…As Seven prospective airlines abandon NCAA’s certification process***
A total sum of N4.62tn has been paid into the federation
account between January and November this year by the Federal Inland Revenue
Service, figures obtained from the Ministry of Finance have revealed.
The amount is contained in a document presented to the ministry
during the Federation Account Allocation Committee meeting.
Details of the revenue payment were obtained on Thursday in
Abuja by our correspondent.
The committee, headed by the Minister of State for Finance,
Mrs Zainab Ahmed, is made up of commissioners for finance from the 36 states of
the federation; the Accountant-General of the Federation, Alhaji Ahmed
Idris, and representatives from the Nigerian National Petroleum
Others are representatives from the Federal Inland Revenue
Service, the Nigeria Customs Service; Revenue Mobilisation, Allocation and
Fiscal Commission, as well as the Central Bank of Nigeria
The federation account is currently being managed on a legal
framework that allows funds to be shared under three major components -statutory
allocation, Value Added Tax distribution, and allocation made under the
The FIRS in the document stated that N4.62tn revenue was
collected from three major categories of taxes.
They are Petroleum Profit Tax where the sum of N2.3tn was
collected, Companies Income Tax which generated N1.31tn and Value Added Tax
where the sum of N1tn was received.
A monthly breakdown of the N4.62tn revenue figure showed the
sum of N353.27bn was remitted in the month of January while February, March and
April had N450.46bn, N319.08bn and N428.44bn respectively.
For the month of May, the sum of N384.84bn was paid into the
federation account while N457.57bn, N408.93bn and N492.58bn were remitted in
June, July and August in that order.
For September, the sum of N370.5bn was paid into the coffers
of the government while the service also remitted the sum of N473.72bn and
N485.51bn in the month of October and November respectively.
The document read in part, “The PPT collection for the month
of November 2018, was N232.53bn.
“This performance is lower than that of October 2018, of
N276.05bn by N43.51bn or 15.76 per cent. It is also lower than the 2018
approved monthly target of N298.02bn, by N65.39bn.
“The reason for the decrease in the PPT collections was due
to lower receipt of PPT.
“The CIT collection for November 2018, amounted to
N160.89bn. When compared with the 2018 approved monthly target of N165.28bn, it
shows a decrease of N4.38bn or 2.66 per cent.
“This represents a performance level of 73.94 per cent to
the target. However, it was higher than the previous month’s collection of
N92.5bn by N68.39bn by 73.94 per cent.
“The increase in CIT when compared with the previous month’s
collection can be attributed to the receipt of NLNG (Nigeria Liquefied Natural
Gas) corporate tax payment.”
The FIRS Executive Chairman, Mr Tunde Fowler, had while
speaking at the 13th General Assembly Meeting of the West African Tax
Administration Forum, said through the deployment of Information Communications
Technology equipment, the service had been able to fast track tax payment
He said, “In Nigeria, we have in the past two years taken
the route of increasing the use of Information and Communications Technology in
facilitating taxpayers’ compliance and introduced initiatives to improve
inter-agency collaboration, all with a view to enhancing tax administration and
reduce tax revenue leakages.
“Our efforts in this regard have made an impact and
contributed to an increase in the taxpayers roll.”
In the meantime, about seven airlines applying for Air
Operator’s Certificate have failed to complete it or have abandoned the
process, The PUNCH has learnt.
According to findings by our correspondent, investors apply
for certificates to run airlines all the time but many of them take a long time
to complete the process, while some abandon it altogether when they are unable
to meet the requirements.
The AOC is the approval granted by the Nigerian Civil
Aviation Authority to an airline operator to enable it to use aircraft for
commercial purposes including charter and cargo operations.
Information obtained from the NCAA showed that as of the end
of November, the AOC certification process of seven intending airlines had been
declared dormant, while four were on hold.
Before the process was stalled, the airlines had reached
different stages out of the five required to get the AOC.
One of the seven intending airlines that had been declared
dormant was at the fourth stage, three were at the third stage, one at stage
two and two at stage one.
According to findings, one of the intending airlines
abandoned the process since 2015, at the second stage.
The General Manager, Public Relations, NCAA, Mr Sam
Adurogboye, said process of getting an AOC could be stalled if the operator
failed to return to continue with the procedure or if he failed to meet the
requirements at any stage.
“Getting an AOC to run an airline whether scheduled,
non-scheduled or private is rigorous and capital intensive and is in five
stages,” he said.
The first stage according to Adurogboye, is the expression
of interest, where the applicant seeking an AOC makes an initial inquiry. This
is followed closely by the second stage of application.
The third stage, he explained, remained the most rigorous
and also known as the document evaluation phase, where the applicant would be
expected to acquire airplanes, get an office, hire all the personnel for the
operation, get insurance, submit his feasibility study and pay commitment fee
depending on the flight operations.
He added that at the fourth stage, the operator would be
required to carry out flight demonstration, which entailed flying an empty
aircraft to and from his intending destination whether local or international
before he would get to the final stage, which is the issuance of the
certificate, valid for about four years before renewal.
According to Adurogboye, the processes, though capital
intensive, are standard practices all over the world to ensure that the
operator has what it takes to run an airline.
“It is capital intensive, but you must not have all the
money to buy aircraft, you can lease for a start but the planes must be less
than 22 years,” Adurogboye said.
Despite the rigorous process and the multi-billion naira
involved, many investors apply for AOC from time to time.
Currently, there are about 28 airlines intending to get the
AOC for scheduled and non-scheduled operations.
There are also about 31 airlines in the country with active
AOCs with eight of them operating scheduled flights.
According to stakeholders, the operating environment makes
Nigeria’s airline business one of the most expensive globally without a
commensurate ticket price as Nigerian passengers are said to pay one of the
lowest fares around the world.
But while many intending operators had fallen by the
wayside, other investors are going ahead with it and more people are willing to
come into the industry.
The Chairman, Air Peace, Allen Onyema, told our
correspondent in a recent interview that the attraction might be due to the
glamorous nature of the industry or the crowd they saw at the airports.
He said, “But they forget that Nigerians pay the cheapest
fare worldwide and it is only through fares that airlines make money. Even when
you carry a full load, you don’t make one per cent gain in Nigeria, you only
count losses. All over the world, the gains from commercial aviation is
“Nobody gains anything here, it only gives you name. And if
you are talking about investing, you must think about safety, which means you
must be sure of who is in your cockpit and pilots earn a lot. A lot of people
come in and close down within months.”
According to him, airlines start making a profit after seven
to 10 years if they are able to manage well, adding that even at that, it will
also be marginal at about two to three per cent.
The Chief Operating Officer of Dana Air, Obi Mbanuzuo, said
most investors coming into the industry were not aware of some of the
challenges until they started the process.
He added, “First and foremost, the regulator does not allow
you to have just two airplanes for schedule service. Although there are many
other things to do in the industry, people don’t do it, they prefer to run an
airline, without knowing the challenges.
“The aviation industry is glamorous, so, some moneybags come in without reckoning with the cost. I wouldn’t know who is coming in but the people underestimate the industry and when they come in they understand better.”