PPP: Investors Must Meet Criteria that are Very Clear

15 Mar 2013

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George Uriesi, MD, FAAN


The Managing Director of the Federal Airports Authority of Nigeria (FAAN), George Uriesi, recently spoke with select journalists on new policies adopted by the agency to guide its partnership with the private sector and other critical issues concerning airport development and growth. Chinedu Eze, who was there, presents the excerpts

What is your response to the position of aviation stakeholders and investors on the state of the remodelled terminal at the Murtala Muhammed Airport, Ikeja, Lagos amid plans by the authority to bring in more entrepreneurs into the airport system?

What we have seen at the General Aviation Terminal (GAT) is a template of what we expect from investors who are serious to do business with FAAN. I am very proud of this choice of investors; it is in line with what we have in mind. The reason, you have noticed the quality of investment here at the terminal, which is used by the eatery operator, is evidence of the kind of people we are only going to bring into the aviation sector, who are either very established brands, who know exactly what we want, or people who can prove that they have the capacity to render the kind of service that will improve our business.

It is no longer a matter of considering factors such as this is somebody's wife or brother, or anybody who comes and decides that he wants a shop. They have to meet certain criteria that are very clear, and it is beginning to proof a very good policy. This is because if you look around this terminal, it appeared like a shed, when it was commissioned. But, over time, the terminal is beginning to take the kind of shape, that we originally wanted it to take.
So, I am very happy with the quality of services, the retail offering that the terminal has. We are still working on the terminal to achieve a good retail offering.

With this kind of policy, what message is FAAN sending to potential investors, who are poised to do business with it?

Well, we are doing this right and doing the right things; we are not doing anything for myself, or my Minister, we are doing what is right for the business. Any deal that we strike, is done the way, it is done elsewhere in the world. And so, the criteria are clear, the business expectations are clear, unlike in the past. We are not doing anything with anybody unless we have evidence from the banks that they are funding the project and the money is there. This will be from the day you sign the agreement and the day you start construction is six months.

If any investor does not start within that period, the deal is no longer tenable. The new arrangement is that from the day you start construction, it is 24 months, if you do not finish  the construction after then, there will be a problem. The new arrangement is such that under normal circumstances, penalty kicks in . There is no question  of saying the thing has been concessioned  to somebody in 1998 or so when you have not done anything.

The new rule is that you do not need to sign  any agreement with FAAN, unless you have the money. From  now on, six months after signing any agreement , you have not started any construction , it will be too bad.
I am convinced the message is getting clearer now that nobody is going to come  into FAAN and do any business just because they know somebody in FAAN, we have gone beyond that level.
You must have a business proposal on paper that meets our criteria, and now have very stringent criteria, in accordance with the global airport standard. If the business proposal is sound and could earn money for FAAN, we will sign you on. This is about giving opportunity to every investor.

What are your plans for expansion of the terminal?

We are expanding the general aviation terminal of the Lagos domestic airport to accommodate about four million passengers annually from the current 1.8 million passengers. We will expand the apron, we are working hard on the aerotropolis project, we are meeting this week to rework the entire terminal.

The second phase of the airport remodelling project has started, what should airport users expect from FAAN?

The project has started already, last week in Akure, they brought down the terminal there to start