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‘18 unviable airports account for N65 billion revenue shortfall’

By Wole Oyebade
07 October 2020   |   4:28 am
The Federal Airports Authority of Nigeria (FAAN), has blamed unviable airports scattered nationwide for its poor earnings and revenue shortfall over the years, now in excess of N65 billion.

• FAAN remits N8.7 billion in six years

The Federal Airports Authority of Nigeria (FAAN), has blamed unviable airports scattered nationwide for its poor earnings and revenue shortfall over the years, now in excess of N65 billion.
Management of FAAN, while appearing before the House of Representatives’ Committee on Finance, in Abuja, reaffirmed that a total of 18 out of the 22 airports under its operations are unviable.
The Guardian earlier reported that at least 17 of the 20 airports owned and managed by the Federal Government were unviable and operated at losses for three years on the bounce.

Except the trio of Murtala Muhammed International Airport (MMIA), Lagos, Nnamdi Azikiwe International Airport (NAIA), Abuja, and Port Harcourt International Airport (PHIA), Rivers State, none of the other 17 airports has sufficient revenue to cover the cost of operations alone.
Investigations showed that additional funding from high-traffic Lagos and Abuja airports’ excess revenue to the tune of N26.1 billion cushioned the operational cost deficits incurred by the unviable airports in 2017, 2018 and 2019.
Chairman of the House of Representatives Committee on Finance, James Faleke, at the inquiry session demanded the rationale for a total of N65 billion shortfalls in the revenue expected from FAAN cumulatively for the past six years.
Faleke said such revenue shortfalls, as against the Finance Ministry’s expectations, had been responsible for the abysmally low budget performance by the Federal Government.
The lawmaker, who chronicled government’s revenue expectations from FAAN since 2014, observed that the agency had not even been able to meet at least 25 per cent of the projections, which meant that government intentions to provide amenities to the public would also be made impossible due to the default in remittance.
While the government was expecting total remittances of N74.325 billion from FAAN between 2014 and 2019, only a sum of N8.865 billion was remitted.
Faleke reminded the management of the extant laws on financial regulations and revenue management, which he alleged that FAAN had consistently breached with impunity, noting that the public finance revenue management law only allows government businesses to retain 25 per cent of revenue.
In his defence, the Managing Director of FAAN, Capt. Rabiu Yadudu, said the special protocols in making airports comply with recommended standards, imposed a duty on the management to often make prompt reinvestment into the airports by way of upgrade, maintenance and repairs in making the airports serviceable at all times and at the different seasons.
Yadudu said those challenges requiring urgent compliance to international standards and recommended best practices made it a little difficult to exclusively remit revenue ahead.
“FAAN is subsidising 18 airports that are not viable to keep them operational. It’s either we compromise on standards or comply with remittances,” he said.
FAAN owns and manages all the public airports on behalf of the Federal Government. Among them are 20 that are directly owned by the Federal Government, and four state-owned airports.
A fact-sheet of revenue and expenditure of the 20 federal airports and FAAN Headquarters in the last three years, obtained by The Guardian, showed huge revenue shortfalls and deficits across the board.
For instance, the Kaduna International Airport that was upgraded during the 2017 closure of Abuja airport has in the last three years pooled a total of N1.027 billion in generated revenue. Of the sum, N716.7 million was collected. However, the expenditure was in excess of N4.41 billion, leaving a deficit of N3.69 billion.
The Mallam Aminu Kano International Airport, Kano, did not fare better. The airport in 2017, 2018 and 2019 pooled a total of N8.28 billion in generated revenue. Collected was N7.16 billion. Its expenditure was a total of N9.6 billion, leaving a shortfall of N2.44 billion.
The Kastina Airport managed to rake in a total of N250.8 million in generated revenue in three years, out of which only N42.1 million was collected. Its cost of operations was, however, put at N1.58 billion, leaving a deficit balance of N1.54 billion.

Similarly, Sokoto Airport had a total of N725.7 million generated revenue, out of which N400.1 million was collected. The cost of operation was in excess of N2.71 billion, which gave a shortage of N2.31 billion.

In the South, Ibadan airport in three years raked in a total of N349.2 million in generated revenue. N244.9 million was collected. Expenditure amounts to N1.39 billion and deficit totalled N1.14 billion.
Ilorin International Airport made a total of N437.1 million generated revenue in three years. A total of N264.2 million was collected. Expenditure was in excess of N2.453 billion, giving a shortfall of N2.19 billion.
Having listened to the defense by FAAN MD, the legislators still insisted in casting a glance at the financial records of FAAN, especially on its revenue and expenditures, to be able to appreciate whatever the compelling reason for not meeting up with remittance targets.
Yadudu and his Finance and Accounts crew are expected in the hallowed chamber of the lower house, in a fortnight to shed more light on the contentious issue.