Airports as ready made tools for fleecing public funds
The Federal Government is warming up to the prospect of 10 new airports to add to the 26 that are dotting the landscape. Despite the vicissitudes wrought on the nation by the COVID-19 pandemic and paucity of funds, some states’ governors too are nursing an appetite to binge on this high-capital venture. WOLE OYEBADE writes that the economies of aviation business and cargo services would not favour white elephants, which always get abandoned mid-way, or end up as giveaways to the Federal Airport Authority of Nigeria (FAAN) as bad debt. Stakeholders reckon that in place of new self-serving ventures, the existing facilities should be optimised through good infrastructure, road and rail networks for the private sector to explore profitably.
The Moshood Kashimawo Olawale (MKO) Abiola International Airport, Ido-Osun, Osun State, was earmarked to serve as one of the flagship achievements of Rauf Aregbesola’s eight-year tenure as governor of the state.
The design showed a befitting edifice to immortalise the deceased maverick politician, whom Aregbesola saw as his political hero. It was also to open the entire South West commerce and tourism window to a waiting world. “It is a new dawn for Osun,” Aregbesola, who is incumbent Minister of Interior, had boasted to a cheering audience shortly on assumption of office.
In 2012, the State government began work on the project sited at Ede North/Egbedore local councils. The contract lot fell on Aeronautics Engineering at the cost of N4.5b. An upward review estimated the project to cost N11b. Unable to fund the project after excavation work began, the state government opted for concessioning in 2016.
The concession was awarded to a consultant – All Works of Life (AWOL) – in partnership with a Turkish firm and Exim Bank of Turkey. The work was to begin immediately and be delivered in 24 months. Parties agreed on N69b – half the size of the state’s budget for that year.
Just on the eve of the supposed project completion date in 2018, and the 20th anniversary of MKO Abiola’s demise, Aregbesola announced that no work had been done because the project failed, and contract terminated. Official record showed that the state had spent about N4b on the project as at the time of announcement. To date, the 839 hectares of land is still fallow.
Like Osun, the Benue State government in 2016, also flagged off the construction of a cargo airport at Dauda, in Guma Local Council. Governor Samuel Ortom, said that the project would provide a platform for quick evacuation of farm produce from the “Food Basket of the Nation” to markets abroad.
The project was estimated to cost N38b, out of which the state was to provide N5b counterpart fund in the Build, Operate, and Transfer (BOT) agreement, which was to last 25 years from the day of completion. The project didn’t take-off. It failed.
In 2019, Ortom attempted to revive the dying horse by presenting a N12b budget in the 2020 Appropriation Bill to the State House of Assembly. He said the state would solely fund the project from Internally Generated Revenue (IGR) within two years to facilitate growth and development at the grassroots. As at the last check, the airport was yet to take-off.
Osun and Benue states are not the only states that toyed with the idea of state-owned airports. Between 2011 till date, no fewer than 14 states committed a total of N250b to airport projects, the bulk of which ended up as white elephant projects.
Despite the glaring lack of interest from serious local and foreign investors in the seemingly lucrative airport venture, some states and the Federal Government are still prepping a shot at siting new airport facilities. But the economies and balance sheet of existing airports, owned and operated by the Federal Government do not justify floating new airports. Rather what is suggested is the need to offload the burden of ownership and operational nightmare that they have become.
Apparently unconvinced by the prospects of new airports, aviation experts have urged the Federal Government to discourage “capital waste” through highfalutin airport projects. As an alternative, to maximise existing facilities within the regions via good road networks and partnerships with the private sector that are in better stead to identify and operationalise good business potential. Clearly, they said that the food export business in the country is not ready for the price tag of importance politicians often place on it, just to get by an argument for a new airport.
10 New Airports On The Way
THE Minister of Aviation, Hadi Sirika, at the Year 2021 budget defence before the Senate Committee on Aviation, had hinted that at least 10 new airports would be coming on stream to underscore the fact that the country’s Nigerian aviation sector has come of age.
“We have additional 10 new airports coming up. That is almost half the number of airports we used to have in Nigeria. We are adding 50 per cent of the number of airports. These are (new) airports coming up in Anambra, Benue, Ebonyi, Ekiti, Lafia, Lokoja, Damaturu, and so forth. All of these show that civil aviation is growing during this administration,” he said.
Sirika added that the Federal Government, through FAAN, was also in the process of taking over airports at Kebbi, Osubi, Dutse, and Jigawa. The Gombe State government had also written to the federal authorities, asking it to take over the Gombe Airport. Except the privately-owned Osubi Airport in Delta State, which is still in dispute, all others were built and operated by their state governments.
