Parliament approve the increased Government guarantee to Fiji Airways borrowings, Sayed-Khaiyum gave the background that on 9th August 2021, Fiji Airways had an extraordinary general meeting where it notified shareholders of the intent to raise equity of $200 million to raise cash to support itself through the COVID-19 pandemic period.
Attorney General, Aiyaz Sayed-Khaiyum says with the recent issue of new shares, the Fijian Government is the majority shareholder of Fiji Airways holding now 74.56 percent of the entire issued share capital.
While tabling the motion that Parliament approve the increased Government guarantee to Fiji Airways borrowings, Sayed-Khaiyum gave the background that on 9th August 2021, Fiji Airways had an extraordinary general meeting where it notified shareholders of the intent to raise equity of $200 million to raise cash to support itself through the COVID-19 pandemic period.
He says the Fijian Government had a pro-rata entitlement of 24 million 170,428 shares at $4.22 which amounted to $102 million.
Sayed-Khaiyum says the Fijian Government subscribed for the 24.2 million shares by utilising the one off fee owed by Fiji Airways as part of it’s contribution for the shares while the remaining $7.6 million was paid for in cash.
He says this increased the Fijian Government’s overall shareholding in Fiji Airways from 51 percent to 74.56 percent.
The Attorney General says other shareholdings in Fiji Airways includes Qantas Airways with 24.04 percent of the shares, Air New Zealand 1 percent, the Government of Kiribati 0.14 percent, the Government of Tonga 0.14 percent, the Government of Samoa 0.06 percent and the Government of Nauru 0.05 percent.
Sayed-Khaiyum has moved that Parliament approve the increased Government guarantee to Fiji Airways borrowings by increasing the existing local approved guarantee from FJ$191.1 million to FJ$241.1 million and the offshore borrowings from US$117.1 million to US$142.1 million with the total guarantee ceiling increasing from FJ$455 million to FJ$561.4 million valid until the guaranteed facilities are discharged or fully settled; and that Fiji Airways be exempted from paying a guarantee fee.
He says if we did not have a national carrier, the changes for tourists to come to Fiji from December 1st would have been hugely undermined.
Sayed-Khaiyum also says it has really concerned him that the Opposition does not see the big picture.
Debate on the motion continues in Parliament.
Opposition Leader, Ratu Naiqama Lalabalavu says the Government should consider other practical options than to increase the Government guarantee for Fiji Airways.
Ratu Naiqama says there are signals that Fiji will continue to have short term supply chain problems and most importantly the price of crude oil will continue to rise which will put a lot of pressure on production resulting in price increases that will lead to the increase in inflation rate.
He says an additional $106.4 million to the existing open guarantee or $455 million total contingency liability for Government is surely unprecedented in Fiji’s history.
Ratu Naiqama further says the major risk associated with our contingency liability is with Fiji Airways and Fiji Development Bank.
He says despite the risk, the Government continues to facilitate additional guarantees for these two organisations.
The Opposition Leader adds with direct support of over $250 million from Australia, New Zealand and the European Union, the Government should at least provide fiscal space to cushion against the impact of the pandemic through targeted investment and instead it has decided to give out the money to drive consumption.
National Federation Party Leader Professor Biman Prasad says with the further guarantee to Fiji Airways and the FDB, Government is pushing the nation into financial doldrums.
While opposing the motion by Attorney General Aiyaz Sayed-Khaiyum that Parliament approve the increased Government guarantee to Fiji Airways borrowings, Prasad says the sad and unmistakable reality is that the increased guarantee before them has no consideration whatsoever for hundreds of workers terminated from their jobs without notice 17 months ago.
He further says the truth is Government hid behind the pandemic to kick innocent, loyal, hardworking and honest workers in their guts.
Prasad adds he does not think there has not been transparency and accountability in the way Fiji Airways affairs have been presented to them.
He also says the profits showed by Fiji Airways before the pandemic included subsidies from the taxpayers.
Prasad says it is clear that Fiji Airways borrowed another $25 million under RBF’s Disaster Rehabilitation and Containment Facility in July 2020.
He questioned why didn’t the Attorney General inform Parliament about this.
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