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Tuesday, 22 May, 2001, 19:05 GMT 20:05 UK
World Bank quits Nigerian privatisation
Nigeria Airways A310
Adviser quits privatisation of Nigeria Airways
A World Bank body advising the Nigerian government in the privatisation of the national carrier has quit saying its advice was not being heeded.

The International Finance Corp (IFC) is reported to have said in a letter to the President Olusegun Obasanjo that the government and company policies had delayed a speedy privatisation of Nigeria Airways.

"The opportunity for a successful near-term privatisation of Nigeria Airways has been diminished," the IFC's vice-president Peter Woicke was quoted in the Nigerian daily newspaper This Day.

The IFC would "terminate advisory services on the assignment," the letter is reported have added.

An IFC official confirmed to BBC News Online that it had withdraw from the advising on the privatisation.

Resistance to sale

In April the Nigerian House of Representatives called for Nigeria Airways not to be privatised claiming it could cost the government more than $65m to write-off the airline's debts.

President Olusegun Obasanjo
Obasanjo has been critical of the World Bank and IMF
The House also said it would breach an "open skies" agreement signed last year with the US.

The "open skies" deal was one the IFC's key complaints but it also blame the auction of Nigeria's international air traffic rights as a reason for withdrawing.

It added the decision to allow British Airways to increase the flights and to give Virgin Atlantic access to the London-Lagos route did not help make Nigeria Airways attractive to prospective investors.

The IFC has been active in Nigeria since 1964 and is the biggest source of private finance in Africa.

Nigerian economy

Since Nigeria returned to civilian rule in 1999, President Olusegun Obasanjo has mounted a vocal campaign for debt relief.

Past Nigerian governments have squandered most of the estimated $280bn the country has earned from oil in the past 30 years.

Nigeria and its creditors disagree over the scale of the country's debt which Nigeria puts at $28bn and the World Bank and IMF at $32.3bn.

Most of the debt burden was built up under periods of military rule.

On Friday the World Bank warned that it would not offer debt relief unless oil-rich Nigeria was economically restructured.

Debt relief

The world's sixth largest oil exporter, which produces more than two million barrels of crude oil per day, "is in an unusual situation", the World Bank's vice president for the Africa region, Callisto Madavo said.

The government has been offered debt relief in exchange for the privatisation of key state-owned enterprises including telephone company Nitel, the National Electric Power Authority (NEPA) and Nigeria Airways.

British telecoms giant Vodaphone blamed inconsistent government policies for the collapse of its alliance talks with Nitel in February.

Nigeria Airways began in 1958 as West Africa Airways Corporation and operated services to London with BOAC.

The fleet is currently made up of Airbus A310s, Boeing 707s and 737-200s and DC10-30s.

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