The New Oil Boom: Agro-cargo?
AIR cargo export potential readily features in the justification of building new airports. The Minister didn’t fall short of this well-worn argument in advancing the cause of a Lokoja Cargo Airport, Kogi State.
“Lokoja is an important Northern town. Lokoja is a cosmopolitan town; it’s a mini Nigeria and it is extremely very important in the growth and development of our country. We have a lot of agricultural activities around there. There is fishery; there is perishable item production and so on. So, siting an airport there is quite apt. For me, it is something we should have done long ago for its importance,” Sirika said.
The argument was the same in Ekiti when Governor Kayode Fayemi, marked the first anniversary of his second-coming. On the agenda was the Ekiti State Airport, a Public Private Partnership (PPP) to cost N20b.
Indeed, the project dates back to 2010 when the Federal Government denied approval and sponsorship of an airport request by the state government. President Goodluck Jonathan in October 2013 relived the dreams when he announced plans to build an airport in Ekiti. Until he left office, nothing was heard of the pledge.
Governor Ayodele Fayose’s administration did egg on with the project by clearing the 4, 000 hectares of land spanning Ado-Ijan-Igbemo and Afao Ekiti, dispossessing rice plantations that attracted litigations. The project was initially estimated to cost N3b. Upward reviews took the cost to N9b, N11b and eventually N17b.
Fayemi’s Commissioner for Information, Tourism and Values Orientation, Olumuyiwa Olumilua, said the current administration was most determined to build the Ekiti Airport to meet the growing need of agribusiness.
Ogun State has two airport sites approved and awarded as contracts by two administrations within 10 years. Former governor Gbenga Daniel’s government commenced work on the site of Gateway Agro-Cargo Airport located at Ilisan in the Ikenne Local Government Area of the state in 2005.
His successor, Ibikunle Amosun, now a senator, hatched yet another plan to build a cargo airport, at Imosan Village, Wasimi, Ewekoro Local Council. Currently, the proposed airport has only a perimeter fence demarcating the five-by-five kilometre piece of land.
Amosun had in 2015 noted that the airport project at Imosan is a Federal Government-owned venture, but Ogun was ready to facilitate it “to better the lot of the agrarian residents.” He had in 2018 assured that the project would be completed by March 2019 before his exit from office. But nothing changed on site till he left office.
The Agro-export Market
PERHAPS there is a sense in promoting agro-export as a potential non-oil mainstay of the economy. Nigeria is indeed blessed with all-year-round arable food crops that are now equivalent to crude oil in the global market.
Already, no fewer than 22 non-oil products have been penciled in the new export promotion programme of the Federal Government. The initiative is part of the zero-oil plan currently implemented by the Nigerian Export Promotion Council (NEPC) in collaboration with the private sector, and estimated to be worth over $150b in annual export value at full capacity.
Among the products are palm oil, cashew, cocoa, soya beans, rubber, rice, petrochemical, leather, ginger, cotton, shea butter, tomato, banana, plantain, cassava, cowpeas, and spices.
The Executive Director, NEPC, Olusegun Awolowo, reckoned that there were still issues with processing the products to exportable standards, adding that there was huge potential for Nigerian agro products worldwide and vast revenue to make from the export value.
Cashew, which is dense across the rainforest, has export value of $4.5b a year. Its export quantity has been scaled up from 110, 000 metric tonnes to 300, 000 metric tonnes, with more than half going to Vietnam. Cocoa too is worth $80b in the global market a year. Though Ghana already does one million and Cote D’Ivoire three million metric tonnes, Nigeria is miles behind with less than 300, 000 metric tonnes a year.
Awolowo added that petrochemical is also worth $150b yearly, but Nigeria is unable to benefit from the largesse because the country is not refining locally.
Awolowo hinted that the informal export sector in West Africa from Nigeria could generate $41b yearly and that with the coming of the African Continental Free Trade Agreement (AfCFTA) market, those products being exported from Nigeria informally would be formalised going to all parts of Africa and would provide a larger market.
“There is much we can take through cargo and particularly, we are looking at agricultural products that can arrive in Europe the next day fresh. That is the crux of this venture,” Awolowo said. And that is big business for airfreight and aviation business.
Not Yet An Epic Joy Ride
DESPITE the projections and assumptions, stakeholders, however, said that the estimates are still potential and not yet real to warrant the railroad of scarce resources into new airports. They said that the traffic threshold of the existing airport had not been utilised cargo-wise, coupled with poor packaging and logistics challenges.
