• Wednesday, February 28, 2024
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‘Over N230bn wasted on domestic airlines as intervention funds’


FG earns N27bn annually as royalties on BASA

Over N230 billion have been expended and gone down the drain on domestic airlines as intervention in the past few years, stakeholders have said.

They also reveal that the Federal Government may be earning about N27 billion annually as royalties from foreign airlines on the inability of Nigeria to fully utilise the Bilateral Air Services Agreement (BASA).

They say the BASA that Nigeria signed with foreign countries is so lopsided because politicians have refused to allow technocrats do the right thing, hence a great exploitation.

“Political appointees work with the ministry technocrats who often do not have sufficient knowledge on the working or nature of international airlines operations and the methods of negotiating Commercial Aviation Businesses Agreements.

“Without reference or input from major public and other private aviation operators they develop administrative policies, not national policies, which are exploitative, irrational and unilateral. Such are the nature of the policies for the administration of Bilateral Air Service Agreements (BASAs), Commercial Airline Agreements and the Aviation Intervention Funds.

“BASAs are reciprocatory and are expected to restrict the beneficiaries of states airlines to a single entry point. Conversely, the administration of BASAs in Nigeria are skewed by the ministry of aviation officials more to the advantages of the foreign airlines than for the domestic airline operators, such that some foreign airlines operate to all the Nigerian five international airports.

“Consequently, the policy has taken the market on the routes to these airports away from the domestic airlines. In effect, the policy has shifted the balance of trade more in favour of the foreign airlines and their states.

“If my knowledge of mathematics is right, the royalties on the imbalance on 21 BASAs and the Commercial Agreements, at about $50 per seat for the extra of about 45,000 seats, should fetch the government about $117 million or N27 billion annually.

“Whatever informed a minister to take such a reverse decision to discontinue the royalties on this imbalance in 2014, can only bring a setback for an economic sector that has the potential to contribute up to 20 percent to the GDP but was contributing less than 1 percent because of the various unilateral exploitations policies,” John Ojikutu, a retired airport commandant/CEO, Centurion Security and Safety Limited, said

According to him, another policy that had been formulated to favour government officials and politicians, rather than the travelling public or the economy, was that of intervention fund to domestic airlines.

He challenged government to ask questions on how the fund, which he said had gone down the drain, was disbursed and put to use by the airlines.

“The policy of Aviation Intervention Funds is one in which political appointees and the technocrats in the ministry in ally induced government institutions through the Presidency to provide ‘loose’ funds for the private airline operators at interest rates as low as 6 percent annually; some favoured operators got theirs at 2 percent interest rate. This was done at a time when the average interest rate on bank loans was about 20 percent or more.

“Over N230 billion was said to have been shared to these airlines. The aim of the Policy on Intervention Funds, according to government officials at the National Assembly 7th Senate Public Hearing on the Intervention Fund in 2012, was for the private airline operators to use the funds, not to re-fleet their airline, but specifically for the re-negotiation of their bank loans and for the servicing their debts.

“Pray, what sort of economy provides such amount of monies as loans for debts servicing?” he asked.