Status of the Nigeria Air and the PPP Bidding Process

Press briefing by the Honourable Minister of Aviation,

Senator Hadi Sirika today Friday

22nd September 2022

Status of the Nigeria Air and the PPP Bidding Process

Overall Statements

The National Carrier, Nigeria Air, is well on its way to being launched with three Boeing 737-800 in a configuration very suitable for the Nigerian market. Nigeria Air will launch with a shuttle service between Abuja and Lagos to establish a new comfortable, reliable and affordable travel between these two major Nigerian Airports. Other domestic destination will follow thereafter.

The Request for Proposal (RFP) under the PPP act, governed by ICRC, is completed. After a careful, detailed and ICRC governed selection process, Ethiopian Airlines (ET) Consortium has been selected as preferred bidder, offering an owner consortium of 3 Nigerian investors MRS, SAHCO and the Nigerian Sovereign Fund (46%), FGN owning 5% and ET 49%. The consortium has been subject to a due diligence process, after which the contract will be negotiated between the consortium and the FGN, leading to a Full Business Case, which will be expected to be approved Federal Executive Council (FEC). We expect this process to take 6-8 weeks.

An interim Executive Team of highly skilled Aviation Experts has been working since FEB 2022 to set up all the necessary regulatory and industry requirements to launch the National Carrier. All Executives have been approved by NCAA, the Air Transport License has been issued by NCAA, Nigeria Air (after having identified the first three aircraft) will now finalize all necessary Operation Manuals and then go through the inspection and approval process of NCAA.

The money spent for the launch of Nigeria Air, for all the requirements to establish an AOC and be admitted starting an airline operation, is well within the 5% capital investment of the Federal Government of Nigeria, that will be overall needed to establish the National Carrier initially for the AOC approval and everything else required by stringent national aviation regulations, as prescribed in the FEC approved Outline Business Case (OBC). This OBC is the milestone for the preferred Bidder Consortium and has been met by the submitted business plan of the preferred bidder. It is the overall share capital of around 300 Mio USD, provided by the preferred bidder that will launch Nigeria Air to its full size of 30 aircraft and international operation within the next two years. No further FGN funding will be provided above the 5% share capital of the next national Carrier of Nigeria, which was provided to launch Nigeria Air.

Background on the PPP

The invitation to bid for the ownership of Nigeria Air under the PPP regulations of the Federal Government of Nigeria (FGN) and overseen by the Infrastructure Concession Regulatory Commission (ICRC) was published in the Economist and in several local Nigerian papers on 5th March 2022 (see Annex 1), with a deadline for the Request for Proposal (RFP) set for 10th May, 2022, later extended to 10th June, 2022, with another publication in the Nigerian local papers.

A data room for all the details of Nigeria Air, including the Outline Business Case (OBC) and the financial model, was established by the Transaction Advisor on 15th March 2022. This dataroom is a reflection how transparent the PPP process and the RFP procedure were handled.

A bidders conference was held online on 28th March, 2022 with over 100 participants.

Over 60 parties requested access to the dataroom.

The evaluation Team, 11 Experts from ICRC, FMFB&NP, FMA and the TA met on the 20/21st July 2022 and again on 1st August 2022.

The Ethiopian Airline Consortium bid was formally opened in the presence of a representation of Ethiopian Airlines, checking that all envelopes were closed and sealed at that point, 11am on 20th July, starting with the Technical Bid. The Financial Bid was opened, again under the observation of the Ethiopian representative, on 21st July 2022.

All 10 forms, as required by the RFP, were evaluated by the team. Unanimously, the assessment team cleared the Technical Bid, which had a total score of 89% out of 100.

In a further meeting on 1st August, 2022, the team assessed the Financial Bid further and graded it with a score of 15% out of 20.

The Ethiopian Airline Consortium got a combined score (Technical and Financial Bid) of 86.7%.

Ethiopian Airline Consortium was declared the Preferred Bidder and the evaluation Team will proceed with the

Due Diligence Phase (completed for all consortium partners on 15 Sep. 2022)

Contract Negotiation between the Preferred Bidder and FGN

Development of the Full Business Case (FBC)

Issuance of Compliance Certificate for the FBC by ICRC

Approval of FBC by FEC.

We aim to finish this PPP process by mid Nov. 2022.

Background on Nigeria Air

The interim Executive Team has been working since 1 Feb. 2022 on establishing Nigeria Air to prepare the necessary documents and requirements for achieving the Air Transportation License (ATL), Air Operator Certificate (AOC) and launch the operation, before handing it over to the successful PPP bidder consortium.

All interim Executives were approved by NCAA after individual interviews (Accountable and Post holders/Nominated persons) in May 2022.

The ATL was awarded to Nigeria Air by NCAA on 6th June 2022.

Three aircraft were searched for by the interim Executive experts and several offers were evaluated, from highly experienced and competent operators. The contract was negotiated with three final candidates, and a signature-ready contract has been finalized with Ethiopian Airlines for three Boeing 737-800 with a 16 Business Class and 150 Economy Class configuration. Should we update this para to the agreements reached in Addis that we will work directly with ET to provide three B737, initial crews and engineers, while NAL is recruiting 737 rated experienced Captains, First Officers and Cabin Crew, as well as aircraft engineers shortly to join Nigeria Air (see advert in tomorrow's papers).

The first aircraft is ready to arrive in Abuja for the further work and NCAA inspection, demo flights and audit as part of the AOC requirements. In time, two others will arrive to complete the required three aircraft for a new AOC holder.

The interim executive team has prepared, with the support of FAAN, the Terminal C at the Abuja Airport and finalized a contract with MMA 2 terminal in Lagos, for the operation of an initial shuttle between Lagos and Abuja. The bridge in Terminal C still has to be repaired, the costs are calculated.

The Operation Manuals (OM), required for the AOC, are prepared by the interim Executives and a third-party provider as much as possible, waiting for the decision on the initial - aircraft, as the basis for all OMs. With the decision on B737 the finalization of the OMs will be established.