Recently, a large consignment of vegetables and other edibles exported from Nigeria to the United Kingdom, were returned due to failure to meet up with international packaging standards.
This is coming exactly 10 months after consignments of yam exported to the United States were also rejected due to poor quality. The produce, estimated to be about N5 million include pumpkin leaf, waterleaf, bitter leaf, local pear, garden eggs, wrapping leaf and others.
Chief Executive Officer of NAHCO Plc., Tokunbo Fagbemi, said even though the airlines have capacity for exports, the country as a whole still has a long way to go in cargo exports, because we have not “structured cargo well enough to optimise benefits.
“For instance, there is no standard packaging yet for Nigeria. When you see goods from China, you readily know from their packaging. The same for England, India, even African countries and so on. That is a lot of work that goes into cargo packaging. Some of the procedures may depend on the government closing its eyes to some banned items.
“These are some of the discussions that we have had with the NEPC, so that we can standardise the packaging. Fruits that are exported to England from Africa must have been packaged up to 90 per cent from here. It is just the wrapper of the supermarket that is added on getting there. Our people must also be trained to do that. They look like small things, but they are part of the standards in the international market. That is where to start to create the market and utilise available capacity.”
Besides, cargo-dedicated aerodromes around the world are quite expensive ventures and not fashionable when compared to airports built for general purpose. The runway of a cargo airport is one of the most expensive components of an aerodrome, especially when built in an area where the terrain is not rocky or solid. So, the norm is to have at least a terminal dedicated to cargo services in an airport.
Airports Underutlised, Unviable
ANOTHER contrast to the cargo argument is that local airports nationwide still have their revenue earnings largely dependent on passenger traffic, than on freight services. As of 2019, over 70 per cent of aviation revenue earnings were from passengers that travelled through airports nationwide.
Factsheet obtained by The Guardian showed that except the trio of the Murtala Muhammed International Airport (MMIA), Lagos; Nnamdi Azikiwe International Airport (NAIA), Abuja, and the Port Harcourt International Airport (PHIA), Omagwa, Rivers State, none of the other airports has sufficient revenue to cover the cost of operations. Self-evident is their gross underutilisation nationwide.
Cumulatively, they cost the FAAN at least N44.39b loss for keeping them in operations, and overhead of 10, 000 workforce in the last three years. The breakdown of revenue and expenditure of FAAN headquarters in 2017-2019 showed that the body generated a total of N16.09b in three years, and collected N15.02b. It, however, spent a total of N59.41b, leaving a deficit of N44.39b in three years.
In-house sources said that the deficit was not unconnected with efforts to keep the low-income airports running. Indeed, a closer look at the revenue earnings of some of the airports showed poor viability 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 N1.027b in generated revenue. Of this sum, N716.7m was collected. However, the expenditure was in excess of N4.41 billion, leaving a deficit of N3.69b.
The Mallam Aminu Kano International Airport, Kano, did not fare better. The airport in 2017, 2018 and 2019 pooled a total of N8.28b in generated revenue. Collected was N7.16b. Its expenditure was a total of N9.6b, leaving a shortfall of N2.44b.
The Kastina Airport in three years made a total of N250.8m in generated revenue, out of which only N42.1m was collected. Its cost of operations was put at N1.58b, leaving a deficit balance of N1.54b.
The Sokoto Airport recorded a total of N725.7m generated revenue, out of which N400.1m was collected. The cost of operation was in excess of N2.71b, which gave a shortage of N2.31b.
In the South, Ibadan Airport in three years made a total of N349.2m in generated revenue, and collected N244.9m. The expenditure amounted to N1.39b with a deficit of N1.14b.
The Ilorin International Airport generated a total of N437.1m revenue in three years and collected N264.2m. The expenditure was in excess of N2.453b, leaving a shortfall of N2.19b.
Ditto for the Akure Airport. The facility pooled a total of N175.8m in generated revenue, and collected N168.7m. Expenditure was, however, N1.06b, leaving a difference of N893.7m.
The Benin airport in Edo State also ran at a loss. The airport generated a total of N993.2m in three years and collected N930.1m. The total cost of operations was put N2.02b, leaving a shortfall of N1.09b.
The Margaret Ekpo International Airport, Calabar, had a total of N540.8m generated revenue, though collected more, put at N559.6m, the expenditure was as much as N2.50b, giving a deficit of N1.94b.
Similarly, The Sam Mbakwe International Cargo Airport, Owerri, amassed a total of N1.25b in generated revenue and collected N1.08b. Expenditure was, however, N2.50b, with a shortage of N1.42b.
