BusinessDay

Promoting indigenisation, standards, job creation through airport concessions

Air transport market in Nigeria is forecast under the ‘current trends’ scenario to grow by 174 percent in the next 20 years. This would result in an additional 9.4 billion passenger journeys by 2037. If met, this increased demand would support approximately US$4.7 billion of GDP and almost 555,700 jobs.

However, the current infrastructures across the country’s airports are not up to standard and not commensurate with the projected growth in the aviation sector. There is therefore an urgent need to upgrade the country’s airports infrastructures.

Most airport infrastructures in Nigeria require considerable rebuilding and restoration. This entails massive external financial support, which the federal government has been unwilling to provide due to its cash crunch, existing corruption and operational inefficiencies.

For the purpose of addressing some immediate challenges resulting from dilapidated airport infrastructures such as delay in passenger facilitation, threat to safety and high charges, the federal minister of aviation introduced airport concession to some of the airports in the country (Lagos, Kano, Abuja and Port-Harcourt), to facilitate needed expertise in the area of operations and technical-knowhow.

Recently, with globalization and the current economic recession, the government realized that it lacks the resources (man, material, money and machinery) and technical knowhow to operate a modern airport successfully.

Read Also: Experts show pathway for workable airport concession

In most developed countries like South Africa, Brazil, United States of America and others, governments and airport authorities have withdrawn from airport operations having the conception that enterprise-based airport services and operations would allow for greater flexibility, effectiveness, efficiency, excellent services and customer satisfaction.

It has therefore become clear that adoption of airport concession is the way out of the current crisis.

However, in adopting airport concession, experts say it is also important that standards be met and job opportunities be created in the process and the way to generate more jobs for Nigerians through airport concession is if the project is given to indigenes as done in other countries that have recorded successful airport concession.

Concession process

Airport concession as a business interventionist model, is a widely accepted Public Private Partnership (PPP) option in the global aviation industry. It is not in any way peculiar to Nigeria alone, other nations of the world have taken advantage of the model and utilised it to the fullest.

What has however become a course of worry is the process of concession and the individuals or organisations the government engages to run the project.

Stakeholders in aviation have however called on the government to be transparent in the process and ensure the right people or organisations with track records are being engaged on the project.

Olumide Ohunayo, an aviation analyst, expressed the view that the process of airport concessions must be transparent, and acceptable and bring revenue for the government and the public.

“For me, the processes and protocols put in place for a successful concession are more important to me because once something is not done properly, you may have a chaotic situation,” Ohunayo said.

He said while the government considers bidders for the process, it should ensure that Nigerians are the majority.

He disclosed that the concession process so far has not been transparent and people are not happy, as many things are still not clear, especially with the disbursement of the proceeds when the concession kicks off.

“It is the concessionaire that determines what is profit, not the government. Some things are not right with the process and those things must be corrected before the process is completed,” he said.

Criteria for selection

Stakeholders in the aviation sector have said there is also a need for the government to look at some key benchmarks before selections are made.

Seyi Adewale, chief executive officer – Mainstream Cargo Limited said that for the government to have a workable airport concession model in Nigeria, the preferred bidder must have a successful airport already in its management and about 85-90 percent of the employees must be local staff.

Adewale also advised that repatriation based on management, technology and ICT fees shall only be for an agreed period of time and thereafter, it must be domesticated and knowledge or options locally oriented.

He said the firm must show real and new investment in the airports and they must prove capacity in energy efficiency, environmental control and its management.

“In Nigeria, we have local companies that have proven to be stars and can favourably compete with international companies. In aviation, Bi-Courtney has definitely proven capacity to deliver. However, Bi-Courtney in my opinion will need to further prove financial capacity (new and real funds),” he added.

Some experts say it is necessary for the airports to be concession to local firms with track records, merit and competence, rather than foreign companies that cannot be vouched for.

“Some of the foreign companies being touted don’t have the required records,” an insider in the concession process claimed.

Lingering issues

On MMA2, from the outset, both parties (BASL and FG) set up a Coordinating Committee, comprising Bi-Courtney Aviation Services Limited (BASL), FAAN and an independent body to address any challenge that may arise from the concession agreement on MMA2.

On each occasion that the committee was called to address some of the challenges emanating from the concession, judgments have been in favour of BASL

Late President Umaru Musa Yar’adua at an intervention meeting he held with all stakeholders in attendance backed 36 years for Bicourtney to manage the terminal on a Public Private Partnership basis.

Yar’Adua gave the approval for the 36 years having discovered that the agreement on the period had already been signed by all relevant parties based on the exigencies that cropped up as explained by the concessionaire, which subsequently nullified the early 12 years agreement.

A copy of the agreement was sighted, confirming the 36 years approved as the final number of years to manage the project.

Part of the master plan was for the local terminal to be linked to international, but the crisis of MMA2 has stalled the expansion. This is regrettably affecting the travelling public and affected the ratings of Nigeria’s airports.

Regional flights were supposed to emanate from MMA2 according to the contractual agreement BASL had with FG. As of 2019, the Nigeria Civil Aviation Authority, (NCAA) came with its team to do a checklist of its facilities and pointed out the gaps in the system and advised them to close the gaps within a certain period.

When the NCAA team returned, the team certified MMA2 fit to operate regional flights from the terminal, but unfortunately till date, the terminal has not been allowed to commence it, even though domestic operators on the regional routes prefer to operate from the terminal.

The agreement also states that for the period of 36 years, all domestic flight operations must be carried out from MMA2 but FG through the Federal Airports Authority of Nigeria, (FAAN) created General Aviation Terminal (GAT) and had since processed local flights from GAT.

Experts opine that by law, GAT belongs to BASL as all local flights from Lagos are supposed to take off from MMA2 as entrenched in the contractual papers.

BASL as a considered bidder

The Murtala Muhammed Airport Terminal Two, MMA2, has continued to rank as one of Nigeria’s best terminals as a result of the airport’s infrastructures and passenger facilitation.

Experts opine that BASL, operators of the MMA2, has proved to be the best private terminal manager in the last 14 years and so should be supported by the government because of its antecedent in terminal management.

BASL generates only eight percent of total airport revenues in Nigeria, yet regularly maintains its terminal since establishment in 2007.

Since 2003, when BASL executed a Concession Agreement for the redevelopment of the airport terminal with Wale Babalakin SAN, lawyer as the infrastructure developer, the terminal has continued to win local and international awards for being the best managed airport Terminal in the country.

It was a Build, Operate and Transfer (BOT) agreement and the new Terminal, tagged MMA2 which was commissioned on 7th April 2007 by the then president Olusegun Obasanjo became operational on 7th May 2007 and has since redefined the Nigerian Aviation industry.

BASL is a complete indigenous organization without a foreigner on its payroll. Experts say the empowerment of BASL is an empowerment for indigenous organisations.

By the Executive Order No.5 (EO5) signed February 2018 by President Buhari, all Ministries, Departments and Agencies (“MDAs”) of government were directed to engage indigenous professionals in the planning, design and execution of national security projects and maximise in-country capacity in all contracts and transactions with science, engineering and technology components.

Ibrahim Mshelia, owner of West Link Airlines Nigeria and Mish Aviation Flying School, expressed the view that the federal government must not let foreign firms take over the country’s affairs. For Mshelia, more Nigerians must be engaged in the aviation concessions in a bid to create more jobs.

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