Cautious optimism, outright rejection trail FG’s proposed airport concession

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*L-R: Former DG of NCAA, Dr. Harold Demuren, Chairman, AON, Capt. Nogie Meggison, and Chairman, Senate Committee on Privatisation, Senator Ben Murray-Bruce at the stakeholders' conference on privatisation/concession of Nigerian airports held in Lagos.

The propriety of the federal government’s proposed concession of four prime airports has been the subject of discussion in many fora in recent times, with some stakeholders in the aviation industry endorsing the initiative with cautious optimism while others condemn it in its entirety, reports News Gazette

Since the minister of state for aviation, Senator Hadi Sirika dropped a hint of its plan to parcel out the Lagos, Port Harcourt, Abuja and Kano international airports to concessionaires for greater performance and profitability, the aviation industry has had a surfeit of those who endorse the initiative and those who oppose it.

The proposal is still in embryo stage. Even as the minister set up two committees to draw up plans to drive the process, the debate has not ebbed.

It reached a feverish peak recently when stakeholders congregated in Lagos at an event tagged ‘Conference on Privatization/Concession of Nigerian Airports.

In his presentation, the chairman of Airline Operators of Nigeria (AON), Capt. Nogie Meggison quoted the International Air Transport Association (IATA) as saying “the decision to offer airport concessions should be motivated either by a lack of financial resources necessary to develop airports or the objective of improving the efficiency of airport authorities. With the quote from

Meggison said: “Going by the quote and taking into account the key words: lack of financial resources and improving the efficiency of airport authorities, the answer is: YES in view of the current economic situation in the country.”

Meggison who differentiated between privatization and concession said they are two different concepts.

“When you privatize you give up ownership. But when you concession, you retain ownership and give out management and development for a period of time while retaining ownership,” he said.

He contended that the Nigerian economy has taken a plunge in recent times, hence “we have to rethink the way we do things.”

He said there “is urgent need to upgrade the country’s airport landing aids and navigational equipment in line with global standards” stressing that 70 per cent of delays and cancelations are due to poor landing aids.

He said concession would increase the operational efficiency and profitability of the airports, stimulate growth in the non-oil sector of the economy, increase contribution to gross domestic product, and secure financing of airport infrastructure, better service levels, encourage more efficient and commercial operations.

He also said it would ensure increased productivity, make Nigeria more attractive as a regional hub, attract more non-aeronautical businesses to the airport, boost tourism and hospitality and create jobs and better pay.

Besides, Meggison said concession would result in better landing and navigational aids, better run and functional airports, safer airport operations, more transparency and accountability, increased ability to diversify as well as provide available funds for government

However, the AON chairman made some posers thus: “What mode is the concession going to take? Will it be limited to the terminals?  Who will be responsible for airport security? What about the runways, taxiways, airfield lighting system, fire and rescue services, among others?”

He hoped that “government has taken into consideration the entire industry system and developed a robust framework for the airport concession.”

On his part, the former director general of the Nigerian Civil Aviation Authority (NCAA), Dr. Harold Demuren who spoke extempore warned that airport concession would not work in an atmosphere of political interference and absence of good corporate governance.

Demuren who said “concession is the way to go” however said he was wary of government’s handling of previous concessions that resulted in litigations.

He said if good corporate governance were the rule at the Federal Airports Authority of Nigeria (FAAN) and there was no political interference in the affairs of the organisation, “we would not be talking about airport concessions today.”

“If government goes into another concession without resolving issues with the previous concessions, there will be a flurry of further litigation.

“When government doesn’t keep agreements, they destroy the industry. Right now we have to be clear on what concession is and what we are concessioning, we need to clear them, we need to know. Right now we are still building airports. The Chinese…are still building; they have not operated and have not even determined when to transfer. So what are we concessioning?

“We must get the best of investors but we haven’t resolved the issues that are on the ground. All the litigations, all the conflicting agreements should be reviewed. Now are we going to concession the Chinese terminals too? It is a naïve question but I am naïve and government should come out with clear explanations,” said Demuren.

He tasked the government to engage the unions and “be honest about it and provide them (unions) with facts and figure as well as ensure they do not make pronouncements and go back on them,” he added.

In his contribution, the chairman of senate committee on privatization, Senator Ben Murray Bruce argued that outright privatization like what was done in the United Kingdom would grow the aviation industry.

He said statistics had proved that governments that have accepted some kind of privatization or concession have shown to be doing well as against those that have not.

He stated that Nigeria, along with Pakistan, Afghanistan and two others were wallow at the bottom end of worse airports in the world while airports in Singapore, Dubai, Japan were on top of the food-chain and have been privatized unlike the previous he mentioned.

On government’s penchant for breaking agreement’s, the lawmaker said the senate had proposed a piece of legislation to ensure that any asset privatized will have a two-year contention period when anyone who is not satisfied could protest.

In its presentation entitled ‘Development and Management of Airports in Nigeria: The way forward,’ aviation professionals made up of former managing directors and other retired personnel of FAAN vehemently opposed the planned programme saying “anybody who wants to concession a profitable and on-going concern does not mean well for the organisation.”

The group pointed out that FAAN had not been reticent in recent years pointing out that the agency obtained $500m (equivalent to N152.5b) from China to construct terminal buildings at the four airports slated for concession.

“The repayment is about N6.9b per year or N578m per month. This has enabled FAAN to increase the passenger capacities from 15million annually to 46 million passengers for these four international airports,” the group added.

The group disclosed that FAAN had spent over N33.09 billion between 2004 and 2015 to resurface most of the runways at the country’s airports.

Besides, the group said FAAN had been proactive over the years, spending more thanN33.09 billion between 2004 and 2015 to resurface most of the runways at the country’s airports.

They are the runways at the Murtala Muhammed Airport, Lagos which gulped N3.4b; Mallam Aminu Kano International Airport runway, N1.9 billion; Port Harcourt International Airport, N2.3 billion; Margaret Ekpo International Airport, Calabar, N832 million; Maiduguri Airport runway, N499 million. Others are the runways at Kaduna Airport, N816 million; Akanu Ibiam International Airport, Enugu, N10 billion, Benin Airport, N351 million and Nnamdi Azikiwe International Airport, Abuja, N1.5 billion.

“If they (would-be concessionaires) are really patriotic and they have the magic wand (or the proverbial Midas touch) for revitalising enterprises, let them start with the less viable airports in Akure, Ibadan, Benin, Yola, Kaduna Airports etc and let them demonstrate their magical feats.

“They can equally build their ultra modern terminal buildings side by side with FAAN’s structures in these international airports and let us compete,” said the group. This is the true spirit of business development. But coming to disposes FAAN of its new terminal buildings is reaping where they have not sown,” said the group.

 

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