‘We must review past agreements before concessioning airports’

The Federal Government has been urged to review past concession agreements and address its sticking points before giving airports out to new investors.
Besides, concerned stakeholders have also asked for a clear-cut master plan on airport concessioning; seeking details on aspects of the facilities that are for private investments.

The stakeholders that recently met at an aviation conference in Lagos said settling old scores and clarity on what to do with the airports will given confidence to new investors and ensure better bargain for the Federal Government.

Former Director of the Nigerian Civil Aviation Authority (NCAA), Engr. Harold Demuren, recalled that past efforts on concessioning have not yielded the desired result and lessons must be learnt in going forward.Demuren noted a classic case in government’s handling of the Nigerian airways and the plan to restructure the airline.

According to him, “They invited Virgin Atlantic, along with British Airways that has been here, and they started flying to London. A good one at that, so that they can come and work with us to develop Nigerian Airways. We agreed that they will operate from the International wing of the Lagos Airport. It was in the agreement and a minister signed it.

“Not far after, we had an unfortunate incident of fire consuming the domestic terminal. Federal Airports Authority of Nigeria (FAAN) wanted to build it but does have money. So, it was concessioned to Bi-Courtney Services Limited (BASL). In that agreement, it was said that all domestic flights will take off from that place. Another government of Nigeria signed that agreement.

“Another minister came and Arik Air came on board. Arik wanted to compete with Virgin Atlantic and decided to operate from the international wing. Government of Nigeria still went ahead to sign that agreement. So, one government of Nigeria signed three conflicting agreements. They ran into problem and told the operators to fix it. It means we don’t honour agreements and we cannot continue to operate this way,” he said.

Demuren added that not addressing the lingering problem will deter the best of investors from coming. And if they come, it would be clear that the risks are high for which they will price very low with meagre returns for the government. “It is my advice that all existing issues, litigations and agreements should be resumed and come to terms with concerned parties with the aim of resolving them. If we have a Build Operate and Transfer agreement with the Chinese company on Murtala Muhammed International Airport, they are still building and have not yet operated, how do you want to concession that? I don’t understand.”

Demuren stressed that the onus is on the government to come clear on the exactly what they are privatizing in an airport, citing that there are various sections that constitute the airport.“What are we privatising or concessioning? It is it even commercialising? Let’s be cleared. What part of FAAN are we concessioning? There are two parts; the airside and the land side. I’ve had the deputy speaker, Ekwemadu, mention five airports. So, we are not even sure whether it is four or five airports that we are concessioning. This is where problems come,” Demuren said.

Industry veteran and former President of Aviation Roundtable, Capt. Dele Ore harped on the need to follow the template for concession already established by the International Civil Aviation Organisation (ICAO) , which specifically defines the parameters for tenure, aspects of the airport to be handed out, who takes of the airport assets and other issues bordering welfare and fate of personnel.

Ore, who was the chairman of Airport Concession Committee of 2008, observed that all talks about concessioning will amount to nothing with political will to execute the plan.Chairman of Airline Operators of Nigeria, Capt. Nogie Meggison, observed that industry players were yet to get a template of the model to be adopted by government.

Meggison said as much as government needs airports to develop Nigeria into a hub, the question of what parts of the airports should be concessioned remains in the front burner.Convener of the conference and Chief Executive Officer, CheckInNigeria, Michael Chikeka, said the conference became imperative because of the avalanche of issues raised on the subject matter.

He noted that other areas of concerns hovers around the establishment of proper legal framework for concession, especially as it affects the binding threat between future administrations to existing agreements.Chikeka said: “Most industry analysts think that all these are issues that should be properly addressed and sorted out before inviting new concessionaires. The existing level playing field between government and current concessionaires will be important, hence the need for government to address all outstanding rancor, with a view to smoothening the agreement before embarking on new concessions .”

In his presentation, Prof. Pat Utomi, also raised concerns about values, inconsistency in existing concession agreements, which does not inspire investors’ confidence.Utomi said despite clamour for private capital to fund public assets, including airports, previous sour agreements with some concessions have not put the industry in good light.

He submitted that without transparency, corporate governance and adherence to legal agreements, the decision to go the way of concession may not be easily achieved.