Airport concession: Stakeholders’ thoughts and rule of law

Airport concession: Stakeholders’ thoughts and rule of law

By In Travel News On 01/24/2018

The plan by the Federal Government to concession four of its airports to private investors has been generating a lot of heated debate in public space. While many stakeholders and other Nigerians say concession is the way forward, considering the terrible state of the airports marked down for concessioning, and others, and seeing as the first and only concessioned airport in the country, the Murtala Muhammed Airport Terminal Two (MMA2), is being successfully managed by private operators, a few others, particularly unions in the aviation sector, have been kicking against the policy thrust. However, it is obvious that the unions are having difficulty convincing many Nigerians about their stance against concession, going by the sheer number of people and the caliber of aviation stakeholders who are overwhelmingly in support of concession.

The Honourable Minister of State for Aviation, Senator Hadi Sirika, had insisted that the Murtala Muhammed International Airport (MMIA) Lagos, Nnamdi Azikiwe International Airport Abuja, Aminu Kano Airport, Kano and the Port Harcourt Airport, would be ceded to private investors to take them out of their sorry state. Many stakeholders who are desirous to know the details of the proposed transaction have been meeting at different fora to assist the government in its new line of thinking. This is all in a bid to see that the airports are managed as profitable enterprises rather than social service providers that they currently appear to be under the Federal Airports Authority of Nigeria (FAAN).

One of such fora was held at the Sheraton Hotel and Towers last Friday. Organised by CheckinNigera, an aviation and travel consultancy firm, the forum, tagged: ‘Conference on Privatisation/Concession in Nigeria’, succeeded in bringing critical stakeholders in the aviation and financial sectors of the economy together to deliberate on the way forward on airport concession. Political economist, Professor Pat Utomi, sent a representative and addressed the forum via video. Among those present were: former Director-General of the Nigerian Civil Aviation Authority (NCAA), Dr. Harold Demuren; Chairman, Senate Committee on Privatisation, Senator Ben Murray-Bruce; Chairman, Airline Operators of Nigeria (AON), Captain Nogie Meggison; former Director-General of FAAN, Mallam Sanni Baba; and aviation consultant, Captain Dele Ore; representatives of FAAN and NCAA, as well as those of the builder and operator of the first successful Public-Private Participation (PPP) in Nigeria, MMA2, Bi-Courtney Aviation Services Limited (BASL), among others.

Many of the experts who were worried by the state of all the FAAN-managed airports across the country and who spoke on the occasion, said the only guaranty for continued survival of the weather-beaten airports is concession. Although some of them asked the government some pertinent questions agitating their minds about the proposed idea, it was obvious at the end of the deliberations that private investors are the best managers of any government enterprise that is established for profit-making, as exemplified by the managers of MMA2.

Utomi’s video-recorded message, ‘Values in Leadership: A Panacea in Continuity and Stability of Government Policies and A Key Factor in Attracting Local and Foreign Investments and Sustaining Economic Development’, harped on the need to develop strong institutions rather than strong individuals. The political-economist said until Nigerians change their attitude to private investors, both local and foreign, it may take a long time before the country gets out of its present economic doldrums.

Utomi expressed concerns that government officials hardly obey agreements they sign, saying this would certainly drive away any private investor with a good mind to invest in the economy. “Government officials must learn to obey the rule of law irrespective of whether you change the government or not, because government is supposed to be a continuum,” he said.

In his own submission, Murray-Bruce who threw his weight behind the concession programme, said his committee was prepared to facilitate laws to fast-track the success of the programme, adding that countries with the best airports were those who had long privatised or concessioned their airport terminals, while those with the worst airports, like Nigeria, have refused to allow private investors manage their airports for them.

According to him, “My committee is prepared to facilitate whatever laws are required to fast-track the privatisation of our airports. We are also determined to ensure that Nigeria’s privatisation laws have irrevocable and irreversibility clause, so that no new government can just come in and reverse what the previous government did with the stroke of a pen.”

Saying that both local and international investors must be encouraged to have interest in Nigeria, Murray-Bruce said the country cannot make any progress if the privatisation exercise is dumped each time there is a change in government.

“It is my job and the job of the Senate Privatisation Committee to ensure that Nigeria has good, practical and workable laws for the advancement of her national economic interests. We are committed to this task as well as to oversight duties for the purpose of ensuring that what needs to be done ends up being done,” Murray-Bruce added.

