Airport concession: The prospects and challenges

Airport concession: The prospects and challenges

By In Travel News On 01/24/2018

The move by the federal government to concession four major airports in Lagos, Abuja, Kano and Port Harcourt as part of its developmental plan for the aviation sector has evoked experts’ debate on the propriety or otherwise of the new move. Daily Trust looks into the raging discourse.

The Minister of State for Aviation, Senator Hadi Sirika, at a recent stakeholders’ forum where he unveiled the vision of the President Muhammadu Buhari-led Federal Government to transform the aviation sector stirred the hornet’s nest about the planned concessioning of the four airports that are regarded as the viable airports in the country out of 22 airports that are managed by the government.

The airports are Murtala Mohammed International Airport (MMIA), Lagos; Nnamdi Azikiwe International Airport (NAIA), Abuja; Malam Aminu Kano International Airport (MAKIA), Kano and Port Harcourt International Airport (PHIA), Port Harcourt, Rivers State. Sirika explained that the four airports would serve as the pilot phase of the airport concessioning stage while the remaining 18 airports would follow suit in the nearest future.

According to him, the concessioning is a deliberate policy towards bridging infrastructural deficit in the nation’s airports. The minister, who gave a graphic picture of the extent of damage of Abuja Airport runway showing cracks and ditches, assured that the infrastructural challenges in the nation’s aerodromes would be a thing of the past.
This has, therefore, provoked debate in the industry regarding the practicability or otherwise of the proposed concessioning. While some experts and stakeholders hail the move as a bold step towards saving cost by government in the face of the current financial quagmire, others doubt the workability of the plan arguing that Nigerian airports are not ripe for concessioning.

Without mincing words, the idea of the concessioning may not be bad after all given the lean resources at the disposal of government. Taking its hands off the management of these airports, it is believed in some quarters, would ease its financial burden. It would also increase the operational efficiency and profitability of the airports and then stimulate growth in the non-oil sector of the economy.

However, there are fears being expressed about what would be the fate of the Federal Airports Authority of Nigeria (FAAN) if the airports are concessioned. Many stakeholders agree that the nation’s airports would be better managed if the government’s agency in charge is given the free hand to operate without undue political interference.
Will the proposed concession not lead to massive job losses? What mode of concessioning is the government contemplating? Is the concessioning going to be limited to the terminals? What about security at the airports? What about the runways, the taxiways, the ground lighting system, among others? These are the issues that need to be determined as the government implements the plan.

In retrospect, Nigeria has experimented with the idea of privatization with the concessioning of the Murtala Mohammed Airport terminal 2 to Bicourtney Aviation Services Limited (BASL) during the administration of former President Olusegun Obasanjo more than a decade ago. However, the concessioning has been a subject of heated controversy between the government represented by FAAN and BASL. Experts say any attempt at concessioning airports must address the lingering issues over tenure of the concession of MMA2.

This is why some stakeholders are agitating for the engagement of BASL in the planned concession. Irrespective of the lingering controversy, BASL provides a model for the government to work in the new arrangement and this, according to experts, would give investors confidence to take up the management of the airports.
Former director general of the Nigerian Civil Aviation Authority, Dr. Harold Demuren said, “There is need for PPP in aviation in Nigeria as it is obvious that government cannot do it all. But with the experience of the Murtala Muhammed Airport Two, MMA2, Lagos, government has not shown good faith. Such crisis in the MMA2 PPP must be resolved immediately, or else investors would not invest their resources in the sector.”

An expert and CEO of Belujane Concept, Mr. Chris Aligbe, reiterated that concessioning is the way to go in developing the airport, suggesting that Enugu International Airport should be included in the plan. According to him, the concession should be twined in such a way that the concessionaire managing Abuja airport for instance should take over another less vibrant airport.

However, he said concession must follow strict legal and legislative framework to avoid the kind of controversy being witnessed in the case of Bicourtney. “Before you concession, there must be legal framework, there must be legislative framework. It must go through the National Assembly and have fundamental law that would guide the concessioning,” he said.

He added: “The people who are saying we cannot concession, it is not true. There is difference between concession and privatization. I don’t support privatization of airports for now, I support concessioning of airports. When you privatize you give up ownership, when you concession, you retain ownership and give out management and development for a period of time and you still retain ownership. Government owns all the airports now but if you are going to say, ‘I am going to concession this airport for the next 25 years, then this is what I expect from you by the time you are returning this airport to me’.’

This is what I expect from you in five years, in 10 years, in 15. This is to make sure that the person that is developing the airport improves capacity and meets world’s standard. But when you privatize you can no longer determine for the person who owns it how to go, you have lost ownership.

Also, Chairman of Bicourtney, Dr. Wale Babalakin, believes the private sector is well positioned to manage airports in a more efficient manner.
He said, “I heard some people say that only Lagos airport is viable. I don’t agree. If you want to challenge it, my position is give us (Bi-Courtney Limited) Abuja. If you think it is not viable, we will take it. I want to assure you that to make them viable requires somebody sitting down and thinking of how to make them viable. I don’t expect the airport from day one to be viable”.

Voicing a divergent opinion on airport privatization, another aviation expert, Abdulyekeen Umar believes that it would be wrong for government to concession only four viable airports leaving the other non-viable ones that depended on the only four viable ones.

“It is totally wrong to concession airports because only four viable ones in Abuja, Lagos, Port Harcourt and Kano have been selected. What happens to the 17 other non-viable ones that depend largely on these four airports? Anybody taking the four airports should go with the liabilities of the 17 non-viable ones,” he said.
Umar advised government to improve on the Yola, Jos, Akure and Makurdi airports by designating them as agro-airports to boost the evacuation of farm produce.
Also, a former Director of Engineering Services with FAAN, Engineer Mohammed Sadiq, noted that the nation’s airports are capable of operating without capital from government while contributing to government coffers.

“It is this economic viability of our airport system that the economic terrorists are targeting by advocating privatisation of the only viable international airports to the detriment of the overall development of the other airports and by extension the development of the country”, he said.

According to him, the private operators of airports are only interested in milking the system. He said, “These so-called private operators only concentrate their attention on the terminal buildings. They don’t contribute to the maintenance of the airports’ most critical safety infrastructures namely the runway, taxiway, apron, navigational aids, airport ground lighting system, fire and safety service, airport perimeter fencing and the general maintenance of the airside.

“FAAN has been in the business of airport management and operation since 1976 initially as NAA (Nigerian Airports Authority). FAAN has therefore gathered valuable experience over the past 40 years that no other group or organization in Nigeria can match,” he said.

Experts are of the opinion that the federal government needs to do its homework very well before going out with the concession so as not to get it wrong. Also important is the need to clearly articulate the terms of concession and respect the agreement to the letter to avoid any future controversy.

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