Deepening Campaign for Airport Concession
We will not sell the assets that belong to 200 million people and the future generation of this country. We are not going to sell because those that were sold were lost, so we in government believe that we should hold those assets for the Nigerian people in trust
The Minister of Aviation, Senator Hadi Sirika, recently made effort to sell one of government’s projects in the aviation road map, which is airport concession. Chinedu Eze writes that while majority of stakeholders have embraced the initiative, the labour unions are still kicking against it
It is still surprising that at the twilight of the Buhari administration, the issues that dogged the aviation industry at the inception of the administration are still lingering. One of these is airport concession; another is the proposed national carrier and the third is maintenance facility along with establishing a leasing company.
While many stakeholders express surprise that none of these projects have been actualised more than six years into the administration of the Buhari government, it must be acknowledged that the process to realise the set goals has been on. The administration identified the aforementioned in its aviation road map with the set objective to transform the sector and made it generate more revenue for government and investors, contribute significantly in the nation’s GDP and also create more jobs.
But the programme that has received more criticism is the plan to concession the airport terminals. Many airline owners support the programme because they believe that if the airport facilities are concessioned they would be upgraded, they would be professionally managed and passenger processing will take shorter time and there would be more efficient management of the terminals.
Timeline
During the recently held Airport Business Summit organised by NIGAV in Lagos, the Minister of Aviation, Senator Hadi Sirika used the rostrum to further clarify on the federal government’s plan to concession the major airports. He assured that none of the over 8,000 workers of the Federal Airports Authority of Nigeria (FAAN) would lose their jobs if the major airport facilities in the country are concessioned under a Public, Private Partnership (PPP) arrangement.
Sirika said government would use between June and August this year to finalise the programme of airport concession programme and stressed that the concession would create opportunity to engage more hands into the system, adding that there was no need to sell the people’s asset but to concession them in a way that they would be operated to generate more revenue for the country, modernise the airports and create more jobs.
“We will not sell the assets that belong to 200 million people and the future generation of this country. We are not going to sell because those that were sold were lost, so we in government believe that we should hold those assets for the Nigerian people in trust.
“We must make those assets better to provide the service that is needed. So, we said rather than sell out rightly, we will concession. In other words, we would give it up to someone who would operate them and make them better. We will then get more money, the people will enjoy better service, the industry grows and after certain time, the airports will come back to us,” he said.
He also said the proposal of the concession would be presented to the Federal Executive Council (FEC) in February 2022, noting that all the agreements on concession was contained in the outlined proposal and it is for the interest of the people.
Sirika explained that the proposal, which commenced in 2015, would be advertised this month for bidders to show interest after which qualified companies would be invited for profiling and review, adding that everything covering the process would close in August.
He explained that evaluated companies would be asked to present a proposal for engagement and assured labour of dialogue to ensure that every issue concerning concession was addressed. He also assured that all on going concessions would be allowed to finish their tenure before their agreements were reviewed.
Dilemma
But despite the Minister’s explanations, there are still many stakeholders in the industry that are seeking for further clarifications. This is because some industry insiders believe that if the federal government had contacted World Bank’s sister organisation, International Finance Corporation (IFC), it would have given credibility to the programme, recalling that many years ago, the Nnamdi Azikiwe Airport, Abuja, was to be concessioned by the world body under the Chief Olusegun Obasanjo administration, but later the programme was aborted by the succeeding administration.
Currently IFC is helping Bulgaria concession its major airport in Sofia, according to report by the member of the World Bank Group.
“IFC, a member of the World Bank Group, is supporting the Ministry of Transport of Bulgaria with a public-private partnership (PPP) agreement to improve Sofia Airport’s operations and services to passengers and finance significant upgrades to its infrastructure, including building a new terminal under a concession model.
“The concession agreement between the Ministry of Transport and SOF Connect, a project company established by Meridian Eastern Europe Investment, which includes Munich Airport and Strabag, was signed on July 22, 2020. This is the first major airport-sector transaction to close amidst the global pandemic that has grounded many of the world´s commercial planes,” IFC reported on its website.
Clarity
The Managing Director of Flight Logistics Solutions, Amos Akpan told THISDAY that there are issues that government should clarify concerning the concession.
“One, I do not think the agenda for the concession program has been sufficiently understood. This lack of carrying people along by publicizing an agenda leads to various misrepresentation.
“Two, I believe the airports should be managed by modern strategic business modules. FAAN as presently constituted cannot manage it efficiently as a business organization. By way of illustration, most of the departments in FAAN are top heavy in management personnel.
