Concession: Bitter-sweet lifeline for ailing aviation sector, as workers demand explanation
The planned concession of airports to the private sector by the Federal Government in order to ensure befitting infrastructural upgrade, and full utilisation of the facilities is not going down well with some 6,000 aviation workers, who risk losing current employment in the uncertainty that looms ahead. Though the self-interest sentiment might ring a little hollow, the issues raised against concession are indeed weighty, and such that cannot be wished away. WOLE OYEBADE reports that some stakeholders have the Federal Government’s back on this.
The Port Harcourt International Airport (PHIA) in Rivers State, connects the oil-rich Niger Delta region of the country to the rest of the world. In terms of traffic, it is the third busiest in the country after Murtala Muhammed Airport (MMA) in Lagos, and Nnamdi Azikiwe International Airport (NAIA), in Abuja.
However, PHIA not too long ago, earned an infamous reputation of what a modern international airport should not be, when a travel website, The Guide to Sleeping in Airports, rated it as the “world’s worst airport.”
In the survey, which took into account, over 200 international airports in the world, questionnaires were handed out to airport users, where their pulses were felt regarding customer service experience at airports they have visited. Customers’ verdict, and the consequent zero ranking of PHIA surprised only it managers, not stakeholders that perpetually saw the airport at its worst in the last couple of years.
Indeed, a brief tour of the airport can be quite revealing. Imagine an airfield amid several uncompleted buildings, and a few old ones that are either unpainted or with flaking walls.
On ground, officials are as laid-back as the facilities are non-functional. Air cooling systems, flight information display gadgets, communication facilities, Internet access, comfortable and secured seats for passengers, and conveniences that are taken for granted in airports around the world appear to be a luxury that PHIA cannot afford.
The fact that the current Minister of Transportation, Rotimi Amaechi, regularly uses the airport in the state, where he was governor for eight years, has done little or nothing to improve the fortunes of the airport.
Anastasia Odia, a resident of the state reckoned that the PHIA is indeed an eyesore and deserves a place in the sub-zero category of aerodromes in the world.
“It is quite unbelievable to say the least. The arrival lounge is a tent; a dirty one at that. I know we don’t have an airport to be proud of in this country, but the one in Port Harcourt is an embarrassment. Even war torn African countries don’t parade such,” Odia claimed.
Another air traveller, Bimpe Adesanya, has never used the Port Harcourt International Airport, but has used the MMIA, Lagos, and the NAIA, Abuja. But her verdict is that customer service experience is generally poor in the country’s airports.
Having lived a reasonable part of her life in England before recently returning to Nigeria, she said her experiences since arriving the country led her to draw the conclusion, having also arrived the country one of those days that the MMIA was in total darkness due to power outage.
She informed The Guardian how her heart skipped beats as the British Airways plane landed and taxied on the runway in darkness, stressing that in all her years of working with international organisations, and traveling round the world, she had never seen an airport in darkness in a country that is not at war.
Upon alighting from the craft, a battery of airport officials, armed with torchlights, shepherded them into a terminal building that could have been mistaken for an oven.
“It was terrible; a put-off to say the least,” Adesanya said, adding, “the heat that greeted us at the port of entry was blistering. I was covered in sweats but too perplexed to yank off my cardigan. And there we were for over an hour because every clearance, whatever it is worth in such circumstance, was done manually. It was hell! The confusion and chaos at the departure section, nearby, was out of the world.”
Adesanya would not have been surprised if she knew that the same website had earlier ranked MMIA and NAIA among the 10 worse airports in Africa.
The parlous state of PHIA and poor infrastructure at Lagos and Abuja airports, perhaps sums up the condition of airports in the country.
The Guardian understands that the ugly development is not for lack of heavy investment on the part of the Federal Government that owns and manages the 22 airports, through the Federal Airports Authority of Nigeria (FAAN). Four other airports in the country are owned by state governments.
The Goodluck Jonathan-led administration budgeted N500b to “remodel” all airports in the country and turn them to model facilities. The PHIA, for instance allegedly gulped about N4b, but it seems the mouthwatering sum left the airport worse than it met it.
