The airline must make arrangements for payment
Fiji Airways can “come to an arrangement” on how it will pay the 15 percent fee for the government guarantee of $ 455 million to the national carrier.
This, according to Attorney General and Minister of Economy Aiyaz Sayed-Khaiyum.
He made the comment during debate in parliament last Thursday for the government to approve an extension of the warranty period.
The AG said the 15% fee was based on an independent assessment by French international banking group BNP Paribas of the implied value of the $ 455 million government guarantee created for Fiji Airways.
Mr Sayed-Khaiyum said there was “no way for Fiji Airways to get the long-term loan at the low interest rates it got” – which ranged from 3% to 5% or restructuring or reprofiling when revising the existing interest rate varying from 3 to 6 percent.
“BNP Paribas therefore estimates that the implicit value of the guarantee is 3 to 4% of interest saved on each loan,” he said.
“They (BNP Paribas) calculated the implied interest profit and determined its net present value (NPV). The 3 percent implicit interest saving has an implied benefit of $ 132 million over the total loan of $ 649 million (20.4 percent) to Fiji Airways.
Likewise, the 4 percent implied a NPV advantage of $ 175 million over the total loan of $ 46 million and $ 49 million (27 percent), so the 15 percent is a reasonable fee.
“The question that was asked was, ‘How will Fiji Airways pay for this? “
“They have to pay for this, we can obviously make deals with them.”