How not to privatise Nigerian airports, by stakeholders

Murtala Muhammed Airport II (MMA2), under the watch of Bi-Courtney Aviation Services Limited, is a good example of why airports in the country should be privatised for viability. However, stakeholders are unanimous that the airport is also a case study of how not to go about privatisation. WOLE OYEBADE reports.

A travel website, The Guide to Sleeping in Airports, last year rated the Port Harcourt aerodrome as the “world’s worst airport”. Lagos and Abuja international airfields were also named among the 10 worst airports in Africa.

Stakeholders, except the managing authorities, attested that the airport experience in Nigeria indeed falls short of what such facilities are known for around the world.

The website and stakeholders’ assessment was actually concentrated on only four international airports (Abuja, Lagos, Kano and Port Harcourt) among 26 others nationwide that are more or less a no-no in matters of taste and efficient services.

Since 1999, the Federal Government and the Federal Airports Authority (FAAN) have not been miserly in awarding billions of naira worth of contracts for “remodeling” the airports. But the end result has never justified the cost.

It, however, came as a significant step when the current administration declared that the four international airports, like apples among oranges, would be given to private investors to manage on behalf of the government.

Minister of Transportation, Rotimi Amaechi, during a fact-finding tour of facilities and agencies at the Murtala Muhammed Airport, said that 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 Murtala Muhammed Airport II (MMA2) domestic terminal in Lagos, run by private hands, remains the best in the country and an example of what to do with other airports.

Unsway by dissenting voices from some quarters, Minister of State for Aviation, Hadi Sirika, and company, took further steps at Nigeria’s trade and investment road show in the United Kingdom (UK) some weeks ago, to woo foreign investors.

Just like the ruling party sold the Lagos success story to gain acceptance at the last election, the ministers advertised the MMA2 success to the outside world.

The terminal is indeed a success, but at what cost?

It would be recalled that the old domestic terminal (now MMA2), like all other termina nationwide used to be managed by FAAN until fire razed it May 2000.

Government of the day considered the cost of replacing the facility as too big a burden, 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, with a lot of the 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 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 almost since inception.

And this battle, unfortunately still ongoing, has been described as a low point and a bad advertisement for the privatisation 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 such investments around the world, given the huge capital intensive nature of the venture.

BASL had later sort to explore the 36-year concession window, to help the investors 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 (Obasanjo and later Yar’Adua-leds), it was not the same with their landlord, FAAN.

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 insisted 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 MMA2 and contravene part of the BASL/FAAN 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 allocation 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.

Amidst the no love lost scenario between FAAN and BASL, concerned stakeholders have said that the Federal Government and Sirika should not pretend that the road leading to the MMA2 success story was not mucky, irrespective of who has the fault – BASL or FAAN.

The stakeholders and lovers of privatisation appealed for resolution of the disagreement, so as not to set a dangerous precedence.

Former Director-General of the Nigerian Civil Aviation Authority (NCAA), Dr. Harold Demuren, recently at a forum in Abuja 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 that there was need for PPP in aviation as it is obvious that government cannot do it all.

He said with the experience of the MMA2, Lagos, government has not shown good faith.

He added that, “such crisis in the MMA2 PPP must be resolved immediately, or else investors would not invest their resources in the 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

Journalist and expert in the aviation sector, Wole Shadare, agreed with the likes of Demuren and Aligbe on what to do.

Shadare said while he was not unaware of haters of privatisation, it remains the best alternative to transforming the sector.

But in doing so, he called for “political solution” to the BASL/FAAN filthy lucre, adding that leaving it unresolved is an ill wind that does no one good.

He said: “Political solution is needed now. BASL will continue to win but will FAAN implement the rulings?

“I’m a big supporter of privatisation because government has no business in business. In government-managed facilities, every one just collects salary and goes away. In the private sector, there is value for money. That is why there is comfort, efficiency, security and so on at the MMA2. And that is what airports should look like. For me, there is no problem with privatisation if it is transparent, fair and for good services,” Shadare said.