Nigeria Air deal would require $112m payment to Ethiopian Airlines – Keyamo
Nigeria's Aviation Minister, Festus Keyamo, disclosed that the suspended Nigeria Air deal would have required the country to make payments totaling around $112 million to Ethiopian Airlines over a three-year period.
This payment was intended to compensate Ethiopian Airlines for providing surplus aircraft as part of its equity stake in the Nigeria Air project.
Keyamo revealed this information during an interview on the Political Paradigm program on Channels Television on Tuesday, where he emphasized the financial implications of the agreement for Nigeria.
He stated: "Ethiopian Airlines was supposed to provide their excess fleet to Nigeria Air as their equity contribution. However, this is not an investment, as we will be paying for them. We will be making payments of about $112 million over three years to Addis Ababa. What exactly are they contributing? We are making payments to them, so where is the investment?"
Keyamo highlighted that the arrangement would have heavily favored Ethiopian Airlines, giving the airline significant influence over Nigeria's new national carrier. He pointed out that the profits and benefits from the deal would largely flow back to Addis Ababa, rather than benefiting Nigeria's economy.
Keyamo dismissed speculations that suspending the project caused Nigeria to miss out on foreign direct investment.
He questioned the value of such investment, arguing that if most of the returns would not benefit Nigeria, pursuing it would not be worthwhile.
The Minister emphasized that the deal would have positioned Ethiopian Airlines as the majority stakeholder, holding a 49% stake in Nigeria Air.
This setup would have effectively granted the Ethiopian government significant control over the operations of Nigeria's intended national carrier.
He also expressed concerns about the risks of relinquishing crucial Bilateral Air Service Agreement rights to Ethiopian Airlines, cautioning that it could undermine Nigeria's control over its own aviation sector.
"By allowing Ethiopian Airlines to dominate Nigeria Air, we were essentially handing over our BASA rights, which are a crucial aspect of our aviation sovereignty," he pointed out.
Keyamo also criticized several terms in the deal, including tax exemptions and indemnity for Ethiopian Airlines, which would have shifted significant financial risks to the Nigerian government.
He clarified that under these terms, any financial losses or setbacks during operations would have been Nigeria's responsibility.
Additionally, he noted that the agreement would have allowed Ethiopian Airlines to control key management positions, including the Chief Executive Officer and Chief Financial Officer, thereby consolidating critical decision-making power within the foreign airline.
The Nigeria Air project, initiated by former President Muhammadu Buhari's administration, aimed to revitalize the defunct Nigerian Airways.
Announced on July 18, 2018, the initiative was suspended just two months later due to concerns about its feasibility, with initial costs estimated at $8.8 million and take-off costs at $300 million.
In 2022, Ethiopian Airlines won the bid to manage Nigeria Air, acquiring a 49% stake, while the Federal Government held 5%, SAHCO 15%, and other investors accounted for 31%.
In May 2023, the then-Aviation Minister Hadi Sirika officially launched Nigeria Air.
However, by June, the House of Representatives labeled the process as fraudulent, leading to the suspension of the initiative.
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