While making a case for the troubled aviation sector, the Senator said: “I urged the government to save our aviation industry, help them with soft loans and reduce their taxes. Government officials should patronise domestic airlines rather than foreign airlines and help them secure insurance.”

Captain Ore, a former Nigeria Airways pilot, in ‘A Review of Reports, Findings and Conclusions of Committee on Airport Concession 2008’, did a summary of the recommendations of the committee, which he chaired, pointing out that the committee had recommended the privatisation of the four major airports in the country as far back as 2008. He, however, lamented that the report did not see the light of day because of certain interests and intrigues in the government circles.

To him, there is no alternative to concessioning, if the airports are to be viable. He argued that government must hands off projects its officials have not managed properly. According to him, it was this attitude of mismanaging public assets by government officials that led to the death of the Nigeria Airways, “where government officials turned the airline into personal property and were flying freely with their family members and friends.”

Meggison, while supporting the new move by the government, reasoned that “the way to go if aviation must contribute to GDP is concession. For domestic airlines to make profit, for navigational facilities to work efficiently, there must be concession. Once the airports start running effectively, Nigeria will become an attractive hub.”

The AON Chairman, however, called on government to make public which model among PPP, JV or BOT they plan to adopt for the proposed concession, adding that the public is still not clear with the direction government was going.

He asked: “How many airports are we concessioning? For how many years? What annual fees are to be paid to government? But I believe Nigeria needs airports of standards to take its rightful place as the hub of South-West Africa”.

Meggison also demanded to know which part of the airport the government was planning to concession and to whom. According to him, the terminal building is not the only thing called the airport, adding that there are other facilities at the airside, such as the apron, the fire service, the runways and the lightings; those at the landside, including the schools and the hospitals/clinics, as well as other non-aeronautical facilities. Saying that there was some ambiguity about the proposed concession, Meggison insisted that before the programme is carried out, government must clear up all these ambiguities, for Nigerians to understand concession better.

Speaking on ‘The Gains of Airport Privatisation and Concessions in a Dwindling Economy Such as Nigeria,’, Demuren said he supported concession wholeheartedly, but advised government to “review all existing issues and litigations which arose from previous concessions before getting into another concession agreement with new investors.”

He specifically referred to the issues which arose from the concession agreement between the Federal Government and BASL, saying government’s failure to resolve all this had led to unending litigations. He advised that this must be resolved first before government can contemplate another concession; and advocated for good corporate governance, transparency and reduction of government interference in the activities of the aviation agencies.

Demuren added: “I’m a bit confused about what government wants to concession. There are already existing issues and litigations in court with some of the airports, which should first be resolved if we want to get the best out of this”.

While speaking on MMIA and the three other airports under a concession with the Chinese government, the former NCAA DG was of the opinion that any attempt to re-concession them would be resisted by the Chinese, who had granted loans for their renovation, asking: “So, how do you want to go ahead to concession airports that China granted you loans for and they are still constructing and are yet to commence the execution of the BOT? Someone should educate me better because it doesn’t add up.”

In 2013, the Chinese Nexim Bank had granted Nigeria a $500 million loan to build new terminals at the Lagos, Abuja, Kano and Enugu airports in form of a BOT that allows China to first manage and recoup its investment before transferring the airports to Nigeria.

Demuren also expressed regret that the domestic airlines were dying without any replacements, saying any talk of concessioning the terminal buildings must also take into consideration the domestic airlines. “Without the vibrant airlines, we cannot talk about concessioning of the airports because the airports need the airlines to function and also for investors to recoup their monies.”

As for Baba, he lamented the level of political interference in the aviation agencies, especially FAAN, adding that government must allow all the agencies to perform their statutory duties. He argued that Nigerians are ready to pay for aviation services as long as they know they would get value for their money.

While setting the agenda for the conference earlier, the Chief Consultant of CheckinNigeria, Mr. Mike Chikeka, said all the concerns about concessioning must be resolved so that the programme can be rancour-free. Chikeka observed that, aside the concern of job losses by the aviation union members, there was the concern about the unresolved issues surrounding the existing concessions. “I am equally worried about the state of the present concessions and the legal battles between government and some concessionaires. We as aviation industry analysts must ensure that all of these issues are properly addressed and sorted out before inviting new concessionaires,” he concluded.

At the end of the conference, it was clear that whilst many aviation stakeholders voted for concessioning of the airports, they, however, want all issues surrounding the existing concessions and concession agreements to be resolved, first, before government can be seen as serious about further concession plans. –   Kayode Dada

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