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B N W: Biafra Nigeria World News |
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Obasanjo, Branson to speak on Virgin Nigeria, as criticisms mount
PRESIDENT Olusegun Obasanjo and British billionaire businessman, Richard Branson are to address a joint world press conference tomorrow to seal the deal in which Branson's Virgin Atlantic Airways becomes the strategic investor in the Nigerian new flag carrier.
The Federal Executive Council (FEC) on September 1, 2004 approved Virgin Atlantic Airways as the strategic/technical investor for Nigeria's flag carrier thereby edging out South African Airways, which had earlier in the year been announced.
The new flag carrier, to be called Virgin Nigeria Airlines, will have a share capital of $50 million at the equity ratio of 51 per cent ($25.5m) to Nigerian institutional investors and 49 ($24.5m) per cent to Virgin. Half of the Nigerian stake will be divested at a later stage through an initial public offer (IPO).
It is billed to take off on October 1, to coincide with Nigeria's 41st independence anniversary.
Wire news last week quoted Branson as saying that the Virgin Group was expected to announce a deal this week to set up an airline joint venture in Nigeria.
"I am going down to have a press conference with the President of Nigeria on Tuesday next week. (tomorrow). By then I hope we will have something to announce," Branson was reported to have said.
The deal, the fourth in four years that the ministry of Aviation will be packaging, has similar features with the botched previous ones. It has also come under acerbic criticisms from various quarters including workers, students, Non Governmental Organisations and foreign groups for alleged lack of transparency, favouring foreigners against national interest and lopsidedness in the arrangement.
The Minister of Aviation, Isa Yuguda, while announcing the deal said that the government might underwrite the 51 per cent equity for institutional investors if the process of fulfilling the guidelines of the Security and Exchange Commission would delay the take-off.
The offer of underwriting the shares allocated to institutional investors and the October 1 take-off date have been described as untidy and very suspicious.
Aviation experts allege that the ministry set an unrealistic date for the start of operation for an airline that was yet to be registered, was to create a sense of urgency before the FEC.
This would be in a bid to secure approval for the provision of government money to fund the supposedly private-sector driven initiative.
The appointment of Virgin as the core investor in the new airline has also been trailed by severe criticisms from within and outside the aviation industry.
Stakeholders have picked holes in the biding process, the unclear standards and criteria used, choice of the technical partner, name of the new airline, allotment of equity and the offer of underwriting by the government of the 51 per cent shares allotted to institutional investors.
The new airline is expected to rise from the ashes of the Nigeria Airways under liquidation and whose workers and pensioners are being owed more than 18 months salaries and entitlements.
Nigeria Airways' workers and pensioners have vowed to resist the take-off of the new airline operations unless their entitlements were paid just as other industry stakeholders lamented that the deal is against the interest of the Nigerian economy and in favour of the British economy.
A coalition of aviation trade unions, groups and Non Governmental Organisations (NGO) has urged the government to reverse the deal in the interest of the nation.
It argued that the FEC was misled to approve what patently contradicts the transparency posture of President Obasanjo's administration and could further the domination of the Nigerian aviation market by foreign operators.
Former Chairman, House of Representatives on Aviation, Alhaji Awwal Tukur, said that rather than create Virgin Nigeria, the Federal Government should have given the lucrative foreign routes to domestic operators, adding that Nigeria deserves more than one flag carrier.
The choice of Virgin, which currently dominates the United Kingdom-Nigeria route, including the use of Nigeria Airways' frequencies, according to the industry stakeholders, will not allow the necessary competition that will give air travellers the best fares and services.
One of the stakeholders, the Nigerian Aviation Safety Initiative (NASI), has also queried the pact.
Describing the procedure of the choice as a "sharia," the NASI Executive Director and the chairman, Captain Jerry Agbegegbe and Dung Pam, in a letter to the Senate, called for an investigation into the choice of Virgin Atlantic as the strategic investor for the country.
NASI said it was particularly worried by the "lack of transparency and circumstances surrounding the emergence of the proposed flag carrier, which had raised the question of security and safety of its operations.
The group observed that under existing federal laws, specifically the Privatisation and Commercialisation Act of 1999, only the Bureau of Public Enterprises (BPE), through the National Council on Privatisation, is empowered to privatise or offer shares in any public corporation for sale.
It noted that whilst government officials had exhibited an "unprecedented blind passion and lack of transparency" in their attempt to "push the deal for the new airline through, "they have remained most economical with other details, most especially the identities of the partners of Sir Richard Branson".
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