FG planning bank guarantees for Nigeria-Ethiopia deal

The Federal Government is planning to provide bank guarantees for the proposed Nigeria-Ethiopia deal, court papers seen by The PUNCH have shown.

The Federal High Court, Lagos Judicial Division, on Tuesday, had issued an order of interim injunction restraining the Federal Government from executing the proposed establishment of the national carrier otherwise dubbed Nigeria Air.

About eight local airlines and their association took FG to court on Friday, listing Nigerian Air, Ethiopian Airlines, Minister of Aviation, Hadi Sirika, and Attorney-General of the Federation, Abubakar Malami, as defendants.

Among other prayers, the indigenous airlines had prayed the court to ask the government to allow all airlines a level-playing ground, stating that FG’s plan to ‘bank-guarantee’ Ethiopian Airlines and, by extension, Nigeria Air was unfair.

They also claimed that the firm serving as transaction adviser was incorporated in March last year, alleging that the company was linked to the aviation minister.

The domestic airlines alleged that the sale of shares of the proposed airline violated the Companies and Allied Matters Act, as well as that of the Securities and Exchange Commission.

The Assistant Secretary  of the Airline Operators of Nigeria, Ewos Iroro, signed an affidavit in support of the originating summons on pages 13 and 14 of the court papers. The court papers seen by The PUNCH  said, “The FGN shall assist the National Carrier in procuring all federal and state tax exemptions, waivers or reliefs and fiscal benefits by such time as shall be reasonably necessary to avoid any delay in the performance of the National Carrier’s Operations and the FGN shall use its best endeavours to expedite the grant of such Additional Approvals.

“In the event that any of the tax exemptions or fiscal benefits referred to in clause 5.2 above is not made available or ceases to be available to the National Carrier (provided that such non-availability is not due to a failure by the National Carrier to apply for such exemption and/or follow up on the such applications), the FGN shall indemnify the National Carrier which would not have been suffered or incurred if the exemptions and fiscal benefits had continue to subsist.

The court papers further read, “The FGN may provide support to the National Carrier in accessing funding and incentive programmes as may be available to support the Business Objectives and Operations existing prior to the establishment of the National Carrier’s Business Objectives.”

Clause 5.9 of the court papers further said, “Further to clause 5.8 above, the FGN may grant support to the National Carrier to any funding or incentive programmes within Nigeria as may be required for the implementation of the Business Objectives;

The papers said the government might facilitate the expansion of funding or incentive programmes within Nigeria to accommodate the national carrier where it would not be ordinarily qualified for access to such funding or incentive programmes.

“It may also facilitate and procure the creation of Federal Government funding and incentive programmes with the aim of providing Financial Support to the National Carrier.

“The FGN shall procure with fifteen (15) Days of receipt of written notice from the Strategic Equity Partner and National Carrier, commercial banks and other Relevant Authority shall permit for the period within which the National Carrier shall carry on the Business Objectives:

“The free transfer of all funds and financial settlement by the Strategic Equity Partner and National Carrier outside Nigeria necessary to implement the Business Objectives and/or Operations and any Financial Agreements entered into by the National Carrier with respect to the Business Objectives and/or Operations.”

Article first published on the Punch Website

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