The Argument For Concession
Apparently tired of the despicable state of airports in the country, the Muhammadu Buhari-led Federal Government last year rolled out a masterplan for the turnaround of the aviation industry at large. In the offing, especially, is the plan to concession the airports, starting with four of them.
Minister of Transportation, Amaechi, during a fact-finding tour of facilities and agencies at the Murtala Muhammed Airport, said the planned concession of the four airports was to guarantee efficiency and good management in view of dwindling resources from the government for infrastructural development in the aviation industry.
The minister also observed that the Domestic Terminal of Murtala Muhammed Airport II (MMA2) in Lagos, run by private hands, remains the best in the country, and an example of what to do with other airports.
Apparently in agreement with Amaechi, and leading the concession drive, Minister of State for Aviation, Hadi Sirika, said amidst the dwindling revenue accruing to the Federal Government, the best option on the cards, for now, is to concession the 22 airports, beginning with the big four in Lagos, Abuja, Port Harcourt and Kano.
Sirika noted that whereas the facilities were built several years ago when air traffic demands and operating airlines were marginal, years of neglect by successive administrations have left infrastructure in the sector unable to cope with rising contemporary demands.
He highlighted the gains of concession to include improved traffic from the current eight per cent of the population that travel by air.
“Nigeria is currently doing a total of five million passengers from Abuja and 15 million nationwide. But if we have the best airports, a very strong carrier out of the country, a very good leasing company to fund it, and a very good financing system to augment the insurance and give confidence, then we will have a new aviation sector
“Figures from the International Air Transport Association (IATA), International Civil Aviation Organisation (ICAO) and other experts, including the World Bank, show that the sector is growing at the rate of five per cent per annum, and doubling at every 15 years, but because the potential in Nigeria has not been harnessed, we are still behind. The fact is that the figures will quadruple, which means that from the onset, once these airports are in place and the carrier is flying, we will multiply 15 by four and that is 60 million passengers. That is what is waiting to be taped into with concessioning of our airports,” Sirika had said to get the buy-in of stakeholders.
Apparently impressed by the proposal, the Chairman House Committee on Privatisation, Senator Ben Murray-Bruce said it was high time the Federal Government hands-off the day-to-day running of the airports, in order to make them viable and profitable.
Bruce said the government’s interest in Nigeria’s air travel industry is most valid at a time the sector lacks most requisite infrastructure and almost at the verge of collapse. While the sector is also in dearth of needed managerial ability to make it profitable, he said, government also does not have the resources to transform the airports into world-class facilities befitting of the country.
He added that the country has a lot to gain from the concession of its airports, citing success stories both in passengers and revenues of British Airport Authority (BAA) and Heathrow Airport since they were privatised some years ago.
He explained that British Airports like the London Heathrow and London Gatwick Airport were struggling financially and sometimes ran at a loss before BAA was eventually privatised by the British government under the Airport Act of 1986.
In just three years after its privatisation, on July 16, 1987, passengers’ number at British airports increased by 42 per cent. BAA’s share price more than tripled, and profit increased by 132 per cent. As at the time of the privatisation, BAA was worth £1.2b. By the time it was valued in 2006, the value has multiplied by eight and now worth £10b, and has expanded beyond Britain to other European nations.
By the 1990s, Heathrow Airport had become the world’s busiest airport. By 2015, annual passenger traffic had increased from 40 million before it’s privatisation, to 75 million passengers, with an annual turnover of £2.77b.
Bruce said: “All the nations with thriving aviation industries and most successful airports are those that have privatised their aviation industries and the airports. Conversely, all nations that have troubled aviation industries and some of the worst airports in the world are nations that have not privatised their aviation industries and airports.
“I have a list of the worst airports in the world and they are in Afghanistan, Pakistan, Haiti, Venezuela, Uzbekistan, Nepal and Nigeria. The best airports in the world are in Qatar, Japan, United Kingdom, Switzerland, Hong Kong, North Korea and Singapore.
“Fact is that the government does not have the managerial operating capacity to manage airports of this day and age. The bureaucracy of the civil service is not conducive to the automation expected of an airport environment, under the best of circumstances.
