The recent certification of the Murtala Muhammed International Airport and Nnamdi Azikiwe International Airport, Abuja may facilitate the airport concessioning process and add value to bargain from investors, experts have told BusinessDay.
Hadi Sirika, the Minister of State for Aviation, few months ago, announced that Infrata, Dentons, Rebel, WSP Parsons Brinkckerhoff, Proserve as the five Transaction Advisers for the handling of the concession of the Abuja, Lagos, Kano and Port Harcourt airports.
The government appears to be very serious about privatisation of its international airport, even after the aviation union resisted through protests; the government said it was not going back on plans to concession its major airports across the country.
Recently, Elysium Integrated Development Company has submitted a proposal to invest Twenty-Seven Million Dollars ($27 million) in a mass transit ground transportation structure at the Murtala Muhammed Airport, Lagos.
The minister said the federal government was targeting about $3billion from the concession of the Murtala Muhammed International Airport (MMIA), Lagos, considering the passenger traffic, the aircraft movement and the volume of cargo processed through the airport.
He said that government was maintaining the Lagos airport and other airports slated for concession, including the airports in Abuja, Port Harcourt and Kano, and plans to raise their values to earn more money from their concession.
John Ojikutu, member of aviation industry think tank group, Aviation Round Table (ART) and Chief Executive of Centurion Securities told BusinessDay that the certification of the Lagos airport is to facilitate concession and add value to concessioning bargaining. For me, $3billion on MMIA alone for 30years is better than nothing from FAAN in 30years and giving intervention funds yearly.
“This translates to N30billion to the federal government’s account yearly; has the Federal Airports Authority of Nigeria (FAAN) ever remitted to the N10billion to the federal account in any year? Instead it spends the Internally Generated Revenue (IGR) and gets subventions from government to make up the unremitted charges by airlines,” Ojikutu said
He explained that if airport is not certified in compliance with the International Civil Aviation Organisation, (ICAO) standards, it becomes a risk to operators, therefore their insurance on their operations to the airport will be higher than those with certification. That explains why flight tickets from Lagos to London are higher than from Accra to London.
“There are investors waiting to grab the opportunity if government will be transparent about the offer. By the way, is Babalakin complaining about poor earnings from MM2? Government needs to be relieved of unnecessary spending on none aeronautical infrastructure like the terminal buildings, car parks, toll gates, car hires, among others. Government spends too much money on these than on runways and their lightings including fire and rescue services,” Ojikutu added.
The Lagos airport was certified by the Nigerian Civil Aviation Organisation (NCAA) under the standard and recommended practices of the International Civil Aviation Organisation (ICAO). The certification means that the airports has met the international standard of safety and security and the certification would last for three years and if any of the conditions that was met for the certification was breached, NCAA would nullify the certification.
However, stakeholders have expressed concerns that the basis of interest for investors on the planned concession is more than just the certification but also have to do with integrity of the government, in terms of their word and assessment of record as regards policy flip-flops.
They say the likely conditions for the success of the current exercise is only when government resolves all the lingering issues as well as tackle some of the regulatory and environmental challenges impacting negatively on doing business in the country.
“If government goes into this concession without resolving the other concessions, there will be a flurry of litigations. This needs to be fixed or dire consequences will follow.
“If Nigeria must get the best of investors, then they have to resolve the issues that are on ground, Harold Demuren, former Director-General of the Nigerian Civil Aviation Authority (NCAA), said.
Demuren asked that government engages the unions and be honest about it and provide them with facts and figure as well as ensure they do not make pronouncements and go back on them.
The federal government few years back entered an agreement with Bi-Courtney Aviation Services Limited operator of the Murtala Murhammed Airport Lagos, terminal 2, (MMA2), that while the concession lasted, MMA2 will be the only terminal solely in charge of operations of domestic flights.
