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Nigeria’s Airport Concession Sophism

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As the drum beat to concession the four major airports in Nigeria (Lagos, Abuja, Kano & Port Harcourt) gets louder, there are obvious signs of abnormalities and insidiousness.

The core questions we must ask in this proposal are: judging from the antecedents of privatized government entities, will the airports perform better? Who stands to gain from this exercise—the public or the concessionaire? What have been the outcomes of previous, partial concession of some airports vis-à-vis the inconclusive and, hotly contested binding agreement between Bi-Courtney Aviation Services and the Federal Airports Authority of Nigeria (FAAN)? What will become of the other 19 low- revenue- generating airports? And, finally, what will be the fate of the thousands of employees of FAAN in this time of plenary economic recession?

Although the words “privatisation” and “concession” have different connotations, in Nigeria –the difference between the two is blurred when reference is made to public companies. The former National Electric Power Authority (NEPA)—changed to Power Holding Company of Nigeria (PHCN), for efficient power generation and distribution, was partly privatised or concessioned to a group of unqualified investors, especially the distribution aspect (called Discos). Yet, despite government’s efforts to maximize electricity supplies, the reverse has been the case, so much so that public outcry to revoke the agreements has, of late, dominated the news media. The underlining factors are: epileptic power supply, and exorbitant tariffs to consumers despite the irregularity of electricity. In this instance, the action of the government, for public good, has become counterproductive.

The question on everyone’s mind —which is also valid is: has the concession of the general aviation terminal (GAT) at Nnamdi Azikiwe airport, Abuja, boosted it services? The answer is capital NO. Despite private management of the most expensive lounge in Nigeria’s airport, services are very poor, and, FAAN has gained nothing from the lease agreement. The investment has been a zero-sum- game for both the public and the airports authority, but a positive source of revenue for the concessionaire.

It is, therefore, unwise for this administration to continue drumming into our ears the planned concession of the four, most profitable terminals in our nation, if concessionaires alone benefit from the lease.

There has been a standing legal tussle between Bi-Courtney Aviation Services Limited(BASL) and FAAN over the tenure of the Build-Operate-Transfer (BOT) agreement; the disputed unpaid yearly royalties, and the inclusion of the other uncompleted constructions within the Murtala Mohammed Airport (MMA2). The Federal Airports Authority of Nigeria has vehemently stood against further expansion of the terminal’s ancillaries (hotels, parking spaces and other facilities) by BASL, which has spurred a protracted, inconclusive legal battle for nearly ten years. The result is a modern, efficient, but uncompleted terminal building, yearning for a form of intervention to bring the project to a viable fruition for the benefit of passengers and other airport users.

Therefore, before the minister of state aviation, Hadi Sirika, and his team commence another problem for the industry, it is imperative to resolve– as quickly as possible– all outstanding issues with BASL and other concessionaires in the airports. The new terminal building at Nnamdi Azikiwe airport, which has gulped N22 billion($61m) of Chinese loan, must carefully be reviewed before committing other investors.

One of the most important factors to consider in the concession of the four most viable airports in Nigeria is: what will happen to the other 19 airports in the country? It has been said, many times, that revenues from Abuja, Lagos, Kano and Port Harcourt support the other politically constructed airports. Some of these airports, located in state capitals, are mere efforts of the respective state governments.

While the idea of an airport by individual state to connect air transportation to the rest of the country to stimulate development must be encouraged, revenue generation to support continuous operation must come from the centre— FAAN. Will FAAN continue to support these airports? Can the various state governments afford to manage the airports on their own? Without federal government’s support, should the airports be closed?

These are fundamental questions that must be properly analyzed before throwing away the four cash-cows to the detriment of everyone. I do not see the urgency to concession the airports at this stage, although, in the past, I was a very vocal proponent of the same feat.

We have a history of neglecting our civil servants, especially the retirees. But in this case, if we are to lease out the four most productive, revenue generating airports in the country, what will become of the over two thousand employees of FAAN? Will the concessionaires accept to engage them in their employment portfolio, or will FAAN simply discard them with disengagement letters? If the horrible stories emanated from the demise of Nigeria Airways, and the unpaid entitlements of ex PHCN staff are to act as reference of how government employees are treated in this country, then the minister must be careful to avoid sending thousands of Nigerians—early–into mortuaries.

There is no guarantee that concessionaires will absorb those currently employed by the airports authority, even if mandated in the contract to do so. It is not uncommon to see how ex workers of a publicly leased or sold enterprise have been thrown out of the system by their new employer, without pension or gratuity.

The current, viral economy recession has elevated a-near hyperinflation, and Nigerians are hanging by the thread; therefore, the more people this government can engage in meaningful employment, the less the frustration; the less crime waves, too.

The Federal Airports Authority of Nigeria can be partially privatised, with investors from around the globe to induce efficiency and profitability. Federal government can equally maintain substantial controlling interest in the newly revitalised company, just to guaranty airport security, and employment opportunities for those already in the system. With the introduction of private investors, all staff of FAAN will surely understand the need to adjust to a new order for higher productivity. The usual laxity associated with government jobs will not be tolerated. Job security will also be guaranteed.

I won’t be surprised if this administration goes ahead with the plan to commence the leases without recourse to understanding the current reality of Nigeria’s economic dire-straits; but like everything else privatised or concessioned, the after math has been absolute disasters. We must underscore the degree of fallacies of this one-sided venture that will only benefit the proxies of those in the helm of affairs of the country.



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