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B N W: Biafra Nigeria World News |
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Govt picks Virgin Atlantic as Nigeria's national carrier
THE Federal Executive Council yesterday approved Virgin Atlantic Airlines as the strategic/technical investor for Nigeria's flag carrier.
To be called Virgin Nigeria Airlines, the new flag carrier will have an equity of $50 million.
Virgin Atlantic Airlines is a private global airline owned by British entrepreneur, Richard Branson who two weeks ago met President Olusegun Obasanjo at Aso Rock Villa, Abuja.
Virgin Atlantic edged out South African Airlines, which had earlier won the bid early in the year but pulled out upon Obasanjo's insistence that Nigerians take a minimum of 10 per cent of its equity when the South African national carrier is privatised. Following intervention by Pretoria, South African Airlines was allowed to participate in the second bid, which has been won by Virgin Atlantic Airlines.
The Council also approved the reduction of the number of security agencies allowed to operate at the nation's airports from about 15 to nine while new tariffs were okayed for the parastatals under the Federal Ministry of Aviation, the supervising arm of the national carrier.
Minister of Aviation, Alhaji Isa Yuguda, told journalists after the Council meeting that Virgin Atlantic emerged the preferred national carrier not only because of its competence but also for its programme of investing in other sectors of the economy including the railways and mobile telephony.
Under the terms of the approval, Virgin Nigeria is to take-off and be commissioned on the nation's 44th independence anniversary on October 1, 2004. The strategic/technical investor is to have 49 per cent of the equity amounting to 24.5 million U.S. dollars while Nigerian institutional investors are to have the remaining 51 per cent, amounting to $25.5 million dollars.
Early this year, the Council had approved the South African Airlines as the strategic/technical investor for the new national carrier. The airline is 95 per cent owned by the South African government.
Yuguda said yesterday that technical competence, maintenance records, flight, global and ground operations including Information Technology services and human development were part of the factors which swayed the team of independent consultants and evaluators hired to help check the competence of the new core investor.
Other factors considered included profitability, new management commitment to the new national carrier, debt profile, economies of scale, ownership structure, philosophy and long-term marketability.
After the evaluation, Virgin Atlantic scored a cumulative average of 8.32 while South African Airlines scored 8.10.
Giving details of the process that produced the technical/strategic investor, Yuguda stated: "We received quite a number of expressions of Interest and they were screened for the next stage of evaluation and at the final stage two airlines emerged for evaluation. They are the South African Airlines and the Virgin Atlantic Airlines. Due process was followed and transparency was also followed in their evaluation. A lot of criteria were used in the evaluation.
"Criteria used are technical and operational competence, maintenance record, training, training aids, flight operations, aircraft acquisition strategy, global operations, ground operations and aerial and support services etc. Under financial criteria, they used profitability, yield management, proposed commitment to the new airlines, debt profile and credit rating, cash and working capital management, insurance plan, performance in the previous experiences, ownership structure.
"We have set up a programme of commissioning for the take off of the airline on October 1, 2004. The ownership structure of the new airline is 49 per cent for the strategic investor and 51 per cent to be taken by Nigerian institutional investors who will eventually let go 50 per cent of their holding and it will be sold out to the Nigerian public through initial public offer. The equity of the company for now is $50 million. Nigerian investors are going to put in $25.5 million while Virgin Atlantic will put in $24.5 million".
Sounding upbeat about the new national carrier, Yuguda added: "Virgin is a globally accepted brand with successful record in running joint ventures. It confirmed it would use local content in domestic employment. It is owned 49 per cent by Singapore Airlines. Virgin had consistent profitability, superior maintenance of both equipment and aircraft and aggressive entrepreneurial venture".
He said that a letter would immediately be forwarded to the management of Virgin Atlantic while agreement would also be signed. This, the minister added, is to help accelerate the process of starting operations by October 1, and also start the issuing of guidelines for offer that the government might underwrite the 51 per cent equity if the process of fulfilling the guidelines of the Security and Exchange Commission would delay the take-off. After the completion of the process, government funds would be returned back to its coffers.