Ending Me-too Syndrome
THE International Air Transport Association (IATA) lately stated that for an airport to be viable and self-sustaining, it must have at least five million passengers a year. Today, only Lagos and Abuja airports could boast of at least five million passengers in a year.
An operator, who prefers anonymity said that as long as the political class and state governors, either for want of a signature project, or easy avenue to loot state resources, do not understand the demands of a functional modern airport, FAAN would continue to face funding constraints.
He said the best bet is to stop granting airport approvals to state governors who just want to have an airport like their next-door neighbours, to make a political statement.
“Where in the world is it done that a governor would spend state’s resources to build a facility and a few years later, the assets and its liability are transferred to the Federal Government to own? That is what happened with the Kebbi, Gombe, Dutse and the likes, where they have just one or two flights in a week. The sitting governors have realised that they are just routinely pumping in scarce resources into these facilities and getting almost nothing in return. So, through the backdoor, the ‘liability’ is pushed to FAAN.
“I am surprised that the minister is indulging these governors to do more of such white elephants. Why build more airports when the existing ones are grossly underutilised, unviable and a burden to FAAN? The funds to build new airports should have been pushed into some of our major airports to keep them optimal and generate more revenue than their operating costs. Maybe for security reasons and for military use, no state should be building any useless airport during a pandemic,” he said.
Apparently in agreement, aviation consultant and Chief Executive Officer of Beljune Konzult Limited, Chris Aligbe, said the airports are readymade tools in the hand of politicians. Aligbe estimated that while these unviable airports are government-owned, some were built by state governments for political aggrandizement.
“It was after building them that they found out that they don’t have the resources to run them, and they quietly pushed them to the Federal Government through the back door. That is how they get into the care of FAAN.
“But we cannot shut them down, especially for political reasons. It is never going to be easy. If you try to do that, the impact will be more on the northern airports than on the ones in the south. The only airport in the South that has become a ghost of its old self is the Margaret Ekpo International Airport in Calabar. It records only one flight a day since Donald Duke left office as state governor. The Victor Attah International Airport in Akwa Ibom has taken over and commanding the most passenger traffic around that flank. Owerri is bubbling; Enugu will pick up because at a time, it was behind Lagos and Abuja, even ahead of Port Harcourt International Airport.
“But in the North, you will have to shut down Sokoto, Bauchi, Gombe, Minna, and maybe Ilorin airports, among others. In the South West, you may need to shut down the Akure Airport. Hence, it becomes highly political and more dangerous. So, for the length of time that it will take the airlines to bounce back, the agencies and the airports will have to keep running with government’s support,” Aligbe said.
The Secretary-General of the Aviation Safety Round Table Initiative (ASRTI), Group Captain John Ojikutu (rtd), said that Nigeria already has more than enough of unviable airports that lacked justification for their investment.
Ojikutu said outside the Murtala Muhammed Airport in Lagos and Nnamdi Azikiwe International Airport, Abuja, none of the other airports could have their Internally Generated Revenue (IGR) sustain their operations’ running costs.
“None of these (unviable) airports have passenger traffic that is significantly more than 400,000 yearly, and therefore earning about N200 million Passenger Service Charge (PSC) and possibly not more than N100m for landing and parking.
“Monthly staff salaries, maintenance, operating costs, and so on cannot be less than 10 per cent of the total earnings. That is why there would always be a need for intervention for other airports from the two viable ones.”
He added that for as long as there were political motives rather than economic, safety and security behind the development of our airports, “we can never get strategic policies of our development right.”
Ojikutu recalled that when the traffic was up, not many of these airports were operating optimally, including those that have been opened to restart operations in the COVID-19 era.
“How much earnings were we making when the flights and passengers traffic were up? Why is it that we are not learning from those of the developed countries in aviation technology and commercial aviation that have reduced their fleet, staff and spread of operations drastically to a level of the start of aviation many years ago?
“Do we really know the worth of our airports, or the actual contribution of Nigeria’s commercial aviation to the GDP? What is the total annual earnings of the domestic airlines and the regulatory agencies? The National Assembly that yearly appropriates funds to the sector without serious oversight on the cost of operations and the appropriations is a delinquent accomplice,” he said.
To save costs, Ojikutu advised the government against new airports. But, to concession the non-aeronautical facilities at all the existing airports – not just the big four in Lagos, Abuja, Port Harcourt and Kano – to run efficiently and profitably. He said the Lagos and Abuja airports should be concessioned in blocs with four or six other unviable airports.
