Failed previous concession agreements are rekindling bitter memories among investors with concerns being raised about the sincerity of government in the current drive for the concession of four international airports, Lagos, Portharcourt, Abuja and Kano, BusinessDay investigations show.
Questions are being raised as to what has changed now that would guarantee that the Federal Government would not renege on terms of agreements as with previous exercises.
Stakeholders say that for best result this time, government should first resolve past and lingering issues because first impression goes a long way and would affect perception going forward.
Government should tackle some of the regulatory and environmental challenges impacting negatively on doing business in the country, the stakeholders add.
“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 further asked that government engages the unions and be honest about it and provide them with facts and figures, as well as ensure they do not make pronouncements and go back on them.
Pat Utomi, management expert and professor of political economics, said one of the biggest threats in the business environment in Nigeria is regulatory risk, adding that government and airline operators need to understand the importance of boundary setting and following rules.
“The business environment in Nigeria is full of uncertainties and people have the tendency of calculating the risks involved before making business decisions. We need to create a context in which regulators can protect the interest of consumers and stakeholders in order to create a more enabling environment that yields consistent human progress.” Utomi added.
He further observed that regulators and operators need to grow the aviation sector by ensuring that property rights are respected.
BusinessDay checks show that in the past, the Federal Government had signed some agreements with investors, only to failed to abide by the terms of contract.
The Federal Government a 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 would be the only terminal from which domestic operations flights would be conducted.
However, the Federal Government failed to comply with the agreement, by building an alternative terminal, which is the General Aviation Terminal (GAT) for domestic flights to land and take-off, while the concession was still effective.
Wale Babalakin, chairman of Bi-Courtney Aviation Services Limited, has said that dwindling clientele at the MMA2 terminal was as a result of the non-compliance of government with the terms of the concession agreement.
Babalakin said the implication of that conduct was that most of the organisations doing business at the terminal withdrew because their financial projections could not be captured by the available passenger traffic at the terminal.
He also pointed out that the financial institutions where the funds for the construction were sourced have shown considerable understanding over the slow repayment of the loans, which they realise stems from dwindling revenues at the terminal.
“The new facility, built in 11 months, with about N648 million has the capacity to handle at least 2.8 million passengers annually, 1,500 passengers at peak periods per hour and can handle at least ten aircraft at a time,” George Uriesi, former managing director, Federal Airports Authority of Nigeria’s (FAAN) said.
This presents a clear competition to Murtala Muhammed Airport 2 (MMA2) operated by Bi-Courtney Aviation Services Limited (BASL), a neighbour to MMA1.
Arik Air, the biggest carrier in Nigeria and Overland Airlines, operate in MMA1, a situation Bi-Courtney sees as being against the spirit of the agreement it reached with the Federal Government in 2003.
Bi-Courtney insists that based on the agreement, it has exclusive rights to operate scheduled local flights in Lagos and that the MMA1 also belongs to it thus; the Federal Government should hands off claims to MMA1.
FAAN had on October 31, 2007 entered into agreement with Maevis Limited, to provide an integrated Airport Operations Management System, (AOMS) for FAAN.
According to FAAN, after listening to both sides and reviewing the terms of agreement, the Senate Committee on Aviation gave FAAN the approval to dispense with the services of Maevis Ltd since it was not adding value to FAAN’s revenue profile.
Akin Olukunle, former general manager, Public Affairs, FAAN, insisted that billions of naira that should have gone to the coffers of FAAN were still not accounted for.
Wale Soneye, head, general services, Maevis, Southwest Nigeria, insisted that the company never withheld funds meant for FAAN and that its platform could not be accessed to by both parties.
Soneye said that since the concessionaire commenced the automation of charges in 2008, revenue of the agency had increased from what it used to be. He did not give figures to back up his claims.
Chris Aligbe, industry expert and CEO of Belujane Concept, said that for concessions to be successful in Nigeria, they must follow strict legal and legislative frameworks to avoid the kind of controversy being witnessed in the case of Bicourtney.
“Before you concession, there must be a legal frame and it must go through the National Assembly and have fundamental law that would guide the concessioning.
“If we take the flagship in concession, which is Bi-Courtney; it is sitting on a void legislative framework. Nigeria has not established frameworks for concessioning that is why the National Assembly becomes critical on this issue to establish the frameworks so that all the concessioning will sit on this framework,” Aligbe added.
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