He dismissed the agitation of the workers of the liquidation-bound Nigeria Airways against the take-off of a new national carrier, saying the new national carrier is not owned by government but is just a product of private-led investment.
He said: "It is an independent airline. Nigeria Airways is a company under liquidation. Presently, a liquidator has been appointed. And it has sufficient assets to take care of the workers under the company".
The Federal Executive Council also approved the reduction of the number of security operatives at the nation's airport from 15 to nine. The approved agencies include FAAN Aviation Security, Nigerian Immigration Services (NIS), Nigeria Customs Service (NCS), State Security Service (SSS), National Drug Law Enforcement Agency (NDLEA), Nigeria Police, including the bomb disposal squad, Ports Heath Services (PHS), Plant and Animal Quarantine (P&AQ;) and the National Agency for food, Drug Administration and Control (NAFDAC).
Out of those approved, six will operate at the check-in counters, while three will operate as backing and on-call basis, whenever the need arises.
To be on duty at the checking-in counters are the following: FAAN Aviation Security, NCS, NIS, NDLEA, SSS and Nigeria Police.
Ports Health Services, Plant and Animal Quarantine and NAFDAC will operate when needed even though they would maintain offices at the airports.
At the departure hall, NIS, SSS, NDLEA, FAAN Aviation Security and Customs would maintain permanent duty posts. At the arrival hall, NIS, SSS, Customs and NDLEA would maintain permanent duty posts.
The Council also approved the use of the revenue from the Bilateral Air Services Agreement (BASA) for the rehabilitation of the National College of Aviation Zaria, Kaduna State. The college, which has suffered neglect, has not graduated any pilot for the past 12 years. The sum of N3.6 billion has been earmarked for the project.
According to Yuguda, "the rehabilitation of the college has suffered a lot of setbacks. For the past 12 years, the college has not graduated one single pilot and we are doing our best to ensure that come October this year we would be able to graduate the batch that has been in that college for the past six years. The students were expected to spend only 18 months.
"Council approved the utilisation of funds in the Bilateral Air Services Agreement (BASA) account to rehabilitate the college. The rehabilitation would include new aircraft, runways, workshops, simulators, and communication equipment".
The council also approved the completion of the first phase of the head office project of the Corporate Affairs Commission situated along Ahmadu Bello Way, Abuja. It was awarded at the cost of N1.6 billion to a construction company with completion period of 88 weeks.
The FEC also approved new tariffs for parastatals under the Ministry of Aviation. Yuguda told State House correspondents after the meeting that the new tariffs are meant to help them to be self-sustaining.
The Council also approved new contracts and measures for the sustenance of good governance in the Federal Capital Territory.
Yuguda added that under the new tariff structure, fresh air transport licence will move from N500,000 to N1 million. The cost of renewal moves from N50,000 to N100,000. Airline operating permit is now N350,000. It was N250,000 before. The permit for non-commercial flights remains N100,000. The cost of Air travel licence moves from N50,000 to N100,000 while its renewal remains steady at N25,000.
Also, registration of agents for foreign airlines would now be N200,000, up from the initial figure of N100,000. The cost of airworthiness moves from the former N250,000 to N350,000.
The Council also approved contracts for 11,415 electrical provision distribution networks for the diplomatic zone in the Central area of Abuja. It would cost a total of N906 million; completion of 33KVA double circuit line constructed from Apo to Nnamdi Azikiwe Airport, Abuja, at a total of N1.5 billion and the approval of 13 companies under the public-private sector partnership for waste disposal within the capital territory.
The council also approved the concession agreement between the Nigerian subsidiary of ISPAT and the Federal Government over the control and management of the Ajaokuta Steel complex and the termination of the concession agreement between the Federal Government and Solgas Nigeria Limited over the steel complex.
It also ratified the ECOWAS energy protocols entered by all the nations of the sub-region.
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