Chairman, Bi-Courtney Limited, Wale Babalakin
Chinedu Ezewrites that Federal Government’s penchant for repudiating agreements in aviation sector may discourage foreign investment
Two weeks ago the Minister of Aviation, Mrs. Stella Oduah, embarked on a road show in China, Canada and the US to drum interest for foreigners to come and invest in the development of airport infrastructure.
From information released by the ministry, the roadshow received positive responses as many Chinese companies are willing to do business in Nigeria; major aircraft manufacturer, Bombardier is interested in helping Nigeria build maintenance, repair and overhaul (MRO) facility and also may reach a term with government to facilitate Nigerian airlines acquire Bombardier aircraft.
But a major hurdle awaits these enthusiastic investors: Nigeria may not keep to the terms of the agreement and may at whim spurn it with flimsy reasons whelped by parochial interests of a few highly placed government officials.
It is an obnoxious trait in the aviation sector that government reneges on the agreements it reached with private investors who want to do business in the industry.
Recent examples abound. When Richard Branson, the British billionaire entrepreneur who owns about 400 companies, including being the major stakeholder in Virgin Atlantic Airways, reached agreement to float an airline that would be called Virgin Nigeria Airways, the Federal Government agreed that the new airline will use the international terminal of the Murtala Muhammed International Airport, Lagos (MMIA) as its operational hub.
That was on September 28, 2004. Branson had 49 per cent stake while institutional investors had 51 per cent stake. The airline started operation on June 28, 2005 but by January 31, 2008, less than four years later, the Federal Government forced out the airline from the international terminal, citing spurious security issues.
Government said then that it would constitute a security threat for domestic and international passengers to be facilitated through the same airport terminal. But that was not the real reason why government did that. It reached another agreement with another private investor to build a domestic terminal and endorsed that when the terminal was completed all domestic air operations in Lagos would be emanating from that terminal.
Then and now, in other parts of the world domestic and international passengers are processed through the same terminal with proper and effective security checks. Even now, both international and domestic passengers are processed at the same terminal of the Nnamdi Azikiwe International Airport, Abuja.
The same thing happens at JFK International Airport, New York, London Heathrow, Schiphol in Amsterdam and others.
The Federal Government through the Federal Airports Authority of Nigeria (FAAN) reached agreement with Pan Express to collect revenue from cargo operations at the Lagos airport. One day the workers through their labour union forced the company from its operations, alleging that it was not paying the agreed monthly revenue to the coffers of FAAN. But even when after investigation it was discovered that FAAN actually owed the company, it was still stopped from continuing its services.
Also in December 2006 the Federal Government reached a concession agreement with Abuja Gateway Consortium on Build, Operate and Transfer (BOT) contract to take over the Nnamdi Azikiwe International Airport, Abuja for 25 years and to rebuild the runway, airport terminal, provide multi-level car park and a hotel and to run it for the said period until it recovered its money. But few months later the concession was revoked by government, citing security fears.
In Lagos Bi-Courtney Limited agreed with the Federal Government to build a domestic terminal (MMA2), which was hitherto gutted by fire and to operate it for the contentious 36 years, but government refused to abide by the content of the agreement.
In March this year, Maevis Limited was disengaged from providing Airport Operations Management System (AOMS) service, which it signed a contract it would provide for easy facilitation of the airports being run by FAAN for 15 years. The reason for the disengagement was that the agreement was exploitative to FAAN.
In all the agreements signed with these private investors, government agencies were fully represented. In that of Gateway Consortium, the agreement was presided over by the World Bank and the International Financial Corporation (IFC) and the Federal Government also engaged the services of an international organisation, Norton Rose, which handles similar concession contracts in over 50 countries.
Besides the contracts that were spurned citing security concerns, others were said to have been tilted against government’s interest and therefore the interest of Nigerians.
The contract that has remained on the front burner is the one signed between the Federal Government and Bi-Courtney. What later became a very unpopular part of the agreement was that while the terminal built by Bi-Courtney subsists, no other of such terminal should be built in Lagos state and that the Bi-Courtney deal includes the General Aviation Terminal (GAT) and this will last for 36 years.
Although government agency, FAAN and the Ministry of Aviation oppose this deal later they presided over its signing and as they gave excuses later that the officials of FAAN were under instruction to sign it, there was no indication that the workers through the unions kicked against the signing then. There was no indication that the officials that signed chose to resign their appointment instead of signing it.
This is very important because when the workers vehemently opposed the agreement in later years, many Nigerians asked where they were when the agreement was signed. Many Nigerians wanted to know why FAAN signed the contract when it was against its interest.
The Public Relations Officer of Bi-Courtney Aviation Services (BASL), which is managing the airport terminal, Stephen Omale Ajulo, told THISDAY that government should be a continuum; therefore if any regime reaches an agreement succeeding regimes ought to continue with that agreement.
“People made agreement; the same people disagree to obey the agreement. Courts gave judgment; people ignore the judgments. That is the major challenge we are facing now. Court judgments have been in our favour. People believe that they can dismiss agreements; they can ignore court orders. It is unfortunate because it does not encourage us and it does not encourage foreign and local investors.”
The Chairman of Bi-Courtney Limited, Wale Babalakin, once said: “MMA2 has been a big challenge. From the day we completed the project, there has been a deliberate refusal to honour the agreement.”
The BASL PRO said Bi-Courtney cannot offer the terminal for sale either to government or any organisation because the company has lost so much money on the facility, disclosing that since the terminal was built it has spent over N12 billion to subsidise it as it cannot generate enough money for its maintenance.
A Divided Industry
It is very important to note that the repudiation of these agreements has created dissention in the aviation industry that every minster that is appointed to head the sector comes in with a burden: he or she inherits a divided industry. In the past there were ministers who chose to sit on the fence about these concessions and they left their position with footnote or no achievements.
There was a minister whose only memorable “achievement” was the sacking of aviation agency head and some directors. There was another who came, strutted, danced into the hands of the agencies and the airlines and left without any remarkable achievement.
Now, Oduah from the onset made her position clear, “already we are studying and evaluating the terms of the existing concession agreements to ensure that they are in favour of the Nigerian people. We shall however not hesitate to revoke or renegotiate, where necessary, the terms of any of the agreements if we discover that they do not serve the greatest interest of the greatest number of the Nigerian people."
Since 2006, no minister of aviation has received as much media attacks as the present minister. And since that period no minister has ambitiously striven to change the landscape of the airports as Oduah is doing. As a divided house people in the industry have taken sides, so no matter her achievements she must be hauled with avalanche of criticisms.
So it is pertinent that government should burnish its image by reappraising these agreements. In that way it would achieve the goodwill it deserves to attract foreign investment.
In a letter to the Editor, THISDAY Newspapers on Sunday, edition of August 19, Nnamdi Ebo wrote: “Richard Branson said recently that he will never do business in Nigeria again. The international business mogul described Nigerian politicians as “dream killers”. Some Nigerians will say he can go to hell; after all, other foreigners are investing in Nigeria. I doubt whether that contention is correct. If it were, then the Minister of Aviation will not be embarking on a road show with some lawmakers.”