FG has no plan to convert Arik, Aero into national carrier – AMCON MD

The Managing Director of Assets Management Corporation of Nigeria (AMCON), Ahmed Kuru, has dispelled the rumour that the Federal Government has concluded plans to merge Arik Airline and Aero Contractors into the planned national carrier.

Kuru who disclosed this on Friday in Lagos in a parley with journalists said that it was wrong for anybody to believe the rumour because the federal government has almost concluded plans for the establishment of a new national carrier.

According to Kuru, it will amount to taking a plunge into the ocean if government decides to build a new national carrier out of Arik/Aero.

“It’s going to be suicidal for government to build national carrier out of Arik and Aero. The problem kin Arik/Aero is so much for government to say it wants to build national carrier out of them; why would government want to build a national carrier out of Arik/Aero when it can get get aircraft anywhere in the world, issue itself operating licence. Why will government build a national carrier out of Arik/Aero and end up in court for the next 20o years? So all those talks are gist. I won’t even advise government to do that and besides the national carrier plan is already on board,” Kuru said.

Though, Kuru said entrepreneurs in the industry behave in a rascally manner, he also pointed out that the aviation industry is facing a lot of challenges that needs immediate government intervene if the industry must survive.

He listed some of the challenges affecting the sector to include access to aviation fuel, corporate governance and infrastructure and suggested that the sector needs to be overhauled, noting that the worrisome state of affairs in the industry is not only about poor management on the part of the investors.
The AMCON chief listed some of the challenges facing the Corporation to include unnecessary litigations by debtors who will rather go to court instead of sitting down with officials of the corporation to agree on how to pay their debts.
“We have people willing to pay but are not able to because of the business climate but they are others not willing to pay. These set of people will go to court to raise one technicality or the other to frustrate our attempt to get them to pay their debts. This is one of the biggest challenges we have,” Kuru said.
According to him, anytime AMCON takes over any business, it is because all effort to get the owners to pay their debts has failed.

He said thatAMCON was not set up to make profit, to save the economy from bad debts and financial crisis.
“AMCON is not set up to make profit; AMCON is a resolution company, a resolution vehicle that was set up in 2008, 2009 to provide liquidity to commercial banks by purchasing non-performing loans, so that it could jump start the economy,” Kuru said.

“Based on that model, for AMCON to make profit, the economy must be very, very buoyant, even some of the climes, save for Malaysia, all the other climes that have used this model (post losses).”
He said the bad debt bank is expected to pay as much as N280 billion in interest to the Central Bank of Nigeria (CBN) on a monthly basis.
Kuru added that the CBN has been extremely supportive with the six percent interest rate granted to the bank, but the mass of debt acquired by the bad bank makes interest sizeable.
He revealed that AMCON is in discussions with the central bank to reduce interest rate, even if by just two percent.
“Every month averagely, our interest obligation to the CBN is N280 billion, interest only. Sinking fund projection of maybe N288 billion, we only receive N136 billion,” he said.
“There was this assumption at that time that the economy will grow at a rate of six percent year in, year out. The banking sector is not even growing at the rate of five percent.
“There is this assumption that I will be able to collect cash, get obligors to come and pay me, I’m not getting 20 percent from them. So, I’m sitting with debt that I am servicing and I am sitting with assets that are not even earning. Some of them I have to pay for security guards to watch over them.”
He said the management is working on fulfilling its mandate within the 10-year period stipulated in the AMCON act, but admits that there is a possibility of an extension.

He, however, did not fail to thank the National Assembly (NASS) and the Economic and Financial Crimes Commission for what he described as their robust to his corporation.

In his presentation, Mr. Olugbenga Ataiyero, head, finance and budgeting, who unveiled the AMCON’s financial records for 2016, said the company posted a stand alone loss of N254.34 billion in, improving its records by N49.86 billion as against N304.2 billion posted in 2015 while credit losses turned positive as net gain on financial assets moved from N10 billion in losses in 2015 to N17 billion in profit by 2016.
However, due to losses suffered from its subsidiaries, AMCON’s consolidated losses grew N295.45 billion in 2015 to N352.15 billion in 2016.