Stakeholders have expressed concerns and uncertainty regarding the federal government’s final decision on airport concession as it takes up the responsibility of renovating the Murtala Muhammed International Airport (MMIA).
Hadi Sirika, the former minister of aviation had announced preferred bidders for Lagos, Abuja and Kano international airport concession projects, who are expected to build, renovate and give these airports facelift.
Festus Keyamo, the Minister of Aviation and Aerospace Development said he was putting concessions ‘under review’ and neither reversing nor cancelling policy.
Stakeholders are therefore wondering why the federal government would be spending billions to renovate an airport they are likely to concession in the first place.
“When newspapers reported that he had cancelled/reversed concessions he clarified that he had just paused the process and would review before taking a final decision.
“So my surprise was he asked airlines to leave the old terminal for renovation. I would have thought renovation as well should not be on the table for now because if the FG goes ahead to concession airports the concessionaire will do the renovation.
“They all, ostensibly, made their bids for the airports in their current state. If the FG decides it will not concession airports then by all means it can go ahead and borrow the money to renovate ( as it has no money) with all the implications thereof,” a stakeholder who would not want to be mentioned said.
The stakeholder however advised that concessioning that is regulated and that ensures the right level of investment in airport facilities is the way to go at this time.
Sirika during his tenure revealed preferred bidders for the airport concession projects.
He said the preferred bidder for the Nnamdi Azikiwe International Airport (NAIA), Abuja, is Corporacion America Airports consortium, while ENL consortium has also been selected as the reserve bidder for NAIA.
According to Sirika, the preferred bidder for the Murtala Mohammed International Airport (MMIA), Lagos, is TAV/NAHCO/Project Plant Limited (PPL) consortium, while Sifax/Changi consortium has also been selected as the reserve bidder for MMIA.
For the Mallam Aminu Kano International Airport (MAKIA), Kano; the preferred bidder is also the Corporacion America Airports consortium. There are no reserve bidders for MAKIA yet.
These bidders are already at edge, not knowing the final decision of the federal government on concession plans.
John Ojikutu, security expert and former military commandant at the Murtala Muhammed International Airport, Lagos told BusinessDay that the present minister and those before him are playing the ostrich game with the Infrastructure Concession Act of 2005 with define processes for PPP or Build Operate and transfer after about 15 years initially.
Ojikutu said this was what gave room for Bicourtney in 2005 which successive administrations in government has been trying to manipulate after the former president Olusegun Obasanjo’s administration but could not.
“It can only be institutional corruption that has made it difficult to agree on which road to tow since and after the concessions to Bicourtney.
“My advice is, we must know what we want to do or must be giving out for concessions which I insist must not include the aeronautical facilities and services. We should begin with only the non aeronautical services like the passengers and cargo terminal buildings, carparks, land and offices, toll gates, etc. We must know the worth of the services in revenue generation before any concession,” he explained.
He said the government should include repairs, periodic maintenance, and infrastructure development with traffic growth in the concessions and must face its obligations on safety and security regulations, oversight and enforcement.
“These are what we owe to the international organisations. The present multiple layers of concession of the airports facilities and services brings multiple problems from multiple directions. This can only add to the institutional corruption we are trying to fight out with the concessions.
“Concession one international airport with four of the domestic airport and don’t leave anyone of them out. Make the Federal Airports Authority of Nigeria (FAAN) a Holding Company and excise the aeronautical services like the runways and taxiways and their allied facilities to Nigerian Airspace Management Agency (NAMA). FAAN should get minimum returns of 40 percent of the projected earnings from the concessions of each cluster of the airports,” he advised.
Seyi Adewale, the chief executive officer of Mainstream Cargo Limited however argued that the current state of Lagos international airport may not be attractive to investors at this dilapidated state.
“If the airport is concessioned at this dilapidated state, how many years will it take for the concessionaire(s) to recoup back their investment? Will it still be affordable to majority of flying citizens with respect to fees and taxes thereof?,” Adewale said.
He said these are very difficult questions and balance to reach.
He however advised that the federal government should headhunt but this may meet a brick-wall in public procurement law or policy.
“I would prefer we headhunt for the best airport Concessionaires in the world and invite them to take charge with goals, Key Performing Indicators that needs to be see at the airports, adding that these may need a very deliberate action and waivers to get Nigeria to the desired state.
“I fully and strongly subscribe to this suggestion for complete and holistic review of all aviation concessions. Many are not done in the best interest of the country, citizens or passenger. Also, the SLA must be enforced in its entirety Service Level Agreement (SLA) especially where there are no connected impediments from government agencies or parastatals as regards their performance.
“Usually SLA has duties and responsibilities from both parties to the SLA. In this instance, government also has duty or performance obligations to effect and its non performance may negatively impact on the concessionaire’s own ability to performance the agreed SLA,” Adewale said.
Sindy Foster, principal managing partner, Avaero Capital Partners told BusinessDay that there are many airport operating and ownership models which have worked around the world, some of which require construction of the terminal.
Others she said require refurbishment of the terminal, adding that investment can come from airlines investing, construction companies or airport development companies investing, etc.
“Nigeria has too many unviable airports which would become even more unviable if they proceed as planned. In view of the concession disasters we have seen to date in Nigeria, I would recommend a reviewable and renewable management agreement with clear SLAs, rather than full concession.
“I understand the airports need investment, but the Nigerian government has shown it can raise investment for what it needs. It’s how they spend the investment which is the issue.
“It needs to be managed by professionals. The entire airport system needs support and recalibration. So, perhaps pairing the viable airports with some non-viable airports would enable that support. But this is less likely to be attractive to investors. So until we can be certain of financial support for the remainder of the airport network it would be reckless to concession the golden geese,” she explained.
Olumide Ohunayo industry analyst and Director, Research, Zenith Travels told BusinessDay that in the absence of a clear cut policy on the way forward, and looking at the timeline of starting the process again, investment must be done one way or the other to keep the airports in a state for whatever decision the government will finally take.
“On a personal level, I am against concession of the terminals. This is because there is a structural problem with FAAN itself because any political holder who comes in sees the place as a meal ticket. Based on this, they are either going for appointments or looking for contracts.
“It is better FAAN itself be handed over to an international airport management company. That company should take over the international management system. Everyday there is an increasing burden of pension and payment of salaries which cannot be solved with concession. Let the international company start the process and position the company better,” Ohunayo said.
