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NEAL REVEALS: 2 PLANES COST E47.4M

06/03/2022 08:46:00 Welcome Dlamini

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MBABANE – An absolute bargain!

The prices of the two aircraft that have been bought by the Royal Eswatini National Airways Corporation (RENAC) have now been revealed; and Minister of Finance Neal Rijkenberg has described the figures as a good deal. On Wednesday, the minister had informed members of the House of Assembly portfolio committee on finance that the aircraft were not of a luxury nature, but commercial aeroplanes that had been bought at a reasonable price. The minister did not give the committee members the amount spent on purchasing the aircraft and asked that he be given an opportunity to confirm the figures and include them in his written responses that would then be brought to the House.

He has since confirmed to the Times SUNDAY that the aircraft were bought for a combined price of US$3.1 million, which is about E47.43 million when calculated at yesterday’s exchange rate of US1 equalling E15.30.

Purpose of purchasing

The two aircraft are the Embraer ERJ-145 and each has a carrying capacity of 50 passengers. As previously reported by this publication, the aircraft were bought from HOP!, which is a subsidiary of Air France. The purpose of purchasing the aircraft is for RENAC to revive the national airline and provide air travel from Eswatini to other destinations in the SADC region because currently the only route to Johannesburg (O.R Tambo International Airport), is operated by Swazi Airlink. It has been ascertained that RENAC could have bought the aircraft for double the US$3.1 million had it carried out the purchase in 2019, where one aircraft was available for US$3.2 million and had a carrying capacity of 47 passengers.

Instead, the public enterprise waited for the right moment and, according to Rijkenberg, he was able to get one aircraft for US$1.5 million and the other for US$1.6 million. Even to the portfolio committee, the minister had explained that Cabinet advised RENAC to buy the aircraft when the market was down and COVID-19 provided that opportunity. “The whole market for aircraft was flat due to the outbreak of COVID-19. So, RENAC saw it as an opportunity, as the prices were discounted. There is nothing hidden and I have no problem bringing the information on the price,” he told the committee.

Explaining to this publication why he did not have the precise cost of the aircraft when he appeared before the committee on Wednesday, the minister said this was because government did not budget for the aeroplanes specifically but allocated one figure to every public enterprise for their operations during that particular financial year. Although he did not know the specific cost of the aircraft, he said he was aware that an amount of E100 million had been set aside to pay for all costs related to reviving the national airline. “We provide a subvention to RENAC and from their savings they have now afforded to buy the aeroplanes. I think they have done a fantastic job and I support them 100 per cent,” he said. He said RENAC came to Cabinet and said with the buying of the aircraft, staffing of the aircraft as well as paying for all the licensing of the aircraft and their refurbishing, it would all cost E100 million.

Absolute bargain

“I explained that to Parliament and they asked me how much the aircraft cost and I said I didn’t know, but would go and verify the figure and include it in my report but now it is being said that I do not know the budget. The aircraft were bought for an absolute bargain. They told me it was a bargain but I wasn’t aware how much,” the minister said. Rijkenberg reiterated his support for the purchase of the aircraft and said he had confidence that even though the airline might not make money immediately, but the viability and value would be realised in the near future. “For the economy to grow, we cannot continue to be cut off from the rest of the world. Having flights to Cape Town, Durban, Harare and more competition on the Johannesburg route will help to grow the economy,” he said. When addressing the portfolio committee, the minister said the bigger picture of the aircraft purchase would be seen in the investments that were being explored in various sectors, including tourism.

Commercial airspace

He said the country had already invested in the construction of the International Convention Centre, and was on the verge of introducing a game reserve in the Lubombo Region and that all these projects aligned with the need to have a commercial airspace. One of the committee members, MP Mduduzi Matsebula, wanted to know the amount given to RENAC as subvention, because it appeared the public enterprise had a lot of money such that it had purchased the two aircraft. He also wanted the committee to be provided with answers on whether RENAC does submit audited financial statements.

For the record, a report by the Eswatini Economic Policy Analysis and Research Centre (ESEPARC), detailing the performance of the country’s public enterprises which was released in November last year, shows that RENAC was allocated a subvention of E356 million. For the 2022/2023 financial year, the Government Book of Estimates reflects that a far lesser amount of E172.56 million would go to the ‘Royal Swazi Airline’. The Public Enterprises Unit (PEU) quarterly report for April to June 2021, does provide financial performance of RENAC.
This will not be the first time that Eswatini has a national airline, as it has on previous occasions operated the ‘Lijubantsendzele’ and also the ‘Ludvondvolo’ aircraft.

Planned airline

Business Eswatini (BE) is on record saying the planned national airline was well known to the country’s employer organisation, after RENAC took the private sector into their confidence.
BE Chief Executive Officer Nathi Dlamini, said they, however, before the whole strategic plan was presented to the organisation’s management team, had had their own reservations which bordered on scepticism in large part, because earlier attempts of having a viable commercial national airline had been met with failure. As such, he said, they were curious as to what would be done differently this time around which could make the venture successful. Dlamini said RENAC management, to their credit, came over to BE and made a comprehensive presentation including laying out the critical success factors to be achieved in order to make the airline a viable one.

He said they went further to describe in detail the role to be played by the travelling private sector community seeing as they did, that most of the travelling between the proposed destination would be primarily business.

Potential prospects

Further, he said RENAC management meticulously dissected the whole aviation plan in front of their eyes to the extent that BE found themselves getting excited about the potential prospects. He said the proposed Harare, Durban and Cape Town routes would cut out the current and time-wasting stopover in Johannesburg. Dlamini added: “That is not a bad thing, especially for business people who always want to get to their destination and conduct their business and come back home hassle-free. We feel this proposed flight plan will definitely be a winner.”