Usman: Local Refining, Solution to High Cost, Scarcity of Aviation Fuel

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The Director of Nigerian Civil Aviation Authority, Captain Muhtar Usman, spoke to Chinedu Eze on the high cost and scarcity of aviation fuel, saying the situation may linger until the product is produced locally. He also spoke on measures being taken by the authority to ensure safe flight operations. Excerpts:

 

 

When you became the Director General of the Nigerian Civil Aviation Authority (NCAA), the agency was facing financial challenges. Has the situation improved and if it has, what did you do to grow a robust financial system?

Financially when we took over, precisely on October 21, 2014, we witnessed a situation whereby the staff and third party contractors were owed over a billion naira in claims and huge debt profile respectively. One, we sat down and discussed with the stakeholders and came up with a programme of schedule of payment. But most importantly, we had to look at the areas of leakages initially in order to stop or to reduce the leakages so that at least we would be able to save the funds that otherwise would have been lost. We targeted that the money saved would be used to take care of the claims.

However, some of the claims were spurious. We verified them and those we were satisfied were genuine were paid and over time we stabilized. Since that time we have been meeting our financial obligations, which include salaries, contractors, as at when due. We also worked on how we would improve on the collection of earnings that are due to us. It has been very challenging working on how to collect what is due to us without interrupting the services. It is also very difficult regulating in an economy that was going through recession. But we had to strike a balance where possible, reduced the wastage and leakages, tried to improve sources of income. As you are aware, the civil aviation authority operates mainly on cost recovery. As you are also aware, NCAA is still being put as a revenue generating agency where we are expected to pay certain percentage of what comes in to the agency into the federation account. We have been working and government has quite understood. I believe we still have some small work to do in order to be able to overcome those issues.

When you came in some of the workers were not happy about so many things, especially some overseas trainings that were stopped and there seemed to be a kind of clampdown on expenditure, was it that you jolted the status quo  or they couldn’t align with your own philosophy?

Well, as I mentioned earlier, in trying to address the financial issues, we had to reduce those wastages and also try to optimise the application of those funds. We prioritised mandatory things first before doing others. For example, in the area of training, it is not that we have reduced training; far from it; we did more training now than before. The only difference is that some of those overseas trainings that were costing us huge amount of money were domesticated. We domesticated some of those courses. And it also gave us an opportunity to monitor the quality of those courses because the training and studies were being and are still being done in Nigeria.

This saves huge resources because the money you are going to use to train, maybe, two people outside Nigeria; you may be able to train about 10 people with it locally. So, far from it that we have reduced the trainings; we have really increased the trainings. This is because one of our major capital projects is training. In NCAA we invest in human beings. We are a regulatory agency and so the quality of the manpower and the quantity must be up to international standards. This is because the International Civil Aviation Organisation (ICAO) requires that we attract and retain qualified and experienced manpower in sufficient number and that is what we have been trying to do.

 

Some years ago a top official in NCAA said that every attention was being given to the administrative personnel, that you are sending them on training much more than you send the technical personnel. According to him, the administrative area is a support staff and the crux of NCAA should be the technical staff, which was not being exposed to enough training. What is the situation now?

As far as we are concerned all staff is entitled to be trained, because training is a tool to enable the human being to be able to carry out his duties efficiently. The type of training that you give the technical personnel is different from the training that you give the support personnel. So there is nothing like giving priority to support staff against the technical staff. They are all staff of the organisation and we have a duty to ensure that every staff is given the requisite training to be able to perform the function on which he is employed to do.

 

In the industry, the feeling is that aircraft inspectors have arbitrary powers, that they can do and undo; is there any check on their activities?

Well, I believe the feeling is only a perception. The truth is that we are not doing anything outside the authority given to us by the regulation. However, we are all human beings, the inspectors are also human beings and the operators are partners in progress.  If there are any issues the authority is open to discuss. If anybody has any observation or any issue that he believes that either he is being shortchanged he should bring it up.  It is not final, and we are very much open to criticism even when they are not constructive criticisms, we will still take them as input; we will work on them. We are here to promote aviation business; of course, our areas of focus in addition to that, are safety, safety, safety and of course security.

Recently airlines held a meeting and said that government agencies in the aviation industry seem to favour those airlines under Asset Management Corporation of Nigeria (AMCON) in terms of supporting their operations, assisting them in importation of spares and using them as preferred airlines for government officials. Is there any particular thing NCAA is providing for these two airlines under AMCON that seems to give them head start against the other airlines?

This is also a perception and if there is anything like that I have not been approached or the authority has not been approached along that line. As far as I am concerned, all air operators are the same to us, we treat them the same way. But if there is anything like that the operators should be able to come up and if there are things that we need to explain we would explain. We are here for all operators, that is why people say we are the umpire, the referee. There is no bias whether it is government or not government when it comes to safety and security. It is the same regulation we are trying to enforce without using enforceable means. Whether it is government or not government, the standards and the recommended practices in line with our regulations must be maintained. And we intend to continue to enforce those regulations for the benefit of the aviation industry in Nigeria and indeed the whole world.

