Lifeline for BASL, FAAN in MMA2 concession saga

Murtala Muhammed Airport II

Infrastructure Concession Regulatory Commission (ICRC) this week intervened in the Murtala Muhammed Airport II (MMA2) concession controversy, in an approach that may eventually resolve it for mutual benefit. WOLE OYEBADE reports.

A new ray of hope shined brightly on Murtala Muhammed Airport terminal two (MMA2) in Lagos some days ago when the most crucial meeting, as far as the facility is concerned, was summoned and midwifed by the Infrastructure Concession Regulatory Commission (ICRC).
 
The agenda was clear: towards resolving the protracted face-off between Bi-Courtney Aviation Services Limited (BASL) that built and manages the terminal, and their landlord, the Federal Airports Authority of Nigeria (FAAN).

 
The dispute, which is as old as the terminal operated, is an ill-wind that blows none of the parties any good, including the Federal Government for whom the case has become an albatross in the bid to woo both foreign and local investors to the concession agenda of most airports nationwide. So, the earlier the dispute is settled and all parties get on the same page like good partners, the better for the aviation community and national interest.
 
It will be recalled that the old domestic terminal (now MMA2), like all other terminals nationwide, used to be managed by FAAN until fire razed it in May 2000.

Government of the day considered the cost of replacing the facility too burdensome, and opted for private investors that could shoulder the weight under a Public-Private Partnership scheme.
 
The plan completely transferred all development and operating risks to the private sector, specifically on a Build-Operate-Transfer (BOT) arrangement. The venture is first of its kind in Nigeria. Biddings were received and the lot eventually fell on Bi-Courtney Limited, a wholly indigenous conglomerate and the parent company of Bi-Courtney Aviation Services Limited (BASL). The contract was awarded in 2003.
 
From equity of the owners/proprietor and loans from six banks, the terminal was completed and commenced operations on May 7, 2007. While the domestic terminal seamlessly ran better than international airports in the country and remains a pride of both friends and foes, it has also been a subject of serious legal tussle between BASL and FAAN/FG.

The tussle is for reasons not unconnected with monopoly of the Lagos domestic operations, and years of concession on the agreement. Part of the contentious issues, initially undisclosed, is that BASL will operate the facility, as the sole domestic terminal in Lagos for a period of 10 to 15 years; with addendum for extension to 36 year as is the case for most of such investments around the world, given the huge capital intensive nature of the venture.

Apparently in disagreement with the 36 years claim, FAAN went on to build the General Aviation Terminal (GAT) to rival MMA2, contrary to the earlier agreement, especially the monopoly clause.
 
When tested at an Arbitration Panel and law courts, up to the Court of Appeal, the rulings were in favour of BASL, including the award of the GAT to BASL, and the endorsement of 36 years concession period.
 
The Guardian learnt that there is a subsisting judgment of N132 billion in favour of Bi-Courtney, due to FAAN’s “illegal” operation of the GAT. This judgment was obtained in 2012 but still not obeyed till date.
 
The current administration, as much as stakeholders are demanding, has at several fora pledged to have the faceoff resolved. The logic is that of reassuring prospective investors the government is able and ready to honour agreements, coupled with amicable resolution of disputes when they occur.
 
So, the latest intervention by ICRC was a welcome development. The team, led by the Acting Director-General of the commission, Chidi Iwuzah, brought the managements of FAAN and BASL to a roundtable, where both listed the areas of disagreements in the MMA2 concession agreement freely entered.  
 
Although tempers rose occasionally at the meeting, Iwuzah brought the situation under control, saying “we are not here to fight or exchange words with each other, but to listen to both parties and see how we can resolve all the issues amicably without involving the judiciary again”.
 
Chairman of the Resort Group, Dr. Wale Babalakin (SAN), alleged that FAAN had sold several misconceptions about MMA2 to the public, among which is that the concession agreement was drawn by BASL and only brought to the Authority to sign, coupled with non-compliance with due process.

Babalakin dismissed the claims and even blamed FAAN for flouting orders with impunity. He noted that all the arbitrary decisions and various court judgments, even up to the Supreme Court, which were in favour of BASL, were not obeyed by FAAN. This, to him, is discouraging to the private sector, “which is the only sector with the energy to provide infrastructure in the country”.
 
Also for mention is the investments BASL had lost in the process of executing the MMA2 concession, which was put at 50 per cent revenue loss on account of FAAN’s rival operations of GAT. The facility is currently underutilised due to non-approval of its regional flight operations for which millions of dollars were been invested.

According to Babalakin, over N500 million was used in clearing the GAT and building a dumpsite for disused aircraft that erstwhile littered the aerodrome; millions spent on building fire hydrant and underground fuel tank and the over N4.7 billion used in building a link road between MMA2 and GAT, among others.   
 
According to him, the immediate past Aviation Minister, Osita Chidoka, directed that these monies be refunded to Bi-Courtney after series of meetings between FAAN and BASL, but FAAN has continued to ignore the directive till date.
 
On the abandoned Four-Star Hotel and Conference Centre projects, Babalakin said, “we are ready to finish the two projects but we are completely scared of FAAN because of its antecedents.”

“For example, we spent $2 million to buy tiles and another $1.2 million to airlift them for the projects, only for FAAN to frustrate us.”

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