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Concessioning of four airports, BASL and right of first refusal

By Kamal Ololade Ahmed
05 November 2021   |   1:53 am
Nigeria’s quest towards the Concessioning of four international airports took a leap forward on Monday, October 25th, 2021 with the coming to a close of the deadline given to interested investors and stakeholders to file in their Request for Qualifications (RfQ). The deadline expired at 15:00HRS Nigerian Local Time that day, setting the stage for…

Murtala Muhammed Airport Terminal II, Lagos

Nigeria’s quest towards the Concessioning of four international airports took a leap forward on Monday, October 25th, 2021 with the coming to a close of the deadline given to interested investors and stakeholders to file in their Request for Qualifications (RfQ).

The deadline expired at 15:00HRS Nigerian Local Time that day, setting the stage for the next phase of the Nigeria Airport Concessions Programme (NACP) – the Request For Proposal (RFP) – which the Federal Ministry of Aviation said shall be published and sent directly to qualified bidders for their response.

The airports slated for Concessioning are Murtala Muhammed International Airport Lagos, Abuja, Port Harcourt International Airport, Mallam Aminu Kano International Airport, Kano, and Nnamdi Azikiwe International Airport, Abuja.

Those airports, like the others being managed by the Federal Government have continued to operate at sub-optimal levels despite huge investments on them from the public till. They are not just in bad shapes, they are also cesspool of corruption and centres of extortion of passengers, including foreigners who have on a number of occasions rated Nigeria as very corrupt on account of their bitter experiences at the nation’s points of entry and exit.

The ongoing Concessioning programme is not coming from the blues as Nigeria’s first shot at airport concession was in year 2000 when the Federal Ministry of Aviation, through the Federal Airport Authority (FAAN) invited eligible companies to send in tenders for the construction of a new domestic Terminal in Lagos. The call for tender followed the fire incident of 10th May 2000 at the domestic terminal of the Murtala Muhammed Airport (MMA), Lagos which completely paralyzed further aviation operations at the terminal.

Among the companies that submitted bids were Sanderton Ventures Limited (SVL) and Bi-Courtney Aviation Services Limited (BASL). SVL eventually won the bid while BASL which came second became the reserved bidder. The winner could not however meet up with the terms, thus the Federal Government of Nigeria and BASL on 24th April 2003 executed a Concession Agreement for the redevelopment of the airport terminal.

It was a Build, Operate and Transfer (BOT) agreement and the new Terminal, tagged MMA2 which was commissioned on 7th April 2007 by the then president Olusegun Obasanjo became operational on 7th May 2007 and has since redefined the Nigerian Aviation industry. MMA2, a baby of Dr. Wale Babalakin SAN, lawyer and infrastructure developer has consistently won the laurels of being the best managed airport Terminal in the country.

Anytime he speaks on MMA2, Babalakin always recall that the design he was given by government to construct was “a shed.” He would add that the turning point came during one of his visits to South Africa and he discovered that the South African Government was equally constructing a new domestic terminal for the country and he decided to replicate the same facility in Nigeria.

He told aviation correspondents at a recent event in Lagos that his patriotism for Nigeria made him enhance the capacity of the terminal to what it is right now and added that he has plans to improve it in the future. Indeed, the efficiency of running the Terminal and its ambience compared to the decrepit publicly managed airports are reasons being put forward by even the Federal Government to justify the ongoing Concessioning programme of the four international airports.

It is a result of this display of competence that many critical stakeholders feel that BASL should enjoy right of first refusal in at least one of the four international airports up for Concessioning. This is moreso as Clause 2.2(b) Concession Agreement in part stated that “Provided that the Concessionaire shall have a right of first refusal in the event that passenger traffic during the Concession Period necessitates an expansion of the Terminal and the first right of consideration if the grantor elects to build a new domestic terminal in Lagos State.”

Experts also hold the position that based on the experience of successes and failures of concession contracts, government should adopt the Balanced Concession Model in the case of the four international airports under consideration. The model, among others prescribes that “The selection of concessionaires should be based on a balanced scorecard approach and not on the financial evaluation alone.”