Aero Contractors has received certification from Ghana, approving its maintenance facility to conduct C-check on Boeing B737 Classics registered in Ghana.  What support is NCAA giving to Aero Maintenance as a regulatory body and what do you suggest Aero should also do to expand its maintenance capability?

Well, it is very good news that Aero is consolidating in that area of maintenance and they are expanding to go beyond Nigeria. That is what we have been looking for, a capable Maintenance Repair and Overhaul (MRO) centre or centres in Nigeria that are able to handle the maintenance of aircraft that operate in the country. If we have such facilities they will help in reducing the foreign exchange expenditure. Aero Contractors has the potential to provide that service, especially now you are talking of attracting other countries to bring in foreign exchange by servicing their aircraft in Nigeria.

In addition, you are talking of more employment; because the more work they have, the more they will be able to engage Nigerians. Even if we don’t have enough in Nigeria it will attract foreigners to come so that when they get paid they will still have to spend part of the money in Nigeria. So it is part of what we have been looking for and we are willing to support any organisation that has met the required standards to achieve that.  It is in our interest to support that and we will continue to support Aero and any other organisation that has met the standards.

 

The Director General of Airport Council International (ACI) World, Angela Gittens in a recent interview with THISDAY, said that Nigeria does not need a national carrier because Nigeria has some dynamics, one it has a diaspora population, two it has high volume of passenger traffic, so it needs a dynamic airline environment that can promote competition. Gittens observed that national carriers tend to slow down the pace of progress in airline business because they tend to be pampered by government and they are never efficient. Sir, do you agree with her position?

First of all, before I make a comment on that, the envisaged national carrier being planned by the federal government is not likely to be a government owned airline. As such it may not enjoy that pampering as you mentioned.  But we are all aware that Ethiopian Airlines is owned by government and yet it is doing very well. Rwanda Air that started just yesterday is also government owned and is also doing well, so are some other airlines in the Middle East that are government owned. That is not to say that the private airlines should be killed, no. Everybody will have his chance and because there is a lot of competition it will augur well for the development of aviation.

This is because even if you have a national carrier or by whatever name it is going to come, it is going to compete with others. The other airlines are still going to operate; whoever has the capacity to challenge the national carrier is more than welcome. The national carrier will not have everything reserved just like it was done sometimes back, reserving certain routes and so forth.

 

Nigerian airlines said that they spend so much money on aviation fuel. What do you think should be the solution to efficient supply of aviation fuel in comparatively low prices?

I will give my own suggestion. The availability and the pricing of the fuel commodity or aviation fuel are outside the purview of aviation itself. However, if we can produce it locally here in Nigeria, there is a good chance that we will have enough in terms of availability. There is also a good chance that price will be lower because even if you are saving on just the transportation alone to and from, that will lower it. In addition to getting more employment for Nigerians because when the refineries are doing that then they will employ more Nigerians.  As I said, it is outside the purview of aviation but the best way to go about it is to have local production and it makes it easier for us to even monitor. Of course, what is within us as an authority is to monitor and ensure that the quality of fuel that gets onboard the aircraft is up to the standard; and also the quantity that goes onboard the aircraft is enough to take that flight from departure point to the destination point, in addition to other calculations, the alternate airport, the holding fuel (endurance) and so on. So the fuel requirements are being met.

 

Airlines still say that this Customs duty waiver given to them by the federal government is not working because the Nigerian Customs still find a way to ask for fees and also they still delay spares when they arrive. I don’t know whether you are aware of this?

Honestly, I am not aware. I know that at the inception of this administration those issues that came up were addressed.  And even where an airline had engine problem Customs quickly allowed them to deliver a replacement. It was even a foreign airline (Delta Air Lines) that had engine fire and they had to bring in another engine. There was intervention from the side of aviation to ensure that they didn’t pay any duty on that equipment in line with the provisions of the Bilateral Air Service Agreement (BASA) signed between Nigeria and United States.

 

Nigeria was admitted into the Cape Town Convention in 2011, but the airlines say they are not benefiting from it. Has there been any time that NCAA intervened on the issue of leasing aircraft or interfacing with lessors on behalf of the airlines?

NCAA is not supposed to guarantee a lease because it is supposed to be an unbiased empire. The aim of having the Cape Town Convention is to help, especially African airlines to be able to get leases easily and at affordable prices. Of course it came with certain conditions because the people who are going to lease will always need to have some kind of comfort that if there is any default they will be able to recover their mobile equipment, aircraft, engine or anything along that line.

Before that Cape Town Convention leases were quite high and difficult to come by because of the difficulty experienced by those lessors in getting back their aeroplane whenever there were defaults from the airlines. Of course Nigeria has signed, we have ratified and we have even started implementing those provisions. The only problems with the implementation which we have been working to try and remove is where the people who have leased the aircraft will go to court and ask for an ex-parte motion or order to stop the aircraft from either being registered or taken out of Nigeria.

