10 Airlines Recieves N87 billion

10 Airlines Recieves N87 billion
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TEN airlines have received N87billion cash from the government to boost their operations and ensure safety, it was learnt at the weekend.

The cash is from the N300b Aviation Intervention Fund, Senior Special Assistant to the President on Aviation, Captain Shehu Iyal said.

The government made the cash available following complaints by airlines, including Aero, Virgin Nigeria and Chachangi, the global economic recession was having adverse effects on their operations as they were being bogged down by debts.

Besides, there were high interest rates, low working capital, absence of medium/long term funding, high custom duties, VAT and other taxes.

Iyal, in a paper submitted to the Senate and House of Representatives’ joint sitting on the June 3 Dana Air crash, noted that some of the major airlines made the request for assistance during the tenure of the late President Umaru Yar’Adua.

Apart from the issues raised by the airlines’ operators at the joint sitting, stakeholders have expressed doubts about a possible diversion of the funds to other means by the beneficiaries.

He also said the country stands to benefit immensely from the Memorandum of Understanding signed with Lufthansa after work on the ongoing review of the MoU might have been concluded.

Iyal said the former President directed his office to organise a stakeholders’ forum and take a holistic view of the sector to “find out how best the government could assist the airlines”.

After the forum, he said the late President Yar’Adua approved most of the recommendations and directed the Ministry of Finance and the Central Bank of Nigeria (CBN) to give the airlines with funds at generous rates.

Following Yar’Adua’s demise after a protracted illness, his successor, President Goodluck Jonathan, ensured that funds were disbursed to the airlines through the Bank of Industry and the airlines’ sponsoring banks, Iyal said.

A breakdown of the airline-by-airline chart, which was attached to Iyal’s submission and obtained by our correspondent at the weekend, indicated that the Air Nigeria Developmental Limited got the highest share of N35.5b as term loan. Aero Contractors followed with N14b as term loan and another N6b as working capital. Air Nigeria did not collect a working capital.

The funds were distributed through various banks, according to Iyal, who said: “The funds were disbursed at a generous rate of between two per cent to seven per cent as against the 18 per cent to 20 per cent that was the going market rate. There was also a moratorium of six months with extended repayment term of between 10 to 15 years.”

On the working capital, Iyal noted: “Some of the airlines were granted the a working capital of between N500m and N1bn, which represents 20 per cent of the previous year’s turnover of each airline.”

Arguing that it was wrong to accuse the Federal Government of failing to assist the operators to ensure safety, Iyal said the government has continued to upgrade facilities at the airports, adding: “It is quite possible that other extraneous factors outside funding could be at the heart of the crisis in the sector as funding is just one aspect out of several other factors as far as safety in the aviation sector is concerned.”

He identified the problems of airline operations as, among others, lack of cooperation from the agencies and supervising ministry; lack of transparency and accountability in funds management; dilapidated infrastructure and equipment; poor and inadequate facilities; and weak/compromising supervision by the supervising ministry.
Posted by williams sodic on 2012-06-25
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