CONTROVERSY TRAILS CONCESSION OF LAGOS, ABUJA, KANO AND PORT HARCOURT AIRPORTS

By Louis Ibah

“We will resist the plan by the Federal Government to concession the international airports in Lagos, Kano, Port Harcourt, and Abuja because the whole exercise is a fraud and inimical to the interest of Nigeria and its citizens,” said the Secretary General of the National Union of Air Transport Employees (NUATE), Mr. Olayinka Abioye at a press conference held in Lagos last week to demand that the government halt the concession exercise.

“And if the government feels it has the private sector experts that can manage or turn around the fortunes of Nigeria airports, why not concession the non-vibrant airports to them and let us see the magic that they will perform. Why start the concession exercise with the four lucrative airports while leaving out the 18 other airports that are dependent on the four for their survival?” Abioye queried.

Abioye, who spoke on behalf of three labour organisations, the Air Transport Services Senior Staff Association of Nigeria (ATSSSAN), the National Union of Air Transport Employees (NUATE) and its ally, the Nigeria Union of Pensioners (NUP) gave the Federal Government a 15-day ultimatum (expiring on Oct 25,2017) to rescind it’s airport concession policy or aviation workers would down tools across all airports in the country in protest.

According to him, the three unions were of the view that the entire concession exercise was shrouded in secrecy and devoid of transparency.

“Where is the blueprint of the concession project vis-a-vis the feasibility study conducted on the projects? No one has seen this,” he said. 

Why concession

With dwindling revenue, the Federal Government says it has run out of cash to continue pumping money into the maintenance, upgrade, and expansion of infrastructure of the four airports to meet with contemporary needs and also cope with the high volume of passenger and airline traffic that they now attract. But aside the issue of paucity of funds, there are also concerns over the high level of mismanagement of funds earmarked over the years by successive governments for these airports. The Federal Airports Authority of Nigeria (FAAN) manages the airports on behalf of the Federal Government. The government’s thinking, therefore, is that it is only the private sector that would be able to inject the requisite funds to boost the state of infrastructure at these airports and also halt or check the graft in the industry.      

Labour’s position

Labour, however, insists that the decay in airports infrastructure in Nigeria had to do with continuous government interferences and not with management issues on the part of FAAN.

“The problem of the sector is not the ability of FAAN to manage its affairs properly and in the wisest of ways,” said Abioye. “But the continued ministerial/official meddlesomeness inflicted on the industry and the pauperization, essentially of FAAN through several policy somersaults, as no clear policy has been sustained in the last 25 years arising from regular change of government and ministers who initiate their own agenda/policies while dismantling existing ones, not minding the success or otherwise of such policies,” he added.

Pitfalls

Aviation sector labour unions are however opposed to the concession policy alleging that the Minister of State for Aviation, Mr. Hadi Sirika is not transparent in his handling of the project. For instance, they allege that key stakeholders like airport workers, existing investors and labour unions had not been carried along in the course of arriving at the choice of concession as the panacea to the challenges facing the airports.

“How did the Minister get to the ‘concession model’ out of the many available models?,” queried Abioye. “Where and who was this discussed with? How did we pick concession out of all the models within the Public Private Partnership (PPP) initiative?,” he demanded in an interview granted Daily Sun.

According to him, Nigerian aviation workers have critically analyzed the Public Private Partnership (PPP) concept as a veritable vehicle to drive the process of engendering revenue growth, quality service delivery and maintenance of facilities, infrastructures and returns on investment and accepted its workability, if driven with good intentions and in a transparent manner.

He however pointed out  that given the penchant with which Nigeria’s political class makes pronouncements without deep thoughts, labour has become deeply worried and hugely concerned about the haste, hush-hush and secret disposition of the Minister of Aviation in actualising the concession project without following due diligence as practiced worldwide.

“We have also observed with grave concern, the deceit and coercion that goes with the current process of concessions, that is lacking in transparency which is hugely required at this moment,” he said. “What facts were presented to the Federal Executive Council (FEC) for the approval to concession, as due diligence was never followed up to the time the said FEC approval was granted and announcement made by the Vice President, Yemi Osinbajo?” he asked. 

Transaction Advisors

In a document made available to Daily Sun, the unions faulted the appointment of Proserve Energy Service Limited, an oil and gas consultant as Transaction Advisors (TA) to the concession project as not having followed due process.

Said the unions, “How was the Transaction Advisors (TA) engaged and where did the bidding for such sensitive matter come up and when that no one saw or heard of it.

