AN alleged fresh $500 million loan procured by the Ministry of Aviation from China, as intervention fund for the purchase of 30 aircraft for domestic airlines, is causing ripples in the aviation sector.
Stakeholders have criticised the new scheme, saying that the airlines were yet to account for the over N120 billion given to them about two years ago. Virtually all the airlines, including Aero, Arik, IRS, defunct Air Nigeria and others were beneficiaries of the largesse.
The new intervention fund has come under scrutiny with the President of Aviation Round Table (ART), Capt. Dele Ore, telling journalists at the weekend: "It is unbelievable but it is true because of persistent news breaks that $500 million has been borrowed from China to acquire aircraft for our domestic airlines.
"This huge amount of money has been given to Nigeria on loan to enable the acquisition of aircraft through FAAN. If this whole scenario is true, it is definitely an abnormality and a very ridiculous usurpation of statutory functions.
"This got me on a wild goose chase and inquisition into the Act that established FAAN. What functions are assigned to FAAN by its establishing Act? It is definitely ultra-vires the powers of FAAN to acquire aircraft for any airline or for any purpose."
"What is the interest of FAAN in all these? Who needs these aircraft?" he asked.
"What feasibility study has been carried out that concluded the suitability of that particular aircraft for a particular route network? In what proportion will the 30 aircraft be shared among the airlines that indicated interest or have requested for these aircraft? Answers to these posers are required to ascertain the propriety or otherwise of the whole deal."
According to Ore, international best practices dictate that most airlines do not need to own their aircraft, and there are various types of aircraft leases from the conventional owners of aircraft, who are usually banks, insurance companies, aircraft leasing companies and other financial institutions.
Speaking in the same vein, a former Commandant, Murtala Muhammed Airport, Lagos, Group Capt. John Ojikutu (rtd), condemned the action of the government, describing it as a big misplacement of priority. Ojikutu said there were many areas government could channel its resources into, noting that intervention fund granted to airlines in the past had been misused and diverted by some of them.
"We had intervention fund for infrastructure - N19.5 billion - we didn't know where it took us to," Ojikutu said. "Suddenly we came up with another intervention fund of N500 billion for airlines and, according to the Bank of Industry and the CBN, the money was not meant for the airlines to re-fleet their airlines. The money, according to them, was meant for their debts. It is a recycling of public money for some people."
Air Nigeria was reported to have been given N35.5 billion, Arik and Aero equally got hefty sums. Some of the airlines are said to owe the Asset Management Company of Nigeria (AMCON) $737 million. Concerned with the precarious state of the carriers, AMCON late last year took over a carrier and plans to do same to one of the biggest airlines this year for its over $85 billion indebtedness to it.
Last week, the Federal Airports Authority of Nigeria (FAAN) Spokesman, Yakubu Dati, told reporters that government had concluded arrangement to purchase 30 brand new aircraft for airlines to boost their operations.
He debunked insinuations and reports that $500 million was borrowed from China to acquire aircraft for domestic airlines.
"FAAN has not borrowed $500 million from China or any country for that matter," he said in a statement, adding that the authority was not acquiring aircraft but that the Ministry of Aviation was only making arrangements to facilitate the acquisition of 30 planes to boost domestic operations.
