Government plans to establish aircraft maintenance facility, leasing firm in Abuja

Isola Moses | ConsumerConnect

In a strategic move to advance the lot of the aviation sector of the economy while making things easy, cheaper and timely for Nigerian airlines to maintain their aircraft, the Federal Government plans to establish a Maintenance, Repair and Overhaul (MRO) in Abuja, FCT.

The government as well concluded a plan to establish an Aviation Leasing Company (ALC), so as to enable Nigerian airlines lease aircraft at cheaper rate, according to ThisDay report.

According to the Federal Government, the latest move is part of its efforts at maximising business opportunities in the Nigerian aviation value chain.

Earlier, report indicated that the government requested pre-qualified bidders to submit their bids in response to the Request for Proposals (RFP) for the establishment of an Aviation Leasing Company (ALC) and establishment of a Maintenance, Repair, and Overhaul (MRO) centre at the Nnamdi Azikiwe Airport, Abuja.

Quoting information from the Ministry of Aviation, the report stated the bidders who had already bidden for these projects were qualified having passed the Request for Qualification (RFQ) stage of the procurement process, disclosing that the RFP submission deadline closed on Friday, October 30, 2020 and Tuesday November 3, 2020, respectively.

The Federal Ministry of Aviation said the evaluation of the bids commenced immediately, after which the preferred bidders would be announced and invited for contract negotiations.

The Ministry said: “Thereafter the Full Business Case will be developed and submitted to the Federal Executive Council for approval and subsequent agreements will be signed between the investors and the Federal Government of Nigeria represented by the Ministry of Aviation.”

Among other objectives of the project, according to the Ministry, are “curtailment of capital flight, easing the leasing process for domestic airlines, encouraging foreign investment (FI), enhancing technology transfer to Nigerians, improving aircraft maintenance turnaround time, localising aircraft maintenance in compliance with regulation, and generally develop the aviation sector in the country.”

There is no Aviation Leasing Company in Africa at the moment, as the existing ones are owned and run by major international lessors who are reluctant, and rightly so, to lease aircraft to African airlines due to the perceived risks, principally revenue, maintenance and legal risks, said the Ministry.

It stressed: “For the Maintenance, Repair and Overhaul (MRO) facility, which will be sited at the Nnamdi Azikiwe International Airport, Abuja, the plan is to have in place an independent MRO facility that will cater to West and Central Africa market. Also importantly, the MRO facility will service the proposed National Carrier and the Aviation Leasing Company.

“The business justification for the proposed MRO is the fact that there is no facility of this nature in West and Central Africa to address aircraft maintenance challenges. Most airlines in Africa ferry their aircraft overseas for maintenance and the huge cost of scarce hard currency is enormous.”

Catamaran Nigeria Limited, one of the transaction advisers for the projects, said that the proposed ALC would be structured as a Joint Venture (JV) between the Federal government and the private investor.

The business model would be, in the short term, to lease aircraft from international lessors and subsequently sub-lease to African airlines while long-term plan is to acquire, own and lease aircraft directly to African airlines.

The Ministry of Aviation also noted “the proposed MRO which will also run through Public Private Partnership (PPP) using the Build, Operate and Transfer model is expected to have the capacity to service both Narrow Body (Jet and Turboprop) and Wide Body aircraft.

“Government, on its part, is willing to support the initiatives by establishing a Free Zone at the airports and has initiated the process for approval.

“The MRO will also enjoy maintenance exclusivity for the proposed National Carrier and the Aviation Leasing Company as well as some land lease relief considerations.”