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How NSIA 46% stake in Nigeria Air tilts the scale in favour of govt ownership vs Ethiopian Airlines’ 49%

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By Oludare Mayowa

The Nigerian Sovereign Investment Authority (NSIA), which manages the country’s Sovereign wealth funds will own a 46 per cent stake in the proposed national carrier, Nigeria Air while Ethiopian Airlines, will control 49 per cent as a core investor and technical partner for the carrier.

According to the ministry of aviation sources, the government decided to limit its involvement in the new project to five per cent to reduce influence and interference from official circle, conditions that were responsible for the collapse of the previous efforts.

A breakdown of the shareholding structure showed that Ethiopian Airlines will own a 49 per cent stake in the new airline, while the Nigerian Sovereign Fund will take 46 per cent and the federal government the remaining 5 per cent.

In reality, despite claims that Nigeria Air would be wholly owned and run as a limited liability company that will have no government intervention, the presence of the NSIA has put the government at an advantage with its cumulative 51 per cent shareholding in the national carrier.

The airline project was one of President Muhammadu Buhari’s 2015 election campaign promises in a bid to replace the previous government-owned Nigeria Airways which collapsed due to official interference, corruption and mismanagement.

The government in July 2018 launched an elaborate logo and name for the new National carrier and announced that Nigeria Air would commence operation before the end of 2018.

By August of 2018, the government had suspended all action on the new national carrier due to disagreement among cabinet members on the modality to run the company.

READ ALSO: Nigeria moves to recover stolen funds from Atiku, Fayose, Obanikoro, engages US firm

The members of the federal cabinet had different beliefs and positions as regards the establishment of a national carrier for the country, according to the then Minister of Transportation, Rotimi Amaechi who also oversaw the aviation ministry then.

“On national carrier, (the) cabinet is divided on the issue of modality. There are those who believe that the Federal Government should invest and then we can sell the equity later.

“There are also those who believe that no, and from day one, they say let us get investors in and give them the franchise of Nigeria Airways or Air Nigeria or whatever is called. That is where we are and that is what held it down. But as for whether it is still in our plan, it is and has not been abandoned,” Amaechi said at a briefing in May 2019.

However, the ministry of Aviation said the reason for the investment of NSIA in the project was to accommodate those who still believe that the government should still have some level of control in the airline to protect the interest and sovereignty of the country.

The cabinet is expected to sign off on the shareholding plan in the next few weeks while the Airline would have an initial capital of $300 million and plans to have 30 aircraft within four years.

According to the minister of aviation, Hadi Sirika, Nigeria Air will launch with service between the capital Abuja and Lagos, the commercial capital, and add other routes later.

“We are going to initially bring in six Boeing 737 aircraft and between the third and fourth year the airline will be able to acquire up to 30 aircraft,” Sirika said.

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