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CBN Says They Are Satified With Performance At Aviation Intervention Fund
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… Air Nigeria servicing its loan –UBA •As Dana, NCAA, lawmakers disagree over aircraft age limit. We Are satisfied With the perfor-mances of the banks and airlines that ben-efitted from the Aviation Intervention fund, the Cen-tral Bank of Nigeria (CBN) has declared. The declaration was made yesterday by the apex bank’s Director of Commu-nication, Onyebula Okoro-afor , while testifying before the joint Senate and House of Representatives Com-mittee on Aviation, which is conducting a public hear-ing on the Dana aircraft mishap of June 3. Okoroafor stated that two quarterly checks car-ried out so far by officials of the apex bank and the Bank of Industries, managers of the Fund on Air Nigeria, a beneficiary of the fund, re-vealed that the airline had been satisfactorily honouri-ing its obligations to UBA. Explaining the rationale behind the setting up of the fund, Okorafor said the apex bank, in the course of its job found out that there were existing huge systems risks in the financial indus-try, particularly following the global economic crisis and the melt down of the nation’s capital market.
This, according to him, necessitated the introduc-tion of the N500 billion in-tervention funds, whereby the Aviation and power sec-tor benefitted to the tune of N300 billion. He said the Fund was to ensure financial systems stability as well as restore confidence in the financial sector, which goes to the core of the mandate of the CBN.
The director further ex-plained that the way the facility was designed, the apex bank could not, on its own impose beneficiaries on the banks.
He said that airlines wishing to access the Fund must demonstrate to the BOI that it already had an existing facility which it wished to refinance.
According to Okoroafor, there is a ceiling of 7 per cent interest on the facil-ity and out of that, BOI as the managers of the Fund is entitled to one per cent, while the banks Are at their discretion to add their own little interest.
“For us to ensure that our core mandate was ad-hered to we had to do some-thing urgently to ensure that the none performing loans Are freed for the inter-est and confidence of the industry,” Okorafor said, noting that, “the facility is purely for the refinancing of existing none perform-ing loans.”
He said the Intervention fund, which is under the management of the Bank of Industries (BOI), stretch-es the repayment period of benefiting facilities up to 15 years, With a maximum interest rate of seven per cent.
Under cross examina-tion by members of the probe committee Okoroafor said for those who access the fund, the CBN expects such beneficiaries to apply the facility to the purpose for which They Are meant and that the apex bank does not hesitate in raising the hammer on those who violate the purpose of the fund.He reiterated the fact that the Fund was not meant for assets acquisition but purely for loan refinancing.Meanwhile, the Execu-tive Director (Northern Operations) of the United Bank for Africa (UBA), Mr. Dan Okeke, has revealed that Air Nigeria benefited the sum of N35.5 billion from the Aviation Fund be-cause of the airline’s size, capacity and impact on the Nigerian economy.
Under cross examina-tion by members of the probe committee, Okeke explained that his bank in collaboration With a team from the BOI carried out due diligence on Air Nige-ria before advancing the airline the facility.
He reiterated that the deal was carried out be-tween UBA and BOI and that no physical cash was involved in the transaction.
Asked why UBA charges only two per cent interest rate on the facility, Okeke said, “The need to support the airline and support them to recover fully in-formed the decision to peg the interest rate at two per cent.”He stated that, “the ges-ture we Are making is to grow the industry.”
Expressing satisfac-tion over the deal, he said: “Right now, Air Nigeria is servicing the loan very promptly and on time. The airline is doing very well to justify the purpose of the facility.
The facility has gone down from N35.5 bil-lion to about N33 billion at the moment at a monthly repayment rate of N244 million. Air Nigeria has four aircrafts of their own and seven on lease and has bright prospects for the fu-ture.”
Commenting on the risk level of the facility, Okeke explained that the loan was fully collaterised by his bank, dismissing concerns that the Fund was too ex-posed. He said the bank ensures proper monitoring of the application of the funds as-suring that once any benefi-ciary abused the facility, his bank would not hesitate to penalise such a beneficiary.
Chairman of the joint probe committee, Senator Hope Uzodinma, while wel-coming the good intentions of the federal government in setting up the loan said the concern of the com-mittee was to ensure that the facility was not abused and deployed to uses other than what it was originally meant for.
Meanwhile, the manage-ment of Dana airlines, the Director General of the Nigerian Civil Aviation Authority, Mr. Harold De-muren, and members of the probe panel yesterday disagreed sharply over the required age limit of air-crafts that should fly the na-tion’s air space.
The sharp disagreement ensued when the Managing Director of Dana Airlines, Mr. Jacky Hathiramani, revealed during his pre-sentation before the joint committee that, the ill-fated Boeing MD-83, which crashed at Iju-Ishaga in Lagos killing all 152 passen-gers and crew was about wenty two years old, hav-ing been manufactured in October, 1990.
Hathiramani, who fought hard to hold back tears, said the age of an aircraft does not in any way affect its ca-pacity and optimal perfor-mance, especially if such is regularly maintained.
He explained that the aircraft never showed any sign of defect prior to its crash, pointing out that the NCAA had on Friday June 1, barely 48 hours before it crashed, carried out due diligence and round check on the flight. This was as the MD re-vealed that Dana Airlines acquired the affected Boe-ing aircraft in 2008.
He also disclosed that Ni-geria does not have the ca-pacity to carry out mainte-nance of aircraft, hence the need to go abroad for such purposes.The position of Dana air-line was supported by the DG of NCAA, Demuren, who, in response, to a ques-tion by the Chairman of the House of Representatives Committee on Aviation, Hon. Nkiruka Onyejiocha, on the place of age on air-lines.
In his submission, De-muren maintained that, “there is no age limit, since aircraft can only come based on approved parts.”Demuren further stated that, a former Minister of Aviation, Dr. Kema Chikwe had made a policy putting the age-limit of aircraft on Nigerian airspace at 22 years.
The joint committee, however, disagreed With the aforesaid position, insisting that age must be a deter-mining factor of aircraft flying on the nation’s air-space, to avoid a situation whereby airlines would be flying “air coffins” in the name of aircraft.
While Uzodimma stated that, “we will not encour-age airlines to be bringing old aircraft even if it is the policy”, Onyejiocha main-tained that, “the National Assembly will help you im-prove on this or you stop flying if you Are not ready to do what is right in the in-terest of Nigerians.”
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