The court faceoff between Airline Operators of Nigeria (AON) the Nigeria Air Limited and the Minister of Aviation, Hadi Sirika, could cost Ethiopian Airlines incentives from the Federal Government.
Ripples Nigeria had reported last year that the AON sued the yet-to commence national carrier and the Federal Government over its deal with Ethiopian Airlines.
In November, the Federal High Court, Lagos, restrained the government from going ahead with its national carrier agreement with Ethiopian Airlines, preventing the commencement of Nigeria Air in December 2022.
With the court set to resume hearing on the AON lawsuit on January 16, 2023 to determine the validity of the agreement between the foreign airline operator and the Nigerian government, court documents have shown that Ethiopian Airlines has more to lose than the stake it plans to acquire in Nigeria Air.
The government had offered 49 per cent of Nigeria Air to Ethiopian Airlines, while handing out 46 per cent to Nigerian investors, and retaining 5 per cent.
According to court documents with suit number FHC/L/CS/2159/2022 submitted by Ethiopian Airlines to defend its position, it was learnt that aside from the stake, the foreign operator also intends to benefit from tax holiday and other incentives.
Ethiopian Airlines demanded 15-year tax moratorium and other incentives from the government as encouragement to buy the stake at an undisclosed amount.
According to the court documents sworn to by the Country Manager of the firm in Nigeria, Wondwossen Beyene, the request is not against the Nigerian law and it is in line with normal international practice in international investment negotiations.
“I believe as fact that the averments contained in paragraph 11B of the affidavit in support of the plaintiff’s originating summons are a distortion of the truth.
“The 2nd defendant did request tax incentives/concessions for the proposed fledging Nigerian airline, amongst other incentives, which is a normal international practice in international investment negotiations, and not against the law.
“In any case, those requests were proposals and proposed during negotiations with the government and which the Federal Government was at liberty to accept or refuse. The plaintiffs have not shown any proof that the 2nd defendant obtained any tax incentives/concessions for the Federal Government of Nigeria.”
AON disagrees with Ethiopian Airlines’ application to buy stake in Nigeria Air, stating that the acquisition would result to job and revenue loss for domestic airlines.
With Justice Lewis Allagoa of the Federal High Court ruling in favour of AON by restraining the commencement of Nigeria Air operation, Ethiopian Airlines’ bid to obtain 15-year tax moratorium is at risk if it loses the case that starts next week Monday.
The controversy surrounding the tax moratorium comes at a period the National Assembly disclosed that companies are ripping off the Nigerian government through tax incentives.
A bill sponsored by NASS member, Yahaya Abdullahi, in December 2022, is being considered to reduce the powers of the Federal Government to unilaterally grant tax holidays without lawmakers’ authorisation.
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