The Minister of Aviation and Aerospace Development, Barr. Festus Keyamo (SAN) on Thursday ordered the immediate suspension of the Nigeria Air project. The Minister also called for the investigation of the Nigeria Air project.
The cancellation without engaging the concerned parties has raised questions about the doing business environment of Nigeria and legal concerns too.
Recall at the twilight of the end of President Mohammed Buhari, the model aircraft for the proposed Nigeria Air was unveiled by Ethiopian Air, the lead investor in the project. The immediate past minister of aviation, Hadi Sirika was on the ground to do the honours following a request from ET and other consortiums.
Whilst some Nigerians had welcomed the decision of the FG to midwife a national carrier, others frowned on the intent and purposes of the proposed airline. Recall after a careful, detailed, and ICRC-governed bidding process, the Ethiopian Airlines (ET) Consortium emerged as the preferred bidder. Ethiopian Airlines got 49 percent; MRS Oil and Gas Limited, 15 percent; SAHCO, 15 percent; Federal Government, 5 percent while 16 percent had yet to be allotted. All stakeholders were to agree to the modalities of running the airline.
Nigeria Air has already been granted an Air Transport License by the NCAA. Nigeria Air was expecting Air Operator Certificate from the NCAA. It will not fly without the AOC. All investors were to collectively stake $ 350 million at the commencement of the airline.
Nigeria Air was proposed to be a public-private partnership project that will see the FG having just 5 percent equity in the project.
The Infrastructure Concession and Regulatory Commission (ICRC) had approved all the outline business cases and other regulatory parameters whilst the Federal Executive Council also gave necessary approvals. The full business case was still being developed when the administration of President Buhari lapsed.
Public Commentators worry that the Minister of Aviation, Barr. Keyamo may have bowed to the whims of Airline Operators of Nigeria (AON) who have publicly condemned the Nigeria Air project and have outrightly called for its crucifixion. The AON had also gone to court to stop the previous administration from actualizing the project. the court case is still subsisting.
Investor Confidence and Legal concerns
The suspension of the project by Barr. Keyamo has raised the issue of whether Mr. Keyamo has the power to suspend a project the Federal Executive Council (FEC) had given approval for without recourse to the FEC. By the way, he was a FEC member when the approval was given for the project. It also raises the question of the sustainability of the projects started by the Buhari-led government by the Tinubu-led government.
Some public commentators have raised the issue of investor confidence, especially international investors willing to invest in Nigeria. “You can’t be wooing foreign investors and arbitrarily canceling internationally recognized projects like Nigeria. It will dampen investor confidence” said David Akwu, an economist and financial analyst.
The suspension also raised legal issues as to the rights of the qualified bidders to press charges and claim damages from the federal government. Recall the immediate past Minister of Aviation, Sen. Hadi Sirika had said that based on the agreement reached, the Nigerian Government has no stopping rights.
He had said if the federal government withdraws its equity holding, the other entities will continue.
“In a business where other entities own 95 percent and you own just 5 percent. If you decide not to continue, those who own more stakes would. So, if the Federal Government of Nigeria decides not to continue, it only has. 5 percent and has no stopping rights” he declared.
“The certificate of compliance the ICRC gave ensured that there is no stopping rights by the Federal Government. The partner we chose, Ethiopian Airlines Consortium is a company owned by the Ethiopian Government, but the government has no stopping rights to that company. Even in the time of war, the company remained. So, if those that own 5 percent decide not to continue, the 95 percent will continue” Sirika emphasized. He also said since APC is taking over from APC, the project may not be impacted.
Some social media users have been commenting since the suspension was announced on Thursday.
An X user tweeted: “Probe the Nigeria Air? Shame, You were part of that government.
@Advicateforchng tweeted. Another user @Esta43547782 tweeted “like you were not part of that govt.”
Ikenna, @ikenna_onugbolu advised Barr. Keyamo to study the project before any drastic decision. “He should just take time to study the agreements, so we don’t end up in international courts of arbitration. The cases we have there are yet to be resolved.”
Adebayo Salami tweeting @WASalam_01 asked: What in the world is this?!!!?
Michael tweeting with the handle @MOD-okoto wrote “I don’t think he has that power. We will see another 4 years of nothing happening. Just a waste of time.”
Mohammad Rabiu tweeting with @muhammadrabiu_03 said the decision is “highly commendable, could recall that Sen.Kawu Sumaila raised the motion for the reversal of the concession of MAKano Intl Airport.”
Araba_K, @Arabadmeek, tweeted: “And he was part of the Federal Executive Council that took that decision in the first place. What does that tell you about Nigeria? A very unserious people.
I am not saying that his pronouncement was wrong or right; I only provided us with “food for thought.”
Shamack tweeting with the handle @Iamerit said “Why is he suspending a huge investment of that nature and not giving us any insight on the reasons behind his suspension of the project, is he trying to say it’s a wasted effort?”
Timothy Emmanuel said, “I think it is good.” Azeez Abiodun @azeezjalao said “Kudos, Nice move in the right direction.” Justification for a National Carrier
The national carrier will reduce annual capital flight from Nigeria to the tune of hundreds of millions of dollars by carrying a chunk of the over two million international passengers; Floating a National Carrier will enable Nigeria to gain optimal benefits from the BASA Agreements; improve national image and prestige; National Carrier will be carried out using PPP concept; and the National carrier will be expected to form alliance and/or Joint Venture with other airlines to increase reach and number of routes (code-share flights).
Also, the National Carrier may introduce competition leading to fare drop and better services; it will also generate employment for Nigerians; it will have a multiplier effect on the economy through the establishment of support services such as tourism and hospitality services and the national carrier is essential for the development of a hub.