The federal government on Tuesday disclosed plan to set up a new aircraft leasing firm with a sovereign guarantee while taking only a small equity stake.
The plan, the Minister of Aviation and Aerospace Development, Festus Keyamo, hinted was not to bail out airlines directly, but would provide guarantees covering two areas: The legal title and safety status of the aircraft, and repossession rights if a lessee defaults.
The government would hold a five to 10 percent equity stake in the leasing vehicle, positioning it to earn from its enabling role rather than operate the airline.
Keyamo disclosed this during a high-level meeting with airline operators and aviation stakeholders on matters concerning Nigeria Aircraft Leasing Company, which was held in Abuja.
He disclosed that the structure was designed to address a long-standing problem for foreign lessors, explaining, “Previously, even after the Nigerian Civil Aviation Authority deregisters an aircraft, other agencies such as customs could block repossession on legal grounds. The sovereign guarantee would bind all government agencies to cooperate on repossession, with the government itself liable if they fail to do so.”
According to him, “The special purpose vehicle for the leasing company is currently being incorporated, with completion expected in weeks rather than months.
“Fundraising is underway, and officials report global investor interest, though they declined to give a firm financial close date.”
Speaking on foreign exchange, Keyamo explained that the arrangement was aimed at reducing pressure on FX and outflows.
“The government is not putting one kobo on it. The government is only providing a sovereign guarantee for the safety of those aircraft and for repossession.
“And for that, the government will hold a minimum equity in the company. And so the government is earning money from it because of the role it’s going to play.
“Now, whether it’s going to be five or 10 percent, the Minister of Finance, the Attorney General, myself, we shall all decide. But it’s going to be very minimal share equity.
“So the government holds an equity in it for the role it’s going to play . Now, why are we dragging it like this? That is because before, deregistration by the NCAA was not enough to export an aircraft. After NCA deregisters, customs will come in and give all kinds of stories.”
Continuing, Keyamo said: “I have explained this before in my previous press interviews, especially the one I granted after the approval we secured from the Federal Executive Council about three or four weeks ago.
“ It was very important that we brief the airline owners today because eventually they will be the ultimate off-takers of that aircraft leasing company. As you know, one of our major objectives as a government is to see to the survival and stability of the local airlines.
“Why did we make this a prime objective? It’s simply because it is only in Nigeria and the whole of Africa that you have this volume of private operators.
“All over Africa, all other major airlines are run by governments. There’s no single country in Africa that has plenty of airlines run by private people.
“It does not exist. It’s only in Nigeria. All the other airlines we hear of, whether Morocco Air, Egypt Air, Rwanda Air, Uganda Air, South Africa Air, all of them are run or subsidised by governments.
“So government’s duty in Nigeria, therefore, since we don’t own a national airline, we don’t subsidise one, is to ensure that the sector that we preside over, run by private people who are Nigerians, for Nigeria, who employ Nigerians, and for the benefit of the economy, we must support them to make them stable and make their businesses thrive.
“Therefore, the establishment of this special SPV, that the president has approved, is to ensure that they get the fullest support from the government to acquire their aircraft. The major problem of the local operators has been how to acquire their helicopters, their aircraft, for their different operations.
“It’s not only for their businesses, like I said. Once they acquire more aircraft, it helps, one, to cut down on the constant cancellation of flights you hear in Nigeria.”
Speaking on behalf of the Airlines Operators,
the Managing Director/Chief Executive Officer, Ibom Air, George Uriesi, thanked Keyamo for his intervention, saying, “Already our hands are tied behind our back in the wrestling ring. So what he’s done is he’s untied our hands by providing us a Nigerian leasing company that not only will provide us access to aircraft at way reduced interest rates, we’ll be paying it in naira.”
Kasim Sumaina
Follow us on:
