• Friday, June 21, 2024
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More trouble for states as billion naira airports fail


Nigerian state governments which are currently facing fiscal crises as oil prices collapse have compounded their problems with unviable white elephant airport projects, mostly undertaken with borrowed funds.

BusinessDay checks show that most of the airports built when the economy was booming, have today failed to live up to expectations.

Industry watchers have linked the failures of these multi-billion naira airport projects to their being unviable, considering the low passenger and aircraft traffic originating and terminating from them.

“Many of the states that have built airports lack understanding of the industry and its working systems,” John Ojikutu, managing director of Centurion Securities and member of industry think tank group Aviation Round Table (ART) told BusinessDay.

Ojikutu explained that an airport is considered viable if the annually internal generated revenue is sufficient to maintain all the services it provides, which include; salaries of the airport staff, power generation, external services bills, amongst others.

He said that only Lagos and Abuja, which handle over 70 percent of the annual passenger and air traffic can be said to be viable and the excess revenue from these airports are often used to service the others.

BusinessDay checks show that presently, there are 28 airports in Nigeria, of which 20 are owned by the Federal Government, six  by state governments and two privately owned.

The seven state-owned airports in Nigeria are Asaba, Gombe, Bauchi, Jigawa, Kebbi and Akwa Ibom airports.

Some Nigerian states such as Anambra, Ekiti and Osun have indicated they intend to embark on airport projects.

“I believe that the construction of airport should be backed by the growth of the economy. There are some airports that are constructed just for the governors to land and take-off. That is not the idea of having an airport,” Rotimi Amaechi, Minister of Transport said.

BusinessDay checks show that Asaba airport, last year was downgraded by the Federal Government over the failure of  the Delta State Government to put in place safety and security measures.

As a result, the airport is only allowed to accommodate the operation of Dash 8-Q 400 aircraft or its equivalent until all the safety issues are addressed.

Gombe Airport in Gombe State was built a few years ago, with more than N7 billion of tax payers’ money.

Only  Overland Airways operate flights in and out of the airport from Abuja.

The Bauchi Airport, built at over N7.9 billion by the administration of former Governor Isa Yuguda, has attracted only few chartered flights and transportation of pilgrims to Saudi Arabia during hajj.

In the Northwest, the Dutse Airport in Jigawa, built by the administration of former governor Sule Lamido at N15.5 billion, is also unviable.

The envisaged patronage resulting from its proximity to Yobe, Bauchi and Kano states has failed, as it is currently used by only Overland Airways.

The projections that the airport would facilitate agro-allied exports remain a mirage, with services occurring between just Abuja and Dutse.

“The last administration was paying N27, 000 per passenger. And it paid for 60 passengers for three days a week to support traffic development…using public funds to sustain the airline, so that people will say aircraft are landing in Dutse,” Muhammadu Badaru Abubakar, the Jigawa state governor , told BusinessDay.

In faraway Kebbi State, an airport was inaugurated in Birnin Kebbi, its capital. It was built for N17 billion in 2015.

Sources confirm that the airport boasts of the best navigational facilities for aircraft overflying the nation’s airspace. It has however  remained unprofitable to the state, as only Air Peace operates skeletal flights, thrice weekly, between Lagos – Abuja and Birnin Kebbi.

Akwa Ibom Airport in Uyo was built at a cost of N18 billion and completed a few years ago. Only Arik Air, Dana Air, First Nation and Discovery Airline, operate flights into it.

The maintenance repair centre proposed for the Uyo Airport has not been achieved. As a result of its current challenges, the state government called on the Federal Government last year to take it over.

In Osun State, construction has started on the N11 billion Moshood Abiola International Airport billed for Ido Osun. Experts doubt the viability of this airport.

Controversy continues to trail efforts of the Ekiti State Government to build a N22 billion airport, which many have described as a waste of resources.

Experts argue that the proximity of two airports – Akure and Ibadan to Ekiti is sufficient grounds for the state not to waste scarce resources on an airport, given the unviable state of the two airports in Oyo and Ondo states.

“All states do not necessarily have to build airports, there should be a concerted effort at making the few that are viable work,”   Okwudili Kingsley Ezenwa, Communications Manager, Dana Airline told BusinessDay.

Meanwhile, even before the release of a proposed N90 billion bail-out funds to the states, there are fears that the Federal Government could be risking not being able to recover most of the budget support facility which it recently announced for them, to withstand the biting cash crunch.

This is because, it was further learnt that the Federal Government flouted its own rules on the disbursement of the facility, having commenced disbursements ahead of states’ meeting the agreed 22 conditions to qualify them to access the new loan.

Some analysts say the waiving of the agreed rules by government, may have provided room for default and possibly, lack of the much needed monitoring and supervision of expenditure patterns by the state governors.

BusinessDay gathers that the bad financial positions of most states and their inability to pay salaries had put the Federal Government under pressure to begin disbursing the initial N50 billion tranche to some of the 35 states which applied ahead of their compliance.

“As we speak, most of the states are under pressure and we didn’t have to wait till they met all those conditions,” said a financial ministry official who would not want to be named. “We are still following those 22 conditions, so what will happen is that any state that does not meet the conditions will not be able access the next tranche,” the source, however assured.