Air­port con­ces­sion: The prospects and chal­lenges

Daily Trust - - BUSINESS - From Ab­dul­la­teef Aliyu, La­gos

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. 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 non­vi­able 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.

Min­is­ter of states for avi­a­tion, Hadi Sirika

Min­is­ter of trans­porta­tion, Ro­timi Amaechi

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