As it stands today, no other indigenous company has the pedigree of BASL in Airport Terminal management in Nigeria. Governments the world over give preference to tried and tested indigenous companies in matters such as the one the Aviation Ministry is currently midwifing.

This is particularly important for a government headed by President Muhammadu Buhari, who is reputed for the slogan that Nigerians have no other country they can call their own and that they must therefore strive to salvage it. To do otherwise will amount to stifling the growth of indigenous entrepreneurship and paying lip service to the slogan.

This clearly brings us to the statement credited to the Minster of Aviation, Senator Hadi Sirika, who at the close of Request for Qualification (RfQ) was quoted by the Director of Public Affairs of the Ministry of Aviation, James Odaudu, as saying that “The amount of response to the request for pre-qualification by highly reputable international airport operators across the globe is indicative of the level of confidence that people have in our concession programme, and, by extension, the administration of President Muhammadu Buhari.”

The Minister certainly cannot tell Nigerians that only “international airport operators across the globe” participated in the RfQ as the Chairman of BASL, Dr. Babalakin has been widely reported in the mass media as expressing interest in the Concessioning program.

If BASL, and by extension some other Nigerian companies, participated in the RfQ, then the Minister is sending a negative signal to the world that he does not care about the contributions of his fellow Nigerians to national growth and development. It is not yet late for the Minister to redeem what seems like a Freudian slip by him. There is the urgent and compelling need for the Nigerian government to encourage the growth of indigenous companies the same way powerful western nations fostered theirs into becoming the multi-national companies that are now household names all over the world.

By so doing, the Nigerian government is not doing such indigenous companies any special favour. Rather, it will be carrying out one of its duties by nurturing brands which will ultimately enhance national pride and economic development.

This, incidentally will also be in line with the letters and spirit of Executive Order No.5 (EO5) signed on Friday, February 2,2018 President Buhari, by which all Ministries, Departments and Agencies (“MDAs”) of government were directed to engage indigenous professionals in the planning, design and execution of national security projects and maximise in-country capacity in all contracts and transactions with science, engineering and technology components.

The relevant specific directives contained in EO5 are that: All procuring authorities shall give preference to Nigerian companies and firms in the award of contracts, in line with the Public Procurement Act, 2007; MDAs shall engage indigenous professionals in the planning, design and execution of national security projects and consideration shall only be given to a foreign professional, where it is certified by the appropriate authority that such expertise is not available in Nigeria; Nigerian companies or firms duly registered in accordance with the laws of Nigeria, with current practising licence shall be lead in any consultancy services involving Joint Venture (JV) relationships and agreements, relating to Law, Engineering, ICT, Architecture, Procurement, Quantity Surveying, and etc.; MDAs shall ensure that before the award of any contract, Nigerian counterpart staff are engaged from the conception stage to the end of the project and shall also adopt local technology that meet set standards to replace foreign ones; The Federal Government shall introduce Margin of Preference (“MoP”) in National Competitive Bidding, in the evaluation of tenders, from indigenous suppliers of goods manufactured locally over foreign goods (MoP shall be 15% for both international competitive bidding for Goods and domestic contractors for national competitive bidding for Goods.

For Works for domestic contractors, the MoP shall be 7.5%); Foreign companies or firms shall not be engaged in contracts for Works, Goods, and Services in the country in violation of the standard international best practices as provided for under relevant statutes such as the Companies and Allied Matters Act (CAMA), Council for Regulation of Engineering (COREN) Act, Chartered Institute of Purchasing and Supply Management Act, Public Procurement Act, and the National Information Technology Development Agency (NITDA) Act as well as other relevant Nigerian laws and regulations on acquisition of technology and conduct of public procurement; Giving BASL the right of first refusal in the ongoing Airport Concessioning programme will certainly promote the set objectives of EO5. Current statistics provided by International Air Transport Association (IATA) indicated that over $200m of foreign airlines funds are trapped in Nigeria. Supporting BASL will help conserve our foreign reserves as there would be no need for repatriation of funds to any foreign country.
Ahmed wrote via kamalololadeahmed@gmail.com