FG Drops Lufthansa as adviser on national carrier establishment

The federal government has cancelled a N341 million naira contract with Lufthansa as advisors for the establishment of a national carrier and replaced the firm with  AMG (Airline Management Group) and Avia Solutions GE, according to the Minister of State, Aviation, Heidi Sarika. The cost remains the same the minister disclosed at the end of the FEC meeting on Wednesday.

“Today Council considered a memo from transportation regarding aviation. It was a memo that was brought to substitute a member of the consortium that will provide transaction advisory services for the establishment of National carrier. And that member of the consortium is Messers Lufthansa consulting, he said.

“Council considered and approved that substitution with another company called AMG (Airline Management Group) with Avia Solutions GE to join the other members of the consortium to continue providing that the same cost of N341.200 million.

“On why we substituted Lufthansa Consulting, fundamentally there are two reasons. One, that particular member of consortium, Lufthansa Consulting, in the wisdom of the council we felt that Lufthansa consulting is an appendage of the airline group and that might bring conflict of interests because Lufthansa themselves may want to join, partner or help in the process during the procurement phase of this transaction. And of course they are members of Star Alliance, members of One World and members of Sky Team, others may feel shortchanged that the person advising us to set up this airline  which is going to be private sector driven, is a member of an alliance which they are not part of.

“Secondly, since we appointed the transactions advisers in various aviation projects in May 2017, about six of them, five of them have gone ahead, the one for construction of airport, the one for aeropolise and the one for MRO and so on and so forth. Most of them have produced the outline business cases and we are on our way to doing the full business case. However, Lufthansa Consulting, did not accept the offer neither have they signed any contract. They countered the offer instead. One of the conditions the out is that we should pay them 75 percent of the total cost, which is against our procurement law, they also wanted us to change the contract from Naira to Euro, they also wanted us to open an Escrow account in an internationally recognized bank outside the country where the money will be domiciles etc.

“So we found that that was against our procurement law and we have been going back and forth for seven months to see whether they can accept the terms of conditions and even if they had done at a time and they didn’t uptill today, we couldn’t continue with them because it will compromise the system which we thought should be transparent, so that is why we sought the approval of council to substitute them why a neutral person and someone who will accept the terms and conditions given, to accept payment in Naira, to accept 15 percent payment of the entire cost as against 75 per cent etc.”