The skies too can go private

Government Proposes Lagos, Enugu, Abuja and Port Harcourt International Airports For Concessioning
Public enterprises were established to provide service and propel socio-economic development, as well as protect the economy against foreign domination and exploitation. But as lofty as this idea was, over the years, these outfits have failed to perform; and that informed the public enterprises reform, which was an integral part of the Structural Adjustment Programme (SAP) in 1986.

The Nigerian public sector growth was facilitated by indigenisation policy of 1972, which provided the much-needed legal basis for extensive government participation in the ownership and control of significant sectors of the economy.

But despite the impetus accorded public enterprises, many of them fell short of expectations, thereby creating disillusionment, occasioned by mismanagement, which consequently resulted in inefficient and unproductive use of capital, corruption and nepotism. The combination of all these factors weakened government’s ability to manage the enterprises efficiently. The public outcry that trailed this unfortunate development forced government to divest from some of the enterprises, paving the way for their privatisation.

Many enterprises have since fallen victim to the privatisation policy. They include, the Nigerian Telecommunication Ltd. (NITEL), The Nigerian Ports, National Insurance Corporation of Nigeria (NICON) and the Power Holdings Company of Nigeria (PHCN), which was sold to no fewer than 10 private electricity companies.

In spite of the sale and subsequent government financial support of the companies that came out of PHCN, the country is still battling darkness, while many companies and small businesses have closed shop because of high cost and absence of electricity.

At the ports, the Bureau of Public Enterprises (BPE) and Nigeria Ports Authority (NPA) have successfully executed 24 concession agreements and the terminal operators have since been taken over under ports reform programme, aimed at repositioning the sector into a modern and efficient one, capable of exploiting modern trade and sea freight opportunities.

Ten years down the line, however, the ports are still facing serious challenges; prompting stakeholders to initiate moves for a comprehensive review of the privatisation exercise.

Are you saying that someone in Kebbi won’t prefer flying to Abuja than driving for 10 hours? Or that someone in Jalingo wouldn’t want to come to Abuja by air? Are you saying that people in Benue wouldn’t want to avoid all the road traffic problems and fly into Abuja? These are the issues

The deregulation and liberalisation of the Telecoms industry appears the glaring sucess because of its positive impact on the economy. The economic benefits include the attraction of new investments, provision of needed infrastructure and creation of innovative services. All these are having a ripple effect on the other sectors.

The country, which previously couldn’t boast of 10 per cent telephone density, now has about 98 million subscribers plus multiple ancillary services. Today, the telecoms industry is adjudged to be worth over $32billion.

The privatisation train is still moving and has momentarily stopped at the aviation sector, where the government is planning to sell four airports, which include Murtala Muhammed Airport, Lagos; Nnamdi Azikiwe International Airport, Abuja; Aminu Kano International Airport, Kano and Port Harcourt International airport.

The Federal Government, through the minister of state for aviation, Hadi Sirika, recently disclosed plans to concession the four airports. Mismanagement could have prompted the Federal Government to consider privatisation.

Although air travel business is really lucrative in other parts of the world, the Nigerian Aviation industry with about 26 airports, contributes less than one per cent to the gross domestic product (GDP).

And though the last administration tried to remodel the airports, they are still not efficient and effective, forcing the new administration to seek the best way out.

While many stakeholders are opposed to the planned privatisation, others insist that government management of the facilities has left a sour taste in the mouths of airport users. They believe there is need to close the gap by embracing global trend, which has seen countries privatizing their airports for enhancing.

The protagonists of privatisation pointed to Murtala Muhammed Airport II (MMA2), Lagos, being currently run by Bi-Courtney as a good example of an efficient airport terminal, saying it remains the best-managed terminal in the country because of the ownership structure.

Former Managing Director of the Nigerian Airspace Management Agency (NAMA), Capt. Roland Iyayi and a former Director-General of the Nigeria Civil Aviation Authority (NCAA), Dr. Harold Demuren, lauded the idea of privatisation, describing it as “the best way to go.”

Iyayi told The Guardian all the airports, except three, are not viable, adding that their poor state could be linked to inefficient aviation regulatory agencies.

Iyayi, who is also the current Managing Director of Topbrass Aviation, said: “Today, we have 26 Federal Government owned airports in the country and out of these, only three: Lagos, Abuja and Port Harcourt account for 80.2 per cent of the total air travels. Somebody in the regulatory authority cannot ask the question: why this aberration? Is it normal to have well built and well equipped airports, and yet there is no service? Their usual response is that Lagos is the commercial capital, Port Harcourt the oil and gas capital, while Abuja is the seat of government. But they are all wrong.

“Are you saying that someone in Kebbi won’t prefer flying to Abuja than driving for 10 hours? Or that someone in Jalingo wouldn’t want to come to Abuja by air? Are you saying that people in Benue wouldn’t want to avoid all the road traffic problems and fly into Abuja? These are the issues.”

