Airport concession and lessons from power sector
Nigerians were scandalized early in April when videos emerged on social media of officials of the Murtala Muhammed International Airport, Ikeja – the nation’s preeminent gateway to the world – using the torchlight of their phones to chaperon stranded passengers across the darkened hallways of the airport.
Once again, the airport had lost its source of power and was plunged into darkness at the peak of departure formalities for thousands of travellers. Significantly, the departure lounge of the International Airport was the most affected by the blackout.
April’s incident would not be the first time the airport would lose power at the height of operations and repeated promises to address the challenge had gone unfulfilled. In his response to the latest outrage, the General Manager of the Federal Aviation Authority of Nigeria (FAAN), Capt. Rabiu Yadudu disclosed that the greatest challenge facing the authority is that some of the underground power cables are damaged and need total replacements because they were laid over 40 years ago.
In other words, there is not likely to be a respite from this periodic embarrassment without major reinvestment in the airport. It is also clear that the government is unable to provide the funds needed – especially as FAAN has never turned a profit in all its years of operating the nation’s airports and therefore lacks the resources needed for the upgrade.
If, indeed, there ever was needed a proof that government is a bad business manager, the poor state of the nation’s airports is it. From the cooling system through the toilets to even the conveyor belts, there is evidence of decay all over the airports and a pointer to the poor management of the facilities.
Yet, airports are important as the gateways that will open up the country for the development of tourism and investments. An airport that underwhelms is unlikely to give a first-time visitor confidence to invest his or her resources in the country.
Interestingly, an incoming passenger that just witnessed the inefficiencies of the International Airport is likely to be further confused by the rather modern and uber-efficient operations at the privately built and managed Murtala Muhammed Airport Terminal Two (MM2) under the management of Bi-Courtney Aviation Services Limited (BASL). That the two extremes in efficiency really co-exist within the same geographical space is one of the wonders of modern Nigeria. It is also a pointer to what private involvement in the management of the airports could achieve.
These, among other things, must have informed the well-received decision by the government to hand over the management of key airports in the nation to private operators by concessions, in the first phase, four airports. The airports are the Murtala Muhammad International Airport, Lagos; Nnamdi Azikiwe International Airport, Abuja; Aminu Kano International Airport, Kano; and the Port Harcourt International Airport.
BASL won the MM2 airport concession contract in 2003 and raised Nigeria’s domestic airport infrastructure to international standards with the MM2 project is designed and completed in 2007. Little wonder, then, that the smooth operations of the terminal, compared to others at the sprawling Lagos airport complex, was a major plank of defense of the government plan to concession the airports.
Towards the end of October last year, the federal government closed the prequalification phase for the concession of the four airports. In a document to advertise the aviation PPP plans and announce the request for bids, then Permanent Secretary at the Ministry of Aviation, Hassan Musa, said the concession is aimed at improving service delivery at the airports.
Although FG is keeping a tight lid on who the bidders are, media reports indicate that about 13 companies have shown interest in the process. BASL, fittingly, is reported to be one of them and appears poised to deploy its experience and resources to transform the MMIA if given the nod.
Another indigenous company that is reportedly participating in the prequalification phase is the Maevis Nigeria Limited, which had an aviation-related concession contract with the federal government, in the area of aeronautical and non-aeronautical revenue collection and the provision of equipment for airlines boarding cards, bag tags and other travel services at the Lagos and Abuja airports.
Some of the international firms that have reportedly shown interest in the process include operator of the Singapore’s Changi Airport, the Changi Airport Group (Singapore) Pte Ltd (CAG), which is wholly owned by the Singaporean government’s finance ministry; the operator of France’s Charles de Gaulle Airport, Groupe ADP; and operators of one of Ethiopia’s airports.
The Aviation Ministry has announced that it would conclude the process in the second quarter of 2022. But industry watchers are of the view that the concession of the MMA2 terminal in 2000 after a fire incident had made the terminal inoperable, presents good lessons for the ongoing process.
Sanderton Ventures Limited (SVL) won the bid, but due to its failure to meet the standard terms of the agreement, it had to relinquish the contract to second-placed BASL to redevelop the terminal. The federal government signed a Build, Operate and Transfer (BOT) agreement with BASL in 2003 and the terminal was commissioned some four years later.
But the partnership ended in the courts after the FG slashed BASL’s 36-year terminal management agreement to 10 years and stopped the second contract to run the General Aviation Terminal (GAT) of the domestic wing of the Lagos airport.
The question now is whether the federal government is an honest broker that will be transparent and fair enough to ensure that the most qualified bidders win the contract the very first time and that it was going to stick to the terms of the agreement throughout its duration, which the aviation minister says will last at least 20 years.
There is another reason to be cautious – and that is the mess that has become of the nation’s power sector after large parts of its operations were handed to private operators. In fact, a former Minister of Power, Raji Fashola scathingly proclaimed that the companies that bought the power assets neither had the resources to invest in their upgrades nor have the minimum managerial experience to make the assets work.
The result of this is the paralysis that has gripped the power supply in the country. Hopefully, the FG would be guided by this and avoid the mistake of handing over the airports to political players with little to no experience in the sector.
It is bad enough that we have to deal with a prostrate power sector. Engineering a similar outlook in the aviation sector would be a real tragedy – and something we can avoid.
Tijjani is a graduate student with an interest in privatization of public utilities.
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