FG’s N712bn Lagos airport funding model draws criticisms

Stakeholders in the aviation sector have picked holes in the Federal Government’s funding model for the renovation of the Murtala Mohammed International Terminal 1 Airport (MMIA), Lagos.

The government plans to spend N712.26 billion on the new aircraft apron, access roads and bridges, security enhancements, intrusion detection systems, CCTV surveillance, solar-powered floodlights, centralised command centre and expansion of Terminal Two, among others.

Festus Keyamo, minister of aviation and aerospace development, said the project, awarded to China Civil Engineering Construction Corporation (CCECC), would be funded entirely through the Renewed Hope Infrastructure Development Fund and executed over a period of 22 months.

The Renewed Hope Infrastructure Development Fund (RHIDF) is a Nigerian initiative approved by President Bola Tinubu to support infrastructure development across the nation. It aims to attract and consolidate capital for projects in key sectors like roads, rail, agriculture, ports, and aviation.

The fund also focuses on securing favourable financing, construction, and operational arrangements.

The fund aims to attract investment capital from a broader range of sources.

“It targets pension funds, concessionary loans, insurance companies, sovereign wealth funds, private sector arms of multilateral development institutions, and bilateral private sector investors.

“Other financing sources are individual investors, including the Diaspora Nigerians, endowments and equity funds,” a statement from the presidency read.

Stakeholders however expressed concerns over why the government decided to tap debt or from investors’ funds rather than give it out to concessionaires.

Airport concession often falls under the umbrella of Public-private (PPPs), where private companies manage and operate airports under a long-term agreement with the government.

“On the one hand, we are concerned about the burden of subsidies on our finances. On the other, we are refusing to embrace concessions and instead relying on government borrowing and inefficient government contracts. After we borrow and rebuild, someone will now come and concession or privatise the airport,” an economist, who would not want his name mentioned, told BusinessDay.

“Remember that the top floor of the parking lot remains unused as it was disapproved by the International Civil Aviation Organisation due to its overbearing proximity to operational areas.

John Ojikutu, industry expert and CEO of Centurion Aviation Security and Safety Consult, said: “The refurbishing of passenger terminal buildings should go into privatisation, concessions or private commercialisation. What is happening now is not different from the over N200bn that was given to private airlines in 2011 as government intervention, and money spent by the former minister for Nigeria Air and Abuja second runway,” Ojikutu said.

“Passenger terminal buildings are non-aeronautical services that should go for PPP in concession, commercialisation or privatization. This is a global practice,” he said.

BusinessDay’s findings show that some airports in the UK, like London Gatwick and London City Airport, have been concessioned to private entities and are operated by Global Infrastructure Partners, a US-based consortium.

Three European consortiums have won concessions to operate four Brazilian state airports.

Saudi Arabia is aiming for the privatisation of 23 airports, with European firms already securing bids.

Canada divested control of most of its major airports in the late 1990s and early 2000s, with only a few small ones remaining under government control.

India and Russia have opened up their airports to foreign operators.

Seyi Adewale, chief executive officer, Mainstream Cargo Limited, argued that it appears difficult to get a willing foreign investor that is ready to commit its funds to the reconstruction and upgrade project at MMIA.

Adewale argued that the approach of the government appears to be better as the government would recoup spent funds in five years and have a private and independent management company run the rebuilt airports efficiently.

“If government is true to its words and execution strategies, then we will witness a new vista of possibilities in our aviation sector that is modern, contemporary, and that can compete with the best airports within Africa,” the Mainstream Cargo CEO said.

Samuel Caulcrick, former rector of the Nigerian College of Aviation Technology (NCAT), said the government proposal of N712 billion is a huge sum, but a PPP arrangement would enhance the impact of the investment in revamping airport infrastructure.

“First of all, the private sector will struggle to raise such a huge sum in a sector with a razor-thin profit margin. So, the government that can retain the ownership of the airport but could outsource the management to a private sector management consortium, with a performance bond attached.

“The performance bond is a deposit to be held in trust by the government, which the government can draw from in case of non-performance or underperformance of the private management consortium,” Caulcrick suggested.

He said by partnering with the private sector, the government will be tapping into individuals’ expertise, efficiency, and resources, leading to better infrastructure management and maintenance of the project.

“While the exact details of the N712 billion initiative are still unfolding, one thing is clear: travellers and shippers alike intending to use MMIA deserve a seamless pilgrimage. They deserve a travel experience that integrates various modes of transport, from light trains to air-conditioned buses, whisking them to Ikeja or Papa Ajao straight from MMIA,” he said.

Ohunayo said while he supports that the airport be renovated, it will be wrong to hand it over to concessionaires after the money has been spent on the project.

Ifeoma Okeke-Korieocha

Ifeoma Okeke-Korieocha is the Aviation Correspondent at BusinessDay Media Limited, publishers of BusinessDay Newspapers. She is also the Deputy Editor, BusinessDay Weekender Magazine, the Saturday Weekend edition of BusinessDay. She holds a BSC in Mass Communication from the prestigious University of Nigeria, Nsukka and a Masters degree in Marketing at the University of Lagos. As the lead writer on the aviation desk, Ifeoma is responsible and in charge of the three weekly aviation and travel pages in BusinessDay and BDSunday. She also overseas and edits all pages of BusinessDay Saturday Weekender. She has written various investigative, features and news stories in aviation and business related issues and has been severally nominated for award in the category of Aviation Writer of the Year by the Nigeria Media Nite-Out awards; one of the Nigeria’s most prestigious media awards ceremonies. Ifeoma is a one-time winner of the prestigious Nigeria Media Merit Award under the 'Aviation Writer of the Year' Category. She is the 2025 Eloy Award winner under the Print Media Journalist category. She has undergone several journalism trainings by various prestigious organisations. Ifeoma is also a fellow of the Female Reporters Leadership Fellowship of the Wole Soyinka Centre for Investigative Journalism.