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Virgin Nigeria: US Moves Against Deal

Posted by By Tunde Rahman on 2004/12/05 | Views: 3242 |

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Virgin Nigeria: US Moves Against Deal


United States authorities may have thrown spanners into the wheel of the Virgin Atlantic/Nigeria deal under which Virgin Nigeria is to emerge as the national carrier to operate Lagos-New York route and other domestic routes in the country.

EFCC disagrees with liquidator over Airways' property

United States authorities may have thrown spanners into the wheel of the Virgin Atlantic/Nigeria deal under which Virgin Nigeria is to emerge as the national carrier to operate Lagos-New York route and other domestic routes in the country.

The Financial Times of London quoted a Senior US Aviation official as saying at the weekend that the deal could be in breach of US regulations.

The Director of the Office of International Aviation in the US Department of Transportation, Mr. Paul Gretch, said the US would block any plan by Virgin Nigeria to start services to that country from Nigeria, on the grounds that the carrier would be deemed to be under the control of a United Kingdom Airline, Virgin Atlantic.

This would be said to be a breach of the bilateral air services treaty between Nigeria and the US, which as in most of the world stipulates that national carriers of two countries must operate such services.

Contacted last night over the telephone, Virgin Atlantic Nigeria Representative, Chief John Adebanjo, said the issue was beyond Virgin Atlantic airline.

"Itā??s a government matter. Its the Nigerian Government that can handle that part. Its not on our part," Adebanjo said.
On why Virgin Nigeria has not taken off, he said the two parties, Virgin Atlantic and Nigeria, were still talking.

"The process is still on. We have not concluded. We are still busy looking into the papers. We want to ensure that due process is followed. Thatā??s why we have not made any official statement on our take-off," he said.
Richard Bransonā??s (owner of Virgin Atlantic) ambitious plan to start a new airline in the US was also put to question.

Gretch said it was 'puzzling' that no application had been made by Virgin America for a certificate as a US carrier.

The British entrepreneur's plan to start a new carrier in the US had been talked of for a long time, Gretch said adding, "But we have not seen any application by Virgin America to the DOT and I donā??t think it is coming soon."

Gretch said the DOT would examine any application to see who was on board, who was managing the company and what the debt structure was.

Virgin America last June announced its official name, presented a management team led by the former president and chief executive of Delta Air Lines, Mr. Fred Reid, and unveiled plans to order a fleet of Airbus aircraft. It said it hoped to launch the business in the middle of 2005.

On its part, the much-talked about Virgin Nigeria which will replace the crisis-ridden Nigeria Airways was initially slated to take off last October 1.
Virgin Atlantic said in September that it expected to own 49 per cent of Virgin Nigeria under the deal with the country.

The airline stated that it would start domestic routes in Nigeria but later planned to include both regional routes in Africa and long haul services, possibly starting with Lagos-New York route which at present has no direct service.

The issue of foreign ownership and control of airlines is at the heart of a protracted negotiations between the US and the European Union to create a liberalised "open aviation area" across the North Atlantic.

The last talks on the issue collapsed in June amid recriminations.
Meanwhile, the Economic and Financial Crimes Commission and the Bureau of Public Enterprises' appointed liquidator, Mr. Babington Ashaye and Company, may be heading for a showdown over the sale of the property of the moribound Nigeria Airways.

Sources in the EFCC told THISDAY in Lagos night that the likely disagreement between EFCC and Babington Ashaye might centre on the disparity in the cost of valuation of the airways' property.

The liquidator is said to have so far sold about 95 per cent of the property in Lagos zones and has realised about N3.7billion.
It was learnt that the money is presently deposited in Zenith and Standard Trust Banks, which are appointed as bankers.

But the same property is said to have been put at N7.6 billion.
An EFCC evaluator said the property had a current market value of N7.6billion, a shortfall of N3 billion.

THISDAY gathered for instance that while Ashaye has placed a value of N850 million on Airways Headquarters at the Muritala Muhammed Airport Ikeja, Lagos, the EFCC valuation of the same property put it at N1,205,804,000.00.
Also, the blocks of flats at the Ikeja Government Reservation Area were allegedly sold by the liquidator for between N50 and N88million per block of flats but EFCC valuation put the cost at between N60 million and N100million respectively.

Sources said a meeting between the EFCC committee on the sales of airways' property and Ashaye may soon hold in Abuja to harmonise the divergent costs.
Efforts to get Ashaye to speak on the matter were unsuccessful on Saturday but EFCC Head of Media and Publicity, Mr. Osita Nwajah refused to be drawn into comments on the matter.

He merely said, "The EFCC is looking into everything about the sale of Nigeria Airways' property. It is not possible to take issues with anybody now. But we will come up with a report on the matter pretty soon."

The Federal Government through the EFCC inaugurated a committee last June to investigate and recover from individuals and groups all illegally appropriated and confiscated assets of Nigeria Airways across the globe.
The Bureau of Public Enterprises later appointed Babington Ashaye and Co as the sole liquidator of the national carrier.

A copy of the EFCC valuation report made available to our correspondent revealed that the exercise was carried out in Lagos, Ilorin, Kano, Jos, Kaduna, Makurdi, Owerri, Port-Harcourt, Calabar, Abuja and Akure.
In Lagos alone, 115 Detached bungalows, block of flats and bungalows were valued in Ikeja, Ikoyi, Festac and Ipaja.

In Lagos zone one which is mainly in Ikeja, 93 property were valued and the total amount of money on the property was put at N7,357,691,667.42 while Lagos zone two (property at the Murtala Muhammed International Airport) was put at N2,071,384,000.00.

The NAL real estate at Ikoyi was valued by EFCC appointed valuer at N1,378,917,700.00 while those in Festac and Ipaja were put at N34,500,000.00 and N205,500.000.00 respectively.

In Ilorin seven property were valued and the total value was put N30,775,952.00 while the 14 detached houses, bungalows, block of flats, office complex, bare sites and workshop were valued in Kano was put at N520,752,928.00.

In Jos, two bungalows and block of office complex were valued and the amount of money on the property was put N51,519,995.00.

In Kaduna, Makurdi and Owerri, eight property were valued and the total value of the property were put at N96,009,279.00, N35,300,000.00 and N7,900,000.00 respectively.

The value of the airways' seven property in different locations in Abuja were put at N882,231,441.00 while the three in Port Harcourt were put at N118,000.000.00.

Plots of land valued in Calabar and Akure were put at current market prices of N17,000.000.00 and N12,875.000.00 respectively.
Plant and machinery including grounded planes equally were valued at N1,470,081,268.05.

The evaluator noted in the case of the planes that four of the grounded planes, an A310-221, three B737-200 were still serviceable.

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