“This means you have political appointees mixed with career bureaucrats doing jobs below the functions officially designated for their office. I have seen security officers of levels nine - 12 manning entrances up to five in a shift. The reason is because security department has up to 55 assistant general managers, about 60 chief security officers and about 75 assistant chief security officers.
“These are personnel of level 10 - 15 status. This example replicates in commercial department, which is a mixture of various units not clearly demarcated but given designations to encourage recruitment by political patronage.
“The big question is: Will a business driven organization retain such a bogus structure and make profit? This and other reasons make for the apprehension of the unions. The Minister has guaranteed that no personnel within his deal with the concessionaires will be retrenched. Will this guarantee be honoured after two years into the concession? The Ministry should please clarify these fears,” Akpan said.
He also sought clarifications on issues concerning airport status, expected revenue targets, facility upgrade and maintenance.
“We also need clarification on the following issues. What is the status of the airport at the point of concession? What is the expected status at the expiration of the concession agreement? By illustration: what is the total revenue and total cost of running the airport now? What will it be expected to be at the end of the concession?
“Are there provisions for expansion/construction works for upgrades in the concession agreement? Is the concessionaire limited to facilities maintenance only? One should assume that increase in revenue generation and efficient operations should be the primary reason for concession. We must not forget that the airports should be at par with their counterparts worldwide in terms of value to airport users.
“We need clarification on the status of the smaller or non major airports in this concession deal. The current FAAN has consistently maintained the position that these four major airports have supported the sustenance of the smaller airports like Ibadan, Bauchi, Akure, Calabar and others. We need to know what happens to them within and post concession period? Generally, we need information so we can support the concession, and be positioned to contribute to its implementation. The Minister is trying but we need information please,” Apkan also said.
Labour
After the last outing when the Minister discussed at length government’s plan about the concession, some labour leaders expressed support for government, but collectively, the unions officially are still opposed to the concession. Many of the airline operators, as stated earlier, from the onset supported the concession, but airport workers, especially workers of the Federal Airports Authority of Nigeria are not convinced that their jobs would be protected when the airports are concessioned.
The Chairman of Air Transport Service Senor Staff Association (ATSSAN), FAAN branch, Ahmed Musa said the stand of the labour unions, including National Union of Air Transport Employees (NUATE), ATSSSAN and Association of Aviation Professionals (ANAP) is that they are against the concession of airports as proposed by the federal government, noting that if the federal government could give investors space to build their own facilities and manage them for a given number of period in the Build, Operate and Transfer (BOT) arrangement they would encourage it but frowned at the current situation that government plans to concession existing airports.
“What is the stand of NUATE, ATSSSAN and ANAP on the issue of concession? From the beginning we have never minced our words in expressing our opinions against concession.
“We are not for concession. As far back as 2016 when the aviation road map was rolled out and we identified the items that were selected for execution; one of it was the plan to concession four international airports. At that moment we expressed our dissatisfaction and we said no; and at every given opportunity and during the whole engagement with the Minister of Aviation, the position of the unions has been no to concession.
“Looking at the circumstances that government wants to concession these airports, we consulted widely when the opportunity was given to the unions to put representatives in the aviation road map committee. I tell you, we spent more than three months discussing among ourselves.
“So initially we have no intention of joining the committee but after consultation with our elders, we decided to join the committee in order to know the workings of the committee so that at the appropriate time we brief our members and take the right actions when the need arises.
“And that has been helping us over time. That is why at any time after meetings we come back and brief the house. We brief our national secretariat and we call congresses. We have opposed concession and made it public that we do not support concession.
“We have conducted rallies many times expressing our grievances over the way and manner they want to conduct the concession programme. We can only do that because we are part of the committee and we noticed the lacunas involved and that’s why we came back and expressed our views and take it back to the committee for readjustment,” he said.
Musa said the airports belong to government and government could decide to shut them down or sell them and nobody would stop them but urged government to do the right things and also carry out the concession process in the right way.
“There are options as far as concession is concerned, these include build operate and transfer, rehabilitate, operate and transfer. The method of concession is what we are concerned about.
“They are trying to do rehabilitate, operate and transfer. We have given them the go ahead to do build, operate and transfer. In that manner a virgin land is given to the investors. They will build the facility; operate it at the period agreed upon then hand over to government. Within the process, from the survey to the construction and to the implementation of the programme, Nigerians are going to get jobs, capital flight will be reduced, but when you are taking finished and already completed brand new terminals and you are handing them over to investors, that is where we have concern,” he said.
Musa, however, insisted that those labour leaders who support concession are doing so at their individual capacity, not representing the unions and their members. So the dilemma continues until government is able to concession the airport terminals, which hopefully would be at the time slated in 2022.