Why Stakeholders Worry Over Nigeria’s Airports Concession Despite Assurances Of Transparency, As Govt Issues Request For Prequalification

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Sen. Hadi Sirika, Nigeria’s Minister of Aviation

The Federal Government of Nigeria through the Ministry of Aviation in compliance with the Infrastructure Concession Regulatory Commission (ICRC) and National Policy on Public-Private Partnership (N4P) has released a request for qualification for the concession of four International Airport terminals and related services.

In the document signed by the Permanent Secretary, Federal Ministry of Aviation, Engr. Hassan Musa, the four major commercial airports; Nnamdi Azikiwe International Airport Abuja; Murtala Muhammed Internatıonal Aırport Lagos; Malam Amınu Kano Internatıonal Aırport and Portharcourt Internatıonal Aırport and surrounding communities are intended to develop into efficient, profitable, self-sustaining, commercial hubs which will create more jobs and develop local industries through a Public-Private Partnership (PPP) arrangement.

It explained that to be prequalified for consideration as a prospective PPP partner for the project, the prospective firms/consortia must have technical, operational and financial capability including related experience, evidence of financial capacity for such concession illustrated by a minimum net worth of NGN 30 billion, and letters of support from credible financial institutions in support of the consortium’s ability to manage and operate the Airports terminals.

A statement by the Director of Media and Public Affairs Ministry of Aviation, Dr. James Odaudu quoted the document saying: “The Federal Government of Nigeria (FGN) through the Ministry of Aviation is inviting bids from reputable Airport Developers/Operators/Financiers/Consortia for prequalification for the Concession of selected Airports Terminals under a Public-Private Partnership (PPP) arrangement.”

The document urged the interested international parties to partner with local firms in compliance with the requirements of the Federal Government of Nigeria local content development policy while submission of RFQs through electronic media will not be considered.

Furthermore, the Ministry of Aviation held a stakeholders’ meeting recently to present the concession process and receive inputs from the general public.

The Minster of Aviation, Sen. Hadi Sirika, said the Ministry has taken steps to ensure that there will be no job losses to personnel of the Federal Airports Authority of Nigeria (FAAN) while the concession is executed. According to him, the Ministry has secured the approval of and is working with the Infrastructure Concession & Regulatory Commission (ICRC) to ensure transparency and avoid the pitfalls that bedeviled previous airport concession in the aviation industry.

As part of strategies to ensure a successful concession project, Sen. Sirika stated that the airport terminal concession would rely on non-aeronautical sources to make revenue.

“The Nigerian Airport Concessions will be a Terminal Concession and majority of its revenue will be derived from Non Aeronautical sources,” he said.

According to him, “all other facilities at the airports and existing concessions outside the Airport Terminals will still be managed by FAAN.”

The Concessionaire will provide the investment required to upgrade the existing terminals, take over the new terminals and maintain them over a period of time to be determined based on financial assessment of each transaction, the Minister said.

Further, he said that “Passenger Service Charge and Security Charge will be shared by FAAN and the Concessionaire and FAAN’s share of the charges shall be paid directly to FAAN by IATA.”

He had emphasised the necessity of concessioning the airports, noting that “The Airports in Nigeria are currently operating in a suboptimal environment.”

As part of the Public-Private Partnership (PPP) programme now pursued by the Ministry of Aviation, Sen. Sirika said there is “urgent need of infrastructure investments and modernisation; and all Airports require investments in runway maintenance, navigation aids as well as terminal facilities”

He added that there is “relatively low asset utilisation due to the limited opening hours of other smaller Nigerian airports;” noting also the “lack of terminal capacity as the Airports fall short of gates, stands and check-in desks.”

Sen. Sirika also emphasised that “the Airports have not been designed as international hubs but operate separate international and domestic terminals,” stressing that “a private operator of the four main airports in the country will be able to operate the airports with an international standard and expand the facilities in accordance with traffic demand at each airport.”

Typically, minimum service levels for the Concessionaire to comply with will provide the Authority with a tool to set service standards for the operation of the terminals and secure a reliable high-level product.

He revealed that Infrata, Dentons, Proserve, Ciena, and Templars act as the Transaction Adviser to the Federal Ministry of Aviation.

However, key stakeholders including a former Minister of Aviation, Mr. Osita Chidoka, and a consultant in the industry, Mr. Tunde Fagbemi, raised issues over the concession strategy and the need to avoid disturbing challenges that engulfed previous airports concession in Nigeria.

Nnamdi Azikiwe International Airport, Abuja

Other stakeholders worried about the fate of airport workers and private security companies, given that the concessionaire would likely retain only the percentage of staffing it deems needed for its operation. They also questioned the processes and strategies so far on the concession, even though the Minister explained that stakeholders forum had been held a number of times previously, as he urged for more inputs from stakeholders as the process of the concession lasts.

The concessionaire will sign service level agreements with FAAN and NAMA to ensure that airport operates efficiently, the service level agreement will cover the Runway, Taxiway, Security and Air Traffic Management.

FAAN MD, Capt. Rabiu Yadudu

FAAN will be required to provide manpower through AVSEC for security of both the Airside and Landside, however the concessionaire will provide and maintain landside equipment but FAAN will continue to provide maintain Airside security equipment, he said.

Importantly, he said “all existing concessions within the Terminal concession will be inherited by the concessionaire and will be allowed to run its course before any review,” noting further that “tariffs will be regulated in accordance with the procedures set in the concession agreement.”

The ICRC, the Minister said, provides framework for the present concession programme, which was not existing during the Build Operate and Transfer (BoT) process of the Murtala Muhammed Airport 2 (MM2) terminal in Lagos. This protects the concessionaire, and the Nigerian people as owners of the airport facilities. The Director General of the ICRC, Mr. Michael Ohiani, and the the Managing Director of FAAN, Capt. Rabiu Yadudu, said the current airport concession process is transparent, and urged for constructive inputs from stakeholders to ensure the concession is successful and sustainable.

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