“Dangote Refinery coming at this time gives us the confidence that even if we exit subsidy, the products will be available. And eventually, the interplay of market forces will also moderate the prices to a level that will help the country.

“So we are expecting that, no doubt, by the time he produces for domestic consumption, the excess will be exported by the numbers that he talked about, which we agree with.

‘’We should be able to save, conservatively, close to about $5 billion to $10 billion in foreign exchange that will come into the country.

“Whether it comes to our reserves or not is not the point, it is the fact that the dollar is available and it will be sold in the domestic market so that customers of banks who need to import do not necessarily resort to CBN for dollars.
“They can go to their banks and Dangote will sell dollars to their banks and we are going to ensure that it is done at a good market rate.

“What I would have loved to say on Monday (at the Dangote Refinery Commissioning) which I didn’t say was that the CBN, the government and the country have helped Dangote to set up that refinery.

“He is a Nigerian; Nigerians must benefit from that venture and we are going to engage him and talk to him and I am sure that being the richest man in Africa, he is going to throw a few crumbs so that the price will be lowered.”

N8trn interventions in 5yrs

Meanwhile, Emefiele revealed that the CBN had given out about N8 trillion in interventions to the private sector in the last five years.

He said: “In the last four to five years, we have done about N8 trillion in interventions to the private sector of the economy. The loans have been granted for 10 years, with a two-year moratorium and at single digit”.

The CBN boss disclosed, however, that going forward, the apex bank would reduce its quasi-fiscal activities.

MPR jerked up to 18.5%

At yesterday’s meeting, the MPC raised the Monetary Policy Rate (MPR) to 18.5 per cent from 18 per cent.
Emefiele said the strategy, which started in May last year, had been working as it had moderated the rate of inflation in the economy.

He admitted that the interest rate hike was constraining credit to the real sectors of the economy but that it remained the best option in tackling inflation.

He stated: “The current trend in price development would continue to be monitored by the bank with greater collaboration with fiscal authority to address the drivers of inflation.”

Meanwhile, the committee voted to keep the asymmetric corridor at +100 and -700 basis points around the MPR.

It also retained the Cash Reserve Ratio (CRR) at 32.5 per cent and equally left the Liquidity Ratio at 30 per cent.

We look forward to cost reduction — IPMAN

Reacting to the CBN’s declaration that Dangote would sell Dollars to banks at good rate, the National President of the Independent Petroleum Association of Nigeria, IPMAN, Elder Chinedu Okoronkwo, could not be reached for comments, yesterday.

But National Operations Controller, IPMAN, Mike Osatuyi, said: “Oil marketers are very happy about the Dangote Refinery. We were tied to the global market for several decades. Now, everyone will be free to patronise the refinery.

‘’We look forward to a significant cost reduction, apparently because freight and shipping costs will not apply anymore.
“With the coming onstream of the plant, the Federal Government will be encouraged to end fuel subsidy. This might be affordable to Nigerians, unlike what it could have been in the past.”

Dangote Refinery comes with multiplier effects — OGSPAN

Similarly, the National President, Oil and Gas Service Providers Association of Nigeria, OGSPAN, Mazi Colman Obasi, said: “On a serious note, Alhaji Aliko Dangote should be commended for making this gigantic investment.

“Every patriotic Nigerian and African should be proud of this refinery. It is very huge and it comes with a lot of multiplier effects for Nigeria.

“I completely agree with the CBN governor that it will culminate in the generation of additional foreign exchange into Nigeria as well as assist the nation to conserve foreign exchange currently expended on massive importation of petroleum products.

“As a major crude oil producer, Nigeria should not have been involved in the importation of petroleum products. ‘’The nation was compelled by circumstances to go into importation. I am happy that this big refinery will enable us reduce or completely stop dependence on the global market.”

CBN should merge forex rates — NACCIMA

Also commenting, Sola Obadimu, Director General, Nigerian Chamber of Commerce, Industry, Mines and Agriculture, NACCIMA, while acknowledging the capacity of Dangote Refinery to generate forex, said CBN should rather focus on merging forex rates.

He said: “Honestly, my take is that CBN should merge these forex rates to avoid whatever might be called ‘good’ or ‘bad’ rates. And that’s the responsibility of CBN – to determine the true value of the Naira. Various exchange rates are basic ingredients for grandiose corruption as we know it.

“Yes, this is a very commendable project that has the capacity to generate forex whenever it starts to export and the proceeds would be convertible to Naira.

“At present, exporters through official channels are complaining that conversion for forex generated from exports is only available to them at official rates which may be unfair, given the fact that they never get enough forex at official rates when they need it either for imported inputs or machinery/parts.

“That’s the danger of dual or multiple exchange rates, particularly when the gaps are too wide as we have it now. But then, the government now has some stakes in the project.

‘’So they may reach some agreements on that level. But it might be preferred to have policies that encourage export activities by all as much as possible.”

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Cbn Raises Interest Rate To 18.5%; Highest In 22 Years




The Central Bank of Nigeria at its just concluded Monetary Policy Committee (MPC) meeting raised its benchmark interest rate (MPR) by 50 basis points to 18.5 per cent, the country’s highest in 22 years.

The CBN governor, Godwin Emefiele, made this known during the post-MPC press conference on Wednesday.

In April 2023, headline inflation increased to 22.22 per cent from 22.04 per cent in the previous month, marking its highest level since September 2005.

This is the third time the Mr Emefiele led apex bank will be raising it’s interest rate in 2023.

Nigeria has struggled with a high rate of inflation as well as a declining exchange rate at both the parallel and official markets.

In April 2022, headline inflation reached its highest level in more than 17 years, eroding the purchasing power of the populace.

However, the apex bank has continued to increase the interest rate to combat the continued rising inflation.

People Gazette

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