By Muyiwa Lucas, Collins Nweze, Kelvin Osa-Okunbor, Daniel Essiet and Oyindamola Mustapha
The intervention of the Asset Management Corporations (AMCON) in the running of key businesses in the economy has brought knocks and kudos to the debt company.
While the intervention in the banking sector has led to stability and confidence building in the affected banks, its outing in the aviation and power sectors has been described as total failure, just as its interventions in the agricultural sector got some knocks.
For instance, AMCON had through the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) took over some banks with liquidity challenges.
In August 2011, AMCON acquired from the Nigeria Deposit Insurance Corporation (NDIC) three Bridge Banks to assume the assets of former Afribank, BankPHB and Spring Bank.
The corporation consequently injected N679 billion into the Bridge Banks namely, Main Street Bank, Keystone Bank and Enterprise Bank, to meet the minimum capital base of N25 billion and the minimum capital adequacy ratio of 15 per cent.
Keystone Bank was later acquired by Sigma Golf – Riverbank consortium. The acquisition started yielding results as bank recorded profit before tax of N3.72 billion at the end of first quarter financial year ended March 31, 2018. This is against the loss of N2.79 billion recorded in the same period of 2017.
In September 2018, AMCON through Polaris Bank Limited bought defunct Skye Bank. The sum of N786 billion was injected into Polaris Bank Limited which was established to assume defunct Skye Bank’s ownership as well as assets and liabilities. Today, Polaris Bank is running smoothly and profitably.
Central Bank of Nigeria (CBN) Governor, Godwin Emefiele said the apex bank took the decision to stop defunct Skye Bank from relying on CBN’s intervention to remain afloat. The regulators’ target was to save depositors’ funds and ensure the bank continued as a going concern, being a Systemically Important Bank (SIB).
Polaris Bank Limited posted a Profit Before Tax (PBT) of N28.9 billion for the 2020 financial year, its latest full-year audited financial results for the period have shown. Bank customers said AMCON intervention was timely and made it easy for them to sustain their businesses with the bank.
However, the story is different in the aviation, power and agricultural sectors of the economy. Five years after the Federal Government drafted its interventionist agency AMCON into the aviation sector, the fortunes of two carriers it set out to rescue has plunged into a deeper crisis.
Rather than strategise for an achievable template to revive the debt ridden carriers – Arik Air and Aero Contractors , the interventionist agency has run the airlines into near collapse.
From depleting fleet of aircraft, mounting debts to owned fuel suppliers, catering companies, aviation agencies and other suppliers and vendors, the airlines are on the verge of collapse.
Investigations by The Nation show that while AMCON failed to revive Aero Contractors, a once bubbling carrier with an intimidating fleet, the body is at a fix on what to do with the airline.
Last week, the management of Aero Contractors under receivership of AMCON announced the temporary suspension of scheduled passenger services.
The carrier, investigations further reveal, is down with no operating aircraft as it has run out of funds to bring back its airplanes stranded at offshore maintenance centres in many parts of the globe.
Sources familiar with the throes of the carrier said the intervention of AMCON has created more challenges for the carrier before it took over in 2017.
With more than half of its workforce sent on redundancy during the outset of the COVID -19 pandemic, the beleaguered carrier has been struggling to return many of its airplanes to the skies.
Experts have, however, cited the trajectory of one of Africa’s promising carriers – Arik Air,
From a promising outlook in terms of operational pedigree and fleet size a few years ago, the carrier for a myriad of reasons navigated itself into near collapse, forcing the Federal Government to put it under receivership by the Asset Management Corporation of Nigeria (AMCON).
But, a few years later, AMCON is overwhelmed in debts. Experts, who pleaded not to be named, said the carrier is experiencing enormous operational difficulties that has put the interventionist agency in a dilemma over what to do with Arik Air Limited five years after it took over the management of its operations.
AMCON took over Arik Air in February 2017 and appointed Mr. Kamilu Omokhide as its Receiver Manager with the mandate to turn around the fortunes of Africa’s biggest private carrier within a short period of time.
Investigations have shown that Arik Air, which had over 30 serviceable aircraft in its fleet with about 3,000 workers at its peak, was down to 10 as at December 2017.
The carrier investigations revealed experienced difficulties in operating flights due to mounting debts to local and foreign organisations.
The debt profile at the time of the AMCON acquisition, by some accounts, was put at N300 billion, consisting of foreign and local debts with a backlog of unpaid salaries and charges. Total foreign debts totalled $51million with that of Lufthansa Airline put at $47 million.
But, a debate is still raging between the original owner of the carrier – Johnson Ikhide-Arumemi – and the AMCON team taking charge at the airline.
The mandate of the receiver manager was to reposition the airline and put it on the path of recovery within a short time, but after over five years, Arik, rather than improve, has further nosedived from the 10 aircraft AMCON inherited to a few aircraft, downsized, unmotivated workforce.
More precarious is the inability of AMCON to address the mounting debt profile it inherited at take over of Arik, though it was able to pay recurrent debts, according to the submissions of Omokhide during a meeting with the House of Representatives Committee on Aviation headed by Nnolim Nnaji early this year.
The committee had summoned AMCON, the Receiver Manager, heads of aviation agencies and the unions based on petitions by the Association of Nigerian Aviation Professionals (ANAP) and Nigerian Union of Pensioners (NUP).
NUP and ANAP had petitioned the committee to prevail on the Nigeria Civil Aviation Authority (NCAA) not to issue an Air Operator’s Certificate (AOC) to NG Eagle Airline being floated by AMCON based on the huge debts owed the aviation agencies.
AMCON claimed that the debts Arik owed the aviation agencies and other creditors would be classified as bad debts and would not be paid but the union countered the receiver manager who made the proposition for AMCON on the ground that the majority of the debts owed the agencies were taxes, which include ticket sales task (TST) and passenger service charge ( PSC), which Arik collected for the agencies from travellers.
The union stressed that Arik also owed the Nigeria Airspace Management Agency (NAMA) billions of naira for navigational and communication services provided to its flights and the Federal Airports Authority of Nigeria (FAAN) for landing parking charges as well as other charges which included rents across its airports.