Concession Of Airports: The Unnecessary Complications

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While I am an ardent supporter of concession or privatisation of all government owned enterprises, including the Nigeria’s airports, there is a major hurdle to concessioning of Nnamdi Azikiwe airport, Abuja, and the Murtala Mohammed International airport (MMIA), Lagos.

Before her exit, the former minister of aviation, Stella Oduah, had entered into airport concession agreement with the Chinese government, through one of the Chinese companies operating in Nigeria, CCECC, to build, Operate, and Transfer (BOT) for a certain number of years. Only the ministry of aviation is privy to the signed terms of the agreement. It is everyone’s understanding that $500m was released for the construction of the two terminal buildings at both airports. The projects are currently ongoing, therefore, it is absurd and unimaginable that Nigeria’s government would terminate such an agreement prior to its agreed terminal date. How does the government of President Mohammadu Buhari (PMB) hope to wangle itself from an internationally binding agreement?

There is already a binding agreement to concession MM1A and Abuja airports to the Chinese firm, therefore, any idea of extending the programme to other airports in the country, must exclude the two airports.

Nigeria is known for breaching international agreements; PMB must ensure that his government complies and does it part to enforce and maintain all local and international treatises. The burden of respect and credibility lies with this government to stimulate Nigeria’s creditworthiness abroad.

While the minister of state aviation, Hadi Sirika’s virtuous desire to improve the state of the airports is commendable, he should not overlook a standing agreement that is current and enforceable. Nigeria will lose more if any attempt is made to circumvent the deal with the Chinese for personal benefits through proxies. When no one was there for the country, the Chinese took a very bold risk to undertake projects in Nigeria, on credit terms.

Nnamdi Azikiwe airport’s concession programme is known as a wasted, unattainable bid among venture capitalists in the country. About seven years ago, Abuja Gateway Consortium, a Nigerian company, won the bid to take over the airport for an agreed term of 15 years. $10m mandatory deposit was paid to the federal government. The deal was canceled under Stella Oduah, and the Chinese were brought to replace the concessionaire of Messrs. Abuja Gateway Consortium.

If the Chinese are kicked out for another acceptable firm of the Minister, then it would be that there is a serious scam associated with airport concession exercises in Nigeria. This will further reflect the already tarnished image of the country.

The major problem Nigeria has is the invalidity of an agreement from one government of the country to another administration. Everywhere else in the world, government is a continuum, and the responsibility of one regime must continue with the next. It is not so in Nigeria, therefore, every sensible foreign or domestic investor is weary of engaging in a serious business with the federal government.

There is nothing wrong with advertising and promoting the 22 airports in the country for Public Private Partnership (PPP) arrangement, but it must be noted that the two airports under the Chinese company should be expunged from the list of those due for concession.

For the first time in history, a government of Nigeria must be seen to do the right thing, to uphold an agreement to a logical conclusion, and to prevent investors from wasting valuable funds.

There is no viable alternative to the concession of all the major airports in Nigeria. While I do appreciate the sporadic agitations of the employees of the Federal Airports Authority of Nigeria (FAAN), there is glaring stagnation in the development, maintenance, and service delivery profile of the four major airports in the country. The recurring degradation of our aerodrome standards should be a major concern to all.

FAAN as a government agency has outlived its capacity to keep the airports viable to meet the required standards demanded for effective competiveness of the 21st century. It is needless to mention that 70% of FAAN’s revenue is spent on salaries and wages, with outright theft of the remaining 30%.

With over bloated workforce, and no feasible programme for airports upgrade, the airport authority’s efficiency is seriously in doubt.

Like other government enterprises, FAAN has become a conduit pipe for politicians to drain illegal funds, employ their relatives, and seek unperformed contracts.

It has become obvious that government has no business in improving and managing the airports. Private investors should takeover airport improvement, renovation, and operation. But the planned concession must be transparent, and diligently executed for all Nigerians to ascertain to its viability.

If the Chinese are left out of the equation, and other more favoured bidders are invited, then the federal government must ensure full refund payment of the monies invested by the government of China. This will lift Nigeria’s credibility, if there is any left. But why should Nigeria even think of backing out of the deal when the new gorgeous terminal building in Abuja by the Chinese is near completion?

Over the years, Nigeria has built a very negative reputation that is hard to discard. The chances taken by the Chinese will either make or break the future of foreign direct investors/investments in the country. Reneging on our promise to continue the BOT programme with them will instantly magnify the country’s long- standing negative reputation.

Sirika must ensure that the future of foreign investments in the aviation sector is conducive, enticing and rewarding. Foreign investors are very sensitive to uncertainty; any wrong decision by this government will pollute and drive off prospective entrepreneurs, foreign or not.

It is mandatory for the ministry of aviation to intimate stakeholders of the content of the agreement with the Chinese. That will explain the desired scope of PPP, and the bidding participants. If MMIA and Nnamdi Azikiwe airports are unavailable, there is no reason to advertise them and waste investors’ time and money. If the Chinese will be compensated immediately to hands off, it should be in line with the termination clause of the agreement.

Whatever the intention of this government, the complications are insurmountable to ignore. Nigerians cannot remain parochial and insensitive to the laundered image abroad. They must take the challenge to rectify the constant negativity and regression in world business interactions.

Nigeria must not only be seen to do the right things, it must firmly do them.



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