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Sweet-bitter taste of PPP projects in Nigeria

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Uche Orji, CEO, Nigeria Sovereign Investment Authority (NSIA)


The major evolving economic policy suitable to fast-track infrastructure development of countries in the world today is the Public-Private Partnership (PPP). This policy has been adopted and put into effective use by many countries, leading to a massive leap in quality infrastructure availability. However, Nigeria has not fully embraced PPP despite its enormous benefits. In fact, the Managing Director, Nigerian Sovereign Wealth Investment Authority (NSWIA), Mr. Uche Orji, told a public hearing organised by members of the House Committee on Works that the country requires $35billion yearly over the next six or seven years to bridge its massive infrastructure gap. But, the simple question is, where does the government alone get this kind of humungous amount from with the current parlous state of the economy? The answer is simple: through PPP.

However, despite the fact that the private sector in the country has consistently demonstrated its readiness to partner with the government to tackle its many infrastructure challenges, deliberate efforts have been made by government officials to frustrate such patriotic gestures. This much was confirmed at last year’s Quarter Three Edition of Aviation Round Table (ART) by no other persons than the Minister of Information, Culture and Tourism, Alhaji Lai Muhammed and the Chairman, Resort Group, Dr. Wale Babalakin (SAN), who identified the major problems militating against private investment in Nigeria as inadequate education among government officials about the issues in PPP, lack of legal framework, inconsistent government policies and failure to honour agreements validly entered into, among others.
According to them, until these problems are resolved, there would always be dearth of the expected direct investments, both locally and internationally, which are needed to bring the country’s economy out of the woods. The two prominent Nigerians should know better, because while one is a minister of the Federal Republic, the other is a leading private investor, who is experiencing the worst form of hostility in the hands of government officials over his investments in some sectors of the economy.

However, despite the gloom and the needless controversies surrounding successive PPP projects in Nigeria, one that has really demonstrated the resilience of the private sector is the Murtala Muhammed Airport Terminal Two, popularly referred to as MMA2, operated by Bi-Courtney Aviation Services Limited (BASL), a member of the Resort Group. The large number of awards BASL had garnered with MMA2 over the last 10 years, the latest being the Independent Newspapers’ Outstanding Aviation Terminal Operator of the Year 2017, is a clear manifestation of the way the private sector can deliver efficient services, if allowed to flourish. This much was attested to by Muhammed when he said at the same ART forum: “If MMA2 is a mistake, it is a good mistake and I want that kind of mistake replicated all over Nigeria”. But, will vested interests who believe their illegal means of livelihood are being blocked by the private investors allow such a “mistake” to be replicated, for instance?

In its letter to Babalakin, announcing his nomination for the prestigious award, the Managing Director/Editor-in-Chief, Independent Newspapers Limited, Mr. Ade Ogidan had said, “We note that through your company, Bi-Courtney Limited, you applied for the concessioning of the Lagos Domestic Airport, the Murtala Muhammed Airport 2, after the airport was razed by fire. Indeed, nobody gave the project a chance as it was considered too cumbersome for the capacity of a private investor. However, within three years of the concessioning and in the face of serious hostility and inconsistency on the part of the government, Bi-Courtney Limited completed the new domestic airport, which is now famously known as MMA2.

“This airport terminal has been variously described as the best in Nigeria today and certainly the first airport terminal to be built in Africa with private funds without any support from the government. The terminal, constructed under the Build, operate and Transfer (BOT) agreement with the government is acclaimed to be the most modern, functional and well-run domestic terminal in sub-Saharan Africa.”

Besides, the Nigerian Aviation Awards (NIGAV), arguably the most prestigious in the aviation industry, has also announced MMA2 as the Most Functional Airport Terminal of the Year 2017. This is the second straight year that the terminal would win the award, which is to be presented on Saturday, March 24, this year, in Lagos. It had won the same award last year. This is apart from streams of regular commendations from users of the terminal from time to time. Even the most critical stakeholders agree that the awards and commendations are well deserved, although they are not coming on a platter of gold. They are as a result of 75 per cent of deep thinking/planning and 25 per cent of implementation and that is what a serious private investor does. But that is where the sweet story ends.

The bitter aspect is that for the past 10 years that MMA2 has been in existence, it has been a rough ride. Despite losing 50 per cent of its revenue through the General Aviation Terminal (GAT), which is part of its 36 years concession by virtue of the Exclusivity Clause in the concession agreement, BASL has continued to squeeze water out of the rock to sustain MMA2 with the provision of excellent services, by ensuring that no single total blackout at the terminal in over 10 years, by providing seamless passenger facilitation, by keeping the environment around the terminal clean and by making sure all it does there meet international standards. No airport terminal in the whole country offers such excellent services.  

In fact, the Acting Director-General of Infrastructure Concession Regulatory Commission, Mr. Chidi Iwuzah, had during the monitoring visit of the commission to MMA2 in January praised BASL “for the efforts made so far in ensuring MMA2 lives up to its status as a model PPP aviation terminal. We therefore want to encourage you to continue to do more and ensure efficient service delivery to Nigerians and foreigners alike”, adding that the commission would resolve all the issues surrounding its concession, which were deliberately created to frustrate it.

The challenges earlier enumerated above, such as lack of a clear understanding of the issues involved in PPP by government officials, the propensity to jettison agreements validly entered into and introduce sentiments instead, selfish interests rather than national interest, refusal to obey court orders, lack of legal framework and inconsistent government policies, among several others, are the sordid experiences many private investors have had to contend with; all this produce the bitter taste of PPP in Nigeria, which must change if we are desirous of closing the wide infrastructure gap.

Indeed, it is not like this in other climes. Many countries in Europe and America have since embraced PPP, and they are better for it today. Many developing countries are also embracing the model because of its numerous advantages. In fact, the Jamaican government published the initial PPP Policy documents, popularly called PPP3, in 2012, which has led to the government divesting its large interests from the Sangster International Airport, Highway 2000, and the government-owned sugar factories and estates.

Besides, a Nigerian, Adebayo Ogunlesi, who owns Global Infrastructure Partners (GIP), a private-equity firm, operates the London Gatwick Airport today, and the British Government has given him full cooperation to operate freely. GIP, which manages about $18.7 billion, led the acquisition of Gatwick Airport Limited and had a stake in Australia’s Port of Brisbane. In India, despite opposition from the country’s Airports Authority Employees Union (AAEU), the government is going ahead with the privatisation of four more airports, including Chennai, Kolkata, Jaipur and Ahmedabad.

Although the Nigerian government has begun the process of concessioning four of its major airports to private investors, a move being resisted in some quarters by some interests, observers are waiting to see how this plays out without the usual attendant controversies in PPP projects in the country, which always arise as a result on insincerity on the part of the government. Such controversies can only perpetually keep the country’s infrastructure in the quagmire of decay and embarrassing dereliction.
 • Omolale is the Head, Corporate Communications, BASL.

 


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