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Many years after it was proposed, the $450 million Lekki International Airport, near Epe, in Lagos, has yet to catch the fancy of investors. This is in spite of several overseas trips and trade exhibitions by the Lagos State government to woo investors to it.
BusinessDay gathers that investors are keeping distance from the airport project because they have not found it a viable business option for now. Five years ago, a consortium of investors which the state government sought to close a deal on the airport pulled out halfway.
A source confirmed to BusinessDay on Monday that the investors withdrew from the airport project after discovering that the numbers, juxtaposed against the expected investment, wouldn’t add up among other socio-political factors.
Situated about 10km from Lekki Free Trade Zone (LFTZ), the airport had been designed to take wide-body, double-deck, four engine aircraft with capacity up to 500 seats, such as the Airbus A380 making it a Code F compliant airport with capacity for two million passengers per annum for a start, a number that may be difficult to attract given that there is existing airport in the state.
A recent report obtained by BusinessDay revealed that only 11,221,617 passengers passed through the nation’s 32 airports in 2017, representing 26.3 per cent drop when compared to the preceding year which stood at 15, 232,597 passengers.
Olayinka Oladunjoye, Lagos State commissioner for Commerce, Industry and Cooperatives, who shared the investors’ fear in an interview with BusinessDay, however, disclosed that with the spate of new developments around the Lekki axis, investors are again beginning to show strong interest in the project.
“Airport is a capital-intensive project and often comes with foreign and local financing components. Investors always look at the numbers to see whether they add up. Often they consider political and socio-economic risks involved.
“But we are currently in talks with two international investors who have local partners in Nigeria. We’re giving the assurance that the polity is stable and Lagos State is ready to partner them,” said Oladunjoye.
If the airport comes to being, it will serve the fast growing residential cum industrial Lekki hub where several multi-billion dollar investments are springing up, including the LFTZ, Lekki Deep Seaport and Dangote 650,000bpd refinery, among others.
Meanwhile, as investors adopt a wait-and-look option on the Lekki airport, the 3,000 hectares of land along the Lekki-Epe corridor, once cleared in anticipation of the take-off of the first phase of the airport, is now thick bush.
Four rated firms had worked as consultants to Lagos State on the airport project. They include Arup, a firm of consultant engineers, designers, planners and technical specialists; Norton Rose Fulbright, a global legal firm with 54 offices worldwide; Stanbic IBTC Capital, a member of Standard Bank Group, one of Africa’s largest banking groups, which was appointed sole financial adviser, and Banwo & Ighodalo, a Nigerian law firm.
Efforts to bring the airport to reality under previous administration of Babatunde Fashola, the immediate past governor of Lagos, suffered a setback when investors who initially expressed interest withdrew from the deal which is proposed as a Public Private Partnership (PPP) project. This forced the government to return to the drawing board.
The state government in the deal is providing the land and other complementary infrastructure, while the private partner with whom a concession agreement will be signed, will undertake the construction of the airport on a Design, Build, Finance, Operate and Manage (DBFOM) basis, under a competitive tender process, and in accordance with international best practices.
In 2011, as part of the competitive tender process for the construction of the airport, the Lagos State Government, through its consultants, advertised a Request for Pre-Qualification (RFPQ) and 33 Nigerian and international firms indicated interest to participate in the ambitious project.
The companies had earlier submitted Expression of Interest (EOI), bidding for the project under a Public Private Partnership (PPP) arrangement, following a public notice advertised by the state government to that effect.
Of the 33 firms, 20 were Nigeria- based. They were to compete against 13 foreign companies, including Munich Airport Germany, Hyundai Engineering and Construction Co. Limited and Canadian Commercial Corporation, among others.
In 2013, three infrastructure developing consortium of firms, including Bouygues Batiment, Eko Global and Maevis, were again in the race for the first round of bidding for the development of the airport.
Local and foreign representatives of the bidders were in the state for the preliminary processes of the bidding and held talks with the government and its team of consultants.
They also visited the site for physical inspection. The preferred bidder was expected to be announced in April 2014, while the signing of a concession agreement and project documents was to take place in June 2014, with the financial close of deal expected in September same year, but this was never realised.
JOSHUA BASSEY
