Stakeholders kick as N’Assembly delays NGEagle’s takeoff due to Arik’s N10.8 billion debt.

The National Assembly has stated that NGEagle, a new start-up airline, will not see the light of day until Arik Air pays off a debt of N10.8 billion.

At a joint oversight function at Lagos Airport over the weekend, lawmakers said the Asset Management Corporation of Nigeria (AMCON), which owns both airlines, should demonstrate a stronger commitment to asset recovery and offset outstanding debts to aviation agencies and taxpayers.

The Nigerian Civil Aviation Authority (NCAA) will continue to hold NGEagle’s Air Operator’s Certificate (AOC) until the debt is paid, according to the lawmakers.
In a related development, Senate’s Public Accounts Committee said it has summoned officials of the Niger Delta Development Commission (NDDC) to appear before it on Wednesday to answer questions over an alleged N100 billion scandal.

This was as the House of Representatives commenced investigation into circumstances surrounding spending of about N1.93 billion by Nigerian National Petroleum Corporation (NNPC) on charter service without documentation.

Aviation stakeholders, meanwhile, faulted the National Assembly’s meddling in strict regulatory affairs, describing it as a dangerous violation of international civil aviation rules.

They said summoning an autonomous NCAA to a meeting and issuing orders to withhold an airline’s AOC, a core technical affair, was undue interference that has implications for safe operations.

Aviation Safety Round Table Initiative (ASRTI), a think-tank group of local aviation, said the development amounts to interloping in regulatory affairs of aviation.

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President of the group, Gabriel Olowo, said it is not the responsibility of the Assembly to direct the NCAA to issue or not to issue AOC to an airline.

“It is established in International Civil Aviation (ICAO) regulations that no matter how powerful the ministry is, which is the political arm of government, it can only wield influence but not dictate to the NCAA,” Olowo said.

He insisted that the criteria of awarding AOCs are the exclusive preserve of NCAA.

“That is the agency that has the right to issue a licence. The NCAA is recognised internationally as an institution to regulate civil aviation. The autonomy of the NCAA is not negotiable. We will be killing the NCAA, if we allow such interferences over its activities.

“This is an aspect of unnecessary political interference we’ve been addressing over the years in NCAA autonomy. This will not help the sector. If care is not taken, we will begin to see such interferences on safety issues: which airline is to be grounded or not despite safety violations and so on. Standard ICAO regulation on issuance of AOC should be followed,” Olowo said.

AMCON, the special debt recovery vehicle of the Federal Government, took over Arik Air in February 2017, as part of measures to save the airline from “imminent collapse”. It had cited gross mismanagement by the owners of Arik and debt in excess of N300 billion.

Inherited in the lot is the sum of N9.6 billion and $2.3 million (totalling N10.85 billion), being five per cent ticket and cargo sales charge that Arik Air owed aviation agencies before AMCON took over, and which stands unpaid till date.

Five years down the line, it was learnt that Arik airline remains a hard sell, given the level of rot, debt and hard-to-recover liquidity pumped in to keep it on life support. As an alternative, the Federal Government, through AMCON, decided on a new carrier, NG Eagle, from some viable assets of Arik Air. At least, three Boeing 737 airplanes that once belonged to Arik have been stripped and rebranded into NGEagle’s livery.

Managing Director of Federal Airports Authority of Nigeria (FAAN), Capt. Hamisu Yadudu, told the lawmakers that the agency faces huge challenges in infrastructural development, and is largely constrained by economic challenges affecting revenue generation, accumulated debts, rising operating and maintenance cost, among others.

Yadudu said recovering the outstanding debts of Arik would help FAAN turn the corner in airport administration.
Chairman, Senate Committee on Aviation, Smart Adeyemi, in his response, said they were not unaware of the tango on Arik’ debt and “that has delayed NGEagle’s taking off. AMCON is a responsible government agency that has a duty to recover outstanding debt. Let them (AMCON) find the means to pay this debt, otherwise, NGEagle will not take off,” Adeyemi said.

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House of Representatives member, Kabir Idris, said the indebtedness is not exclusive to Arik but involves other airlines that owe FAAN and other regulatory agencies.

Idris, however, expressed displeasure on the laid back attitude of aviation agencies that indulged airlines into accumulating debt over a five to 10-year period, without raising the alarm.

This came as the Senate’s Public Accounts Committee said it has summoned officials of the Niger Delta Development Commission (NDDC) to appear before it on Wednesday to answer questions over an alleged N100 billion scandal.

Chairman of the committee, Senator Matthew Urhoghide, yesterday, said it was painful that the huge sum was spent of contracts without justification.

He said: “We have invited NDDC to come. They don’t have records of financial transaction. They will appear before us on Wednesday. They have 47 audit queries and we are going to look at the issues one after the other from one to 47, and we are going to personalise any refund.

“We equally invite them for status enquiry on all revenue into their accounts. We are waiting for the NDDC. If they don’t come, we’ll take necessary action against them.”

Urhoghide added: “It was observed that so many contractors were paid mobilisation fees to enable them commence execution of projects awarded to them. Contrary to the terms and agreement, some of the contractors bolted away after collecting the fees.

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“The surprising aspect of it was that this practice involved 626 contractors in which the sum of N61.4 billion was lost to fraudulent practices.”

In addition, the House of Representatives has launched an investigation into the circumstances surrounding the Nigerian National Petroleum Corporation’s (NNPC) expenditure of N1.93 billion on charter service without documentation.

This was contained in the 2019 report of the Auditor General of the Federation (AuGF) currently being investigated by the Public Accounts Committee (PAC) of the House, chaired by Oluwole Oke.

The report stated that NNPC, now NNPC Limited, spent the said amount on 17 charter hire services without payment vouchers and adequate supporting documents to back up the expenditure.

It also said that there was no supporting document like evidence of vessels transshipment of products, clearance certificates from appropriate inspection agencies, among others, to show that the payments were valid and charged against public funds.

The AuGF report indicted the management of the NNPC for what it called weakness in the internal control system at the corporation, adding that this could have led to illegitimate payment and payment for services not rendered.

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According to the report, the management of the NNPC failed to provide any response to the audit query issued. It demanded that the Group Managing Director, Mele Kyari, be asked to provide reasons why payments were made without supporting documents. Besides, the corporation is to account for N1.93 billion paid to 17 contractors for the charter hire.