And we have been working with the Judiciary through the Ministry of Justice to educate the Judiciary on the need to ensure that those provisions are maintained. As far as we are concerned our own is to ensure that the airlines adhere to the rules. We help to recover the aircraft where somebody has defaulted in line with the agreement signed and we have done it with one or two airlines. We are working very hard with the Judiciary to remove that bottleneck so that more airlines will be able to attract and get leases at affordable prices which will translate even into lower cost to the passenger.

Generally, airlines seem to pay more insurance premium for aircraft to operate in Nigeria. Is there anything government is doing to make insurance underwriters’ re-appraise this situation through Nigeria Insurance Commission (NAICOM) and NCAA?

Let me start by saying that the high cost of insurance is not as a result of Nigeria not being safe or secure.  Our rating worldwide through the International Civil Aviation Organisation (ICAO), through the Federal Aviation Administration (FAA) of the United States is quite high, both in terms of the safety and in terms of security. To digress a bit, going back to that Cape Town Convention; when an airline goes to court to stop aircraft recovery by the lessor, the management of that airline should understand the implication of that.  The airlines should understand the implication of using court to stop the lessor from taking back his aircraft when the airline has refused to keep to the agreement reached before the aircraft was made available to them.

Using court processes to stop the recovery of aircraft by the lessor is hurting the country more and also it is hurting other potential leases.  So the cost of insurance if it is high has nothing to do with safety or security, there may be other factors.

Recently, the Rector of the Nigerian College of Aviation Technology (NCAT) said a pilot after obtaining private pilot license (PPL) and Commercial Pilot License (CPL) should go to general aviation and horn their skills there, noting that in Nigeria when they want to type rate they start eyeing Aero, Arik and so on. That what is done in other countries is that they should go to general aviation, train with private jets and other aircraft before moving to commercial airlines, saying this is why it is very difficult for them to get type rated and start flying within a short time. Do you agree with this? And is there any role NCAA can play in this?

First of all, let me say we have different classes of licenses. We used to have what is called student pilot license but now it is called student pilot permit. That allows the student to be able to take flight instructions that will lead to getting licenses. The next stage is private pilot license and as private pilot license holder that person is not to engage in anything commercial.

You cannot be paid within the job and you cannot also charge for carriages and so on. So it is purely private pilot privileges. Now when you get to the next level; that is the commercial pilot license with our instrument rating in the multi-engine; that is the barest minimum they require to be engaged as a pilot. In this stage you can be paid, you can be compensated or hired and also you can do commercial operation. Now, that is just the basic. With that somebody can get into the industry, whatever one is able to get, whether it is private aircraft, because it is subject to availability of vacancy.  And pilots require what we call type rating, so for each aircraft that you are going to fly in that particular type you must be rated. You must know about the technical and operational aspect of that aircraft and that is why you have to get the type rating to operate it.

There is a general feeling that NCAA is always hiding a lot of things about private jets that operate in Nigeria. When you request from NCAA how many private jets are in the country the agency will not tell you. Who owns these private jets, NCAA will not tell you. Does it have anything to do with security? Because people always speculate on how many private jets we have, but NCAA has all the records?

Well, it is a very interesting question and the answer is that people don’t come and register the aircraft with their names. So if you ask me who owns what aircraft, I cannot tell you because aircraft are registered based on the application and mostly they come under a company. So only the company name we are able to give and I don’t know who is hiding any record; all the records are there for anybody who wants to know how many aircraft are in Nigeria for private category or non-schedule service. They are there. The information is available for anyone; there is nothing to hide about it. But if you ask me the individuals behind them certainly I won’t be able to tell you because it is not anywhere on record who owns what; but of course the name of the company and the aircraft is registered.

In some cases, after registration it is the company that is operating the aircraft that will make it available to individuals. On the number of aircraft, they are there, but the number is dynamic. They change. People sell; they buy, so whatever figures we give you will be correct as at that time. And sometimes maintenance will keep it out of the skies; somebody may own it but it is grounded.

Why is it that most private jet owners in Nigeria prefer foreign pilots?

That is what we have been trying to discourage. When an aircraft is registered in Nigeria it will need a Nigeria licensed pilot holder. He doesn’t have to be a Nigeria for him to have licenses issued by the civil aviation authority. But when you have an aircraft that is registered outside Nigeria then the regulations guiding who flies that particular aircraft or who maintains that aircraft rest with the country where the aircraft is registered. And of course if the aircraft is going to be here, we also have to ensure that it is operating safely within our own system. But I don’t know that private jet owners prefer expatriate pilots because I am not an operator, but we have been trying  to discourage that and the NCAA  and the Ministry of Interior are working to ensure that the jobs that are meant for Nigerians go to Nigerians. That is why we are working very hard to ensure that whatever belongs to us gets to us as Nigerians.