“Furthermore, Nigeria needs to hands off airport and privatise them, or at the very least, concession them out to private sector managers with the experience and know-how to run these facilities in a business-like manner,” he said.
It was in the light of this equanimity between the executive and the legislative arms of government that the Federal Executive Council (FEC), recently okayed the big four airports for concession.
Workers Kick As Concession Threatens 6,000 Jobs
While other stakeholders have lauded the concession plans, aviation workers that ought to be on the same page with the Federal Government as far as efficient running of airports is concerned are not at home with the idea of concession.
The workers, under the aegis of Air Transport Service Senior Staff Association of Nigeria (ATSSSAN), National Union of Air Transport Employees (NUATE) and the National Union of Pensioners (NUP) prefer the status quo, as against the alleged job losses that awaits about 6, 000 of them if the airports are concessioned.
The unions recently issued the Federal Government, a 15-day ultimatum to suspend plans to concession the airports, stressing that failure to disband the Concession Transaction Advisors within 15 days will attract an industrial action, which would ground activities at airports nationwide.
They maintained that contrary to the anticipated gains of concession of the airports to investors, the move is against public interest and bound to fail with several unresolved issues around the airports.
As far as the planned concession is concerned, the Federal Government is yet to spell out in clear terms, sections of the airports that are for concession. This is one of the critical issues agitating the unions.
Currently, large portions of the landside of major airports in the country have already been concessioned by FAAN.
For instance, there is an existing $500 million loan deal partnership between Nigeria and the China Civil Engineering Construction Corporation Ltd (CCECC) to erect four new terminals, one for each of Lagos, Abuja, Port Harcourt and Kano.
Besides, toll plazas, advertisement spaces, parking lots, operations of the terminals among others are already under the control of one company or the other. In fact, over 300 of such agreements are in place, with some still pending in courts. At least, over 30 of the agreements are on airport cleaning services alone. And behind the agreements are companies allegedly owned by former ministers and top officials that have at one time or the other, served in the Aviation Ministry.
While some workers are wondering why least patronized airports were not used as test cases in the concession process, a top official of FAAN is deeply disturbed about what would happen to the workers once government has its way.
“What plans or arrangements does the government or the concessionaire has for us? We don’t know. If the Federal Government is yet to settle the pension of about 6, 000 ex-workers of defunct Nigeria Airways, what assurances do we have that FAAN workers will get their gratuities and pensions as at when due? That is why workers are against concession,” a top official in the authority said.
National Secretary of NUP, Emeka Njoku, is yet to have answers to his question, which borders on the rationale behind the planned concession of an organisation (FAAN) that can be self-sustaining.
Njoku said: “For the avoidance of doubt, we posit for the records, before the world, nagging issues and questions on our concerns, predicaments and expectations of what will become of FAAN, which has been able to sustain itself, albeit under very terrible conditions inflicted on it by government officials.
“What lies ahead of FAAN with members of staff totaling 6, 285 in 22 airports, and with pension for their retired colleagues totalling N4.1b and still counting?”
He further drew attention to about 64 concession litigations against FAAN that are still pending in various courts, arising from fraudulent operations, faulty and irregular agreements, negation/vitiation of agreements, failure to perform according to agreements and so on.
“How do we manage to clear all these cases, while the minister is busy planning the concession of our airports, albeit without regard to these existing legal issues? Actuarial valuation (liabilities) of the entire staff of FAAN stood at N120b as at 2015; with monthly salaries and pensions standing at almost N2b. Nothing is being said about these,” he said.
With most of these inquiries still unanswered by the government, the workers appeared to have braced up for a showdown with government last week.
According to the General Secretary of NUATE, Olayinka Abioye, the 15-day ultimatum was the unions’ last resort to force the government to stop current efforts or “fully involve us in the concession process.”
According to Abioye: “At the expiration of the 15 days ultimatum, we are going to shut down the industry. We want the minister to talk to us and share ideas with us on what they want to concession and how it will affect our members,” he said.
Just before the ultimatum expired, and as part of efforts to douse the tension, the Federal Government last Thursday parleyed with aggrieved aviation workers, and assured them that concession is in the best interest of all.
