The Infrastructure Concession Regulatory Commission (ICRC) has expressed concern over the unallocated 16% equity in the Nigeria Air project, which is hindering progress towards finalising the deal. In a recent memo to the National Assembly, the ICRC, which is leading the negotiations, revealed that Ethiopian Airlines holds 49% of the equity, MRS Oil and Gas Limited and SAHCO each have 15%, the Federal Government holds 5%, and the remaining 16% is yet to be allocated.

The Tribune Newspaper says, Nigeria Air project was initiated by the Ministry of Transportation in 2016 as part of the Aviation Sector Roadmap, approved by former President Muhammadu Buhari. It was designed as a public-private partnership initiative, with the ICRC providing regulatory guidance in accordance with the ICRC Establishment Act 2005 and the National Policy on Public-Private Partnership (PPP).

According to the memo, the ICRC achieved several milestones, including the constitution of a project steering committee, a project delivery team, and the appointment of a Transaction Adviser. The project initially procured Lufthansa Technik but later switched to Airline Management Group/Traniero after obtaining approval from the Federal Executive Council (FEC). The ICRC's Certificate of Compliance to the Outline Business Case (OBC) confirmed the project's viability and creditworthiness, which was presented to the FEC multiple times before receiving approval.

The memo highlighted that the FEC insisted that the Federal Government would not provide any funds for the airline's takeoff, demanding that the project be fully privately financed since it was deemed viable and bankable.

Regarding the bidding process, the ICRC revealed that after a 10-week advertisement period, only the Ethiopian Airlines consortium submitted a bid, allowing the project to proceed to the negotiation stage as per the ICRC Establishment Act 2005. This act permits direct negotiation without competitive bidding if only one contractor or project proponent meets the prequalification requirements.

However, the memo lamented that stakeholder agreement documents had not yet been signed by the appropriate partners. Preparatory meetings were held between the Ministry of Aviation, other government stakeholders, and the Ethiopian Airlines Consortium. The ICRC requested specific implementation requirements before negotiations could commence, including the consortium becoming a Special Purpose Vehicle, signing a shareholders' agreement/updated consortium agreement, fully allotting the unallocated 16% shares, and adhering to the proposal document's requirements.

To align all stakeholders, a meeting was held at the ICRC to harmonise the government's position before engaging with the private proponent. The meeting concluded that each consortium member must individually sign the PPP agreement and shareholders' agreement. It also emphasised the full allotment of the 16% unallocated shares, compliance with the ICRC Establishment Act's duration requirements, and a review and adjustment of clauses allocating financing and regulatory risk to the government.

On April 17, 2023, the ICRC sent a regulatory position to all consortium members, highlighting issues that needed correction before signing the shareholders' agreement. However, a negotiation meeting scheduled for April 18 and 19, 2023, at the ministry could not proceed due to a court order obtained by the representative of the Federal Ministry of Justice, restraining any action on the project.

The next step, as stated in the memo, is for all shareholders to sign the shareholders' agreement once the court order is lifted, enabling negotiations to resume and conclude. Nigeria Air was unveiled on May 26, 2023, in Abuja, by the Minister of Aviation at the time, Hadi Sirika. Since the launch, there has been criticism from various stakeholders regarding the process that resulted in Ethiopian Airlines winning the bid.


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