Good Road And Rail Network, Not New Airports
EVEN though Akin Obafunwa, a director at an agro-allied company admitted that Ekiti and some states have huge agricultural potential, he doubted that such warrants sinking huge investment to create airports that would end up process one-flight per day.
Obafunwa said that state governors should focus more on regional road networks to ease connectivity among neighbouring states, adding that all states already have at least one or two airports within close proximity to explore for agro-export.
He observed that Ekiti, formerly a part of Ondo State, has an airport in Akure and another in Ibadan, Oyo State. Osun State was carved out of Oyo, which already has Ibadan Airport that is rarely serviced by air. Lokoja has one in Nnamdi Azikiwe International Airport, Abuja.
In addition, Ogun State is about 80 kilometres away from Lagos, which is the hub of aviation in Nigeria. Anambra is less than 100 kilometres to Enugu Airport – the hub of aviation in the South East. Nasarawa State is very close to Abuja and less than 70 kilometers to the Federal Capital Territory (FCT), and the proposed Abia Airport, which is less than 60 kilometres to the Owerri Airport.
Obafunwa said: “From Akure Airport to Ado Junction is a six-minute drive. Ado Junction to Itaogbolu is 10 minutes. Itagbolu to Iju is four minutes. Iju to Ikere is five minutes and Ikere to Ado is 10 minutes. Total minutes spent between Akure to Ekiti when the road was good were about 35.
“Besides, driving from Ibadan Airport to Ado Ekiti should not take more than 90 or 120 minutes maximum. Ado to Abuja International Airport is about four hours. So, who needs a cargo airport in Ekiti?
“I think the governor, whom I admire, should be thinking of rail services that will link all parts of the state. A rail system from Efon Alaaye should link towns like Aramoko, Erio, Igede, Ayedun, Ijero, Ijesha Isu, Oye, Ifaki, Erinjiyan, Iyin, and Ikere Ekiti, down to Akure Airport. This will be more viable, create employment and economic growth for the state and the region,” Obafunwa said.
Another stakeholder, who would not want to be mentioned, told The Guardian in Lagos that most of the airport projects were suspicious and should be discouraged.
The Ekiti indigene said the state had little to gain compared to the huge investment. “Ekiti has no agro product it wants to export that it can’t do via Akure Airport. Simply build the required warehouses. We pleaded with our friends in government to persuade the governor not to waste Ekiti scarce resources on this drainpipe, but he didn’t seem to be persuaded. Ado Ekiti is less than one hour from the Akure Airport. The road is bad, but Ondo and Ekiti can hook up with FG to have a good dual carriageway to Akure.
“This airport idea was initially propelled by a university proprietor that has enormous influence in the state, and probably was looking for where to be landing his private jet, and that of his friends. But at what cost? The rush for the state airport is not ego, but some other things we all know.”
A member of the Aviation Safety Round Table Initiative (ASRTI), a think-tank group of the local sector, Olumide Ohunayo, offered that the states might have genuine needs for aviation facilities, but they don’t necessarily have to be expensive airports.
Ohunayo said if the needs were that pressing for cargo or whatsoever, they could afford to build just an airstrip and in partnership with the private sector, adding that it would be out of place for even the government to be considering new airports during a pandemic.
“The ministry and the government have not come out clearly to state that they will be building 10 airports and if it becomes a fact, then there is a problem somewhere. In a situation where airlines are down, aviation is not growing and everything is on standstill, instead of maintaining or restoring infrastructure, you are trying to add more even when they are not generating money, then that is a problem for us all.
“What we should begin to do is to tilt different airports to different functions. All of them should not be built with the impression of receiving big aircraft to operate schedules from the triangular route (Lagos, Abuja and Port Harcourt). There should be airports that can do short hauls.
“For most state governors, the airport projects is a way of taking huge money from the treasury. Abeokuta does not have roads and manufacturing industries are complaining. Instead of fixing those roads in Ogun State, they are talking of building an airport when there is Lagos and Ibadan close by. A state like Ekiti can in fact look for an airfield that can take smaller aircraft. Having a big airport will not be economical, when you already have about three airports in neigbouring states. Benue, Ogun and Osun also do not need big airports. Maybe airfields for their needs. There is nothing wrong in having airports in all the states, but for the priority of what you really need,” Ohunayo said.
Aregbesola concluded his term without delivering on the airport mandate, nor gave Osun State “the new dawn”. Ortom of Benue and Fayemi in Ekiti, and others still in office should not be intransigent in the airport infrastructure infatuation. Unlike Aregbesola, the latter are better placed to make good decisions for which they would wish to be held accountable after office.
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