MINISTER of public enterprises minister Leon Jooste has defended the government’s decision to pay N$1,6 billion to an American company that leased aircraft to Air Namibia.
Jooste said this in a statement issued on Friday where he confirmed that the payment was made on 30 July.
The national airline was forced to return the aircraft it was leasing after the government shut it down last year.
Air Namibia’s fleet included the two leased Airbus A330-200 aircraft, two Airbus A319-100 planes and four Embraer ERJ 135s.
The 244-seater A330-200 was the biggest aircraft in the airline’s fleet and was often used for the Windhoek-Frankfurt route.
Air Namibia’s liquidation meant the government had to pay a termination fee for opting out of the contract four years earlier.
Jooste’s ministry was tasked with negotiating with American aircraft lessor Castlelake which had a contract with Air Namibia up to October 2025.
“The total negotiated settlement is therefore N$1,6 billion,” he said, adding that this is less than they initially planned to spend and thus saved up to N$667 million.
The government has been criticised for paying billions to a private company while it was in financial troubles.
Jooste said the negotiations were an “intense and extremely complicated process that went non-stop for 10 exhausting months”.
According to Jooste, the Cabinet committee on treasury directed that the negotiation process should be conducted by a committee with the public enterprises ministry as the lead, supported by the Ministry of Finance and the Office of the Attorney General and negotiations started in September 2020.
He said Stritter & Partners was paid N$497 000, while ICF received N$4,4 million for the work on both assignments. “The aviation business is extremely complex, and we were dealing with one of the largest operators with access to the highest level of technical skills the industry has to offer, and it was never an option to even consider this process without the technical assistance we received from these specialists,” the minister said.
He said the government negotiated a four-month “negotiation window” from November 2020 to February 2021 where Castlelake agreed to waive monthly rentals resulting in savings.
“I further believe that the cost of around N$5 million spent on professionals to provide the required technical assistance represents incredibly good value and was money well spent considering the fact that we are saving the treasury close to N$1 billion that can now be redirected towards other important priorities.”
The closure of the national airline affected more than 600 workers. There are also concerns that the liquidation process could take as long as five years.
Jooste is one of the high-ranking government officials accused of pushing for the airline’s closure.