“How could a company named Proserve Energy Service Limited, an oil and gas consultant spearhead concessions in the Aviation Industry? Let it be known that the said Transaction Advisors have no understanding or knowledge of aviation, so how could such persons be a part of the scheme if not for pecuniary reasons and nepotism?”

The unions also allege that without any budgetary provision and for a government that is lamenting of severe funding challenges, about N1.5billion had already been set aside for the Transaction Advisors to use in road shows, adverts, and transport and logistics to woo foreign investors.                                                  

Ambiguities

Daily Sun learnt that another worrisome angle to the entire concession process has to do with the Terms of Reference which is  not comprehensive enough to provide full details of the scope of work upon which the Transaction Advisors were to act upon.

“The areas of the airports meant for concession were not listed out in the Terms of Reference.”

For instance, which part of the airport does the government want to concession. Is it the runways, landside, airside, terminal buildings, or access gates? The government should come out clear on what it wants to concession because virtually all revenue generation catchment points of the Lagos airport for instance have been given out to several individuals on concession, such as car parks, (example is the newly commissioned multi storey car park), access gates,  fuel dumps, shops, VIP lounges, advertisements etc. What then is remaining for concession? And what will happen to the $500Million owed Nexim Bank of China and the terminals built with part of the loan, bearing in mind that FAAN is expected to defray the loan over some years.

What will be the fate of the 18 other airports that depend largely on financial survival/support on the four lucrative airports listed for concessions? Will these other airports not die a natural death with heavy job losses? 

MMA2

But proponents of concession have cited the Build, Operate and Transfer (BOT) concession of the Murtala Muhammed Airport domestic terminal (MMA2) to Bi-Courtney Aviation Services Limited in 2006 and the massive transformation of the airport to world-class standard as reasons to concession the other airports.            

Labour unions in the aviation sector however said the concession of the MMA2 is fraught with a lot of problems and that with about 64 litigation in courts between Bi-courtney and FAAN, there is no way the exercise can be decribed as successful. Bi-Courtney, labour said is in fact owing FAAN about N2billion being various fees for services rendered to it by FAAN which it has refused to pay.

A breakdown of the debt is as follows: aviation security – N1,215,757,045.91; management fee – N331,088,683.68; fire and safety – N131,219,451.83; marshalling service – N2,168,058.21; electricity – N438,955,342.20; rent & SRC conference – N87,864,556.06; and hotel – N116,845,500.00.

The unions noted that as these magnitudes of debts outstanding against Bicourtney are yet to be settled in favour of FAAN, what guarantee can the government give that the concession of more airports would be devoid of more debts from the concessionaire to FAAN.

Said Abioye, “There are 64 concession litigations against FAAN, all pending in various courts, arising from fraudulent operations, faulty and irregular agreements, negation/vitiation of agreements,  failure to perform according to agreements and so forth. 

“How do we manage and clear all these cases, while the Minister is busy planning the concessions of our airports, albeit without regard to these existing legal issues?”

Fate of workers

Fears have also been raised on the fate of the over 6,285 workers of FAAN with their pensioners totaling about 4,124 should the four airports be concessioned. Managing Director/CEO of Air Peace, Mr. Allen Onyema told Daily Sun in an interview that the government should sort out all issues pertaining to the staff of FAAN before concessioning the airport. Onyema who supported the concessioning of the airports, said the concession project would no doubt come with some job losses,but that it was important for the government to ensure that the private firms that took over the airports do not embark on the mass sack of Nigerian staff while expatriate were instead hired.

Small airpots

Rather then concession the four vibrant airports, some stakeholders have instead demanded that the government  kickstart it’s concessioning project with one or two underutilized airports as a pilot scheme, which if successful, should be replicated in other smaller airports. It is only when these other airports become a success story that the government can proceed to concession the big four airports.  

Alternatives

The three unions, the Air Transport Services Senior Staff Association of Nigeria (ATSSSAN), the National Union of Air Transport Employees (NUATE) and  the Nigeria Union of Pensioners (NUP) have suggested that if the Federal Government genuinely desired a business model that resuscitate the airports through Public Private Partnership (PPP) then it can go for either the ‘Green Field’ model or ‘Corporatisation’ model.

The Green field model allows investors to construct new runways, terminal buildings and allied facilities and empowers them to operate it for a specified period of time before it is handed over to government. It doesn’t hand over the entire airport administration or management to a firm as outright concession does.

 

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