The government team, led by the Minister of Labour and Employment, Chris Ngige, and Sirika, reassured the workers that they would be involved in every stage of the process for the sake of transparency.
Furthermore, the National Assembly Joint Committee on Aviation last, Thursday, also met with the workers’ unions as part of efforts to douse tension. After listening to the unions, the committee disclosed plans to revisit the concession of MMA2, as part of measures to resolve the lingering face-off between the Federal Airports Authority of Nigeria and Bi-Courtney Aviation Service Limited (BASL).
The committee also promised to investigate the process that led to the emergence of the Technical Advisers for the concession plan of all 22 federal-owned airports nationwide.
Partnership Gone Sour At MMA2 As Albatross
Previous attempts by government to carry out concession agreements have not been beneficial, as they more often than not end up in series of litigations against FAAN.
A prime example here is the premiere Public Private Partnership (PPP) venture in the sector, which is the MMA2, Lagos, which was built and operated by Bi-Courtney Aviation Services Limited (BASL).
Abioye hinted that BASL already owes FAAN N2b, being debts on aviation security, management fee, fire and safety, marshalling services, electricity, rent, conference and hotel, among others.
“As these debts against BASL are yet to be settled in favour of FAAN, how then can we guarantee that the Federal Government, through our ministry will not unleash another monster on FAAN in the name of concession? Until matters such as this are resolved, aviation unions shall not rest on their oars and allow these shenanigans to continue,” Abioye said.
It would be recalled that the old domestic terminal (now MMA2), like all other terminals nationwide used to be managed by FAAN until fire razed it down in May 2000. Since the government of the day considered the cost of replacing the facility burdensome, it opted for private investors that could shoulder the weight under a PPP scheme.
That 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 the country.
After biddings were received, 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, with a lot of details shrouded in secrecy.
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 operates 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 almost since inception.
And this battle, unfortunately still ongoing, has been described as a low point, and a bad advertisement for the concession plan of the current administration. The tussle is for reasons not unconnected with monopoly of the Lagos domestic operations and years of concession on the agreement.
Part of the details, 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 years as is the case for most of such investments around the world, given the capital intensive nature of the venture.
BASL later sort to explore the 36-year concession window, to help it recoup the heavy investment that was described as “unprecedented” since the venture was first of its kind.
The Guardian gathered that though BASL had the sympathy and goodwill of the then governments (of Olusegun Obasanjo and later Umaru Yar’Adua), its landlord, FAAN, was far from being pleased with the arrangement.
For FAAN, BASL was riding on undue preferences, courtesy of friends within the government circle. While BASL maintains that the short-lived Yar’ Adua administration had approved the 36 years concession period, FAAN insists that the initial 10 to 15 years agreement was sacrosanct.
It was amidst the conflict that FAAN awarded the construction of General Aviation Terminal (GAT), Lagos, to rival operations of MMA2. This singular action contravened part of the BASL/FAAN agreement, especially the monopoly clause.
When tested at an arbitration panel and subsequently in law courts, even up to the Court of Appeal, the rulings were in favour of BASL, including the allocation of the GAT to BASL and the endorsement of 36 years concession period.
The Guardian learnt that there is a subsisting judgment of N132b in favour of Bi-Courtney, due to FAAN’s “illegal” operation of the GAT. This judgment was obtained in 2012, but still obeyed in the breach till date.
In responding to claims of indebtedness to FAAN by BASL, spokesperson of BASL, Steve Omolale, said Bi-Courtney is not indebted to FAAN. On the contrary, it is FAAN and the Federal Government that are indebted to Bi-Courtney for an amount now in excess of N200b.
According to Omolale: “N132b of this sum was confirmed by a court of competent jurisdiction in 2012 in the case of Bi-Courtney Ltd vs. AG Federation (FHC/ABJ/CS/50/2009).
Contrary to the clear provisions of the Concession Agreement, the Coordinating Committee set up by the Attorney-General of the Federation and the decision of the court of law, FAAN continues to operate the GAT, which belongs to Bi-Courtney, thus depriving BASL of over 50 per cent of its revenue. This is a very poor advertisement for any nation seeking to attract private capital for development.
“The unions are aware of this position, but have chosen to fabricate irresponsible falsehoods in a bid to discredit BASL and mislead the public. Fortunately, the public is more discerning. It is common knowledge that the aforementioned unions (NUATE, ATSSAN and NUP) actually challenged the concession agreement in court and lost the case in Appeal No. CA/A/141/M/2009,” he said.
Amidst the no love lost scenario between FAAN and BASL, concerned stakeholders say that the Federal Government should not pretend that the road leading to the MMA2 success story was not murky, irrespective of who has the fault – BASL or FAAN.
Instead of brickbats, stakeholders and lovers of concession have appealed for a peaceful resolution of the BASL/FAAN disagreement, so as not to set a dangerous precedence that will scare potential investors.
Former Director-General of the Nigerian Civil Aviation Authority (NCAA), Dr. Harold Demuren, said that the engagement of Bi-Courtney Limited by the government would in fact, be critical for the success of the planned airport concession.
Demuren said there was need for PPP in aviation as it is obvious that government cannot do it all, adding that with the experience of the MMA2, Lagos, government has not shown good faith.
“Such crisis in the MMA2 PPP must be resolved immediately, or else investors would not invest their resources in Nigeria.”
For industry consultant and the Chief Executive Officer (CEO) of Belujane Konsult, Chris Aligbe, government must put administrative and legal frameworks in place before embarking on another concession exercise.
Aligbe also acknowledged the important role of BASL in the concession process, stating: “Bi-Courtney has shown an example of how airport terminal could be effectively run with MMA2, even under unfair and uncertain political atmosphere and lack of regulatory laws to govern its concession.
“The terminal has epitomised just a little of what the private sector can infuse if given the chance to participate in airport infrastructure development and management,” he said.
Renowned aviation expert, Capt. Dele Ore, congratulated the minister for the initiative to continue engaging the stakeholders till all buy into the concession.
Ore reckoned that the concession was long overdue and the best option available at this time of economic challenges.
He urged the Federal Government and the concession delivery team to ensure detailed inventory of the airports and ensure transparency and public best interest in their processes to avoid controversies that are still trailing past concession exercises.
Turkish Investors And Security Concerns
Senior Special Assistant to the President on Media and Publicity, Garba Shehu, last weekend recounted the gains of President Muhammadu Buhari’s recent visit to Turkey. Among the “achievements” mentioned is the expression of interest by Turkish investors in the planned concession of some airports.
While stakeholders are applauding the interest of the international community in the multi-million dollar worth of investment to revive the aviation sector, they are also worried about the security implication of opening up indiscriminately, through the airports, to some countries.
Of specific concern is the antecedent of Turkey that has lately been embroiled in political unrest, as well as serving as a channel through which arms and ammunition were smuggled into the country.
While the Turkish authorities have denied having a hand in the arms-trafficking saga, aviation experts are wary of future transactions with investors with Turkish interests.
Group Capt. John Ojikutu (rtd) who expressed concerns, added that it is still early days yet to know the investors that would get what.
Ojikutu said from his conversation with Sirika and several huddles in the process, it is less likely that the wrong bidders will be able to grab a pie in the exercise.
He said: “Turks are not the only ones, but there are several of them that are interested. I’m as worried as you, no doubt about that. The National Assembly is also as worried. But I think, from what I’ve heard today, the minister too is very cautious with what he is doing. Just the way he handled the Abuja airport’s runway is the way he is handling this.
“From the look of things now, they have not left the level of getting the consultants of about three or four to package things together. When they get to that stage, there must be a stakeholders’ meeting and there would be. It is not only the concession, but also the national carrier, maintenance facility and aircraft leasing company that are being packaged.
“So, it is too early to start speculating because in any case, all these things will still have to go through commissions, and two or three more processes before going to the Federal Executive Council. But in lieu of the security concerns, I have advised them to focus concession on the terminals, cargo sections and car parks among others, but not the aeronautical side. ICAO has even warned African countries since 2009 not to concession aeronautical side in the light of security issues around us,” Ojikutu said.
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