Ebun Francis|
The minister of state for aviation, Hadi Sirika, on Monday said the federal government is not paying $300 million for a five per cent stake in Nigeria Air.
The minister made the clarification following media reports that Nigeria was investing the said amount for five percent stake in the newly floated national carrier which was launched on Wednesday, July 18.
According to the minister, government is only providing $8m startup capital for the airline.
Sirika said, “The government is not funding the entire project. It’s 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.”
“$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).
“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 further explained that the strategic investor will only become known after the public-private partnership procurement process is completed.
Sirika said 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.
“At that point, Nigeria Air Ltd becomes a public company subject to SEC, NSE and relevant CAMA rules for public companies,” he said.