In his view, the current crises in the aviation sector are “the price we are paying for not doing the right things years back.”“Assuming the economy had been fully diversified, foreign earnings from other sectors would have been accruing to the government and of course, we may not have the need to go through this foreign exchange problems.

“My thinking is that this forex scarcity is a temporary thing, especially if government deregulates certain areas of the aviation sector such as airports concessioning. This will increase Foreign Direct Investment (FDI) and the reliance on forex for operations will reduce. We encourage government to concession key areas of the aviation industry,” Iyayi said.

On his part, Demuren said despite the hiccups experienced in the first case of Public Private Partnership (PPP), which birthed Murtala Muhammed Airport II (MMA2) terminal, the benefits cannot be quantified, when the airports are privatised.

Aviation consultant, Chris Aligbe, in an interview with media organisations, including The Guardian a few days ago, said the Federal Government must take a holistic look at the industry, in all ramifications, and not just the airports.

“None of our airports is world class, not even the Murtala Mohammed International Airport. Even the terminals the Chinese are helping to build are in reality just small terminals. They may not put us where we should be.

“If we want to be where we should be, we should immediately, in the next one or two years, concession our airports in order to develop them. The MMA2 being managed by Bi-Courtney is the only terminal worthy of mention in Nigeria,” he said.While some industry watchers commended the step, others said the plan was ill timed, especially as the privatisation plan is focusing on the four most viable airports in the country.

Publisher of Aviation Safety and Security magazine, Abdulhakeem Umar, advised government to jettison the idea of privatising airports.He said it would be wrong for government to concession only the viable airports, leaving the 17 non-viable ones that are dependent on the viable ones.

Said he: “It is totally wrong to concession airports because only four viable ones in Abuja, Lagos, Port Harcourt and Kano have been selected. What happens to the other 17 non-viable ones that depend largely on these four airports? Anybody buying the four airports should inherit the liabilities of the 17 non-viable ones.”

Umar advised government to improve the Yola, Jos, Akure and Makurdi airports by designating them as agro-airports to boost the evacuation of farm produce.

He alleged that the planned privatisation “is aimed at killing the Federal Airports Authority of Nigeria (FAAN) and sending workers into unemployment market, as was the case during the liquidation of Nigeria Airways”.

Umar called on Minister of State for Aviation, Hadi Sirika, an aviator, to take far-reaching decisions aimed at developing the aviation sector in the country. He also urged the minister to consult the Aviation Round Table (ART) team on the way forward by tapping from their wealth of experience.

The publisher would also want the total restructuring of the aviation sector to achieve development, that some management staff have no business in the sector.

President of Airlines Operators of Nigeria, Captain Nogie Megison, described as laudable the plan to privatise some airports, saying it was in line with global trend.

According to him, airports have been privatized globally, including Heathrow in London, as privately owned airports are better managed to contribute to their country’s gross domestic product (GDP).

Said he: “It is a good idea to sell the airports because government has no business being in business. Airports all over the world are privately managed, which accounts for their efficiency. We have an example in MMA2 and MMA International. While MMA2, which is local, is generating N3.5b annually, the whole of MMA International is generating N7b yearly. If you go behind the international airport, what you will see there will surprise you—leaking roofs, stinking toilets, malfunctioning escalators and a sewage system that is an eye sore. So, privatisation is the way to go, but they have to sit down with stakeholders to fashion the template for the exercise to be transparent. Whoever must buy them must have a good track record and must demonstrate the ability to do it. There must be no favouritism.”

That achieved, he believes the airports would become a hub and with time, become transit points for travellers. This will in turn promote tourism, create jobs and contribute substantially to the country’s GDP, as they would become alternative source of income for the country.

Megison, who drew The Guardian’s attention to the 2016 budget, said it has nothing for the aviation sector, despite the huge sum required to put in place necessary infrastructure at the airports.

“Government does not have money to spend on airport facilities. In this year’s budget, there is nothing to run the airports. The earlier we privatise the ports, the better. But how they do it is what matters.”

The National Union of Air Transport Employees (NUATE) has also expressed opposition to the planned concession of the four major airports. General Secretary, Nigeria Union Of Airport Transport Employees (NUATE), Mr. Olayinka Abioye said: “If government wants to commercialise any airport, our thinking is that they should not be those generating revenue. They should concession the airports in Akure, Ilorin, Ibadan, etc. The government may end up selling these airports to their friends, which is not good for the country.

“We think we should be changing to make Nigeria better, and not for some people to be engaged using the commonwealth for political patronage. What is needed at the airports is infrastructural overhaul and not privatisation.

“If you go inside Murtala Muhammad International Airport, you will see lots of deficiencies. There is incessant power cut. There are some facilities that would work in the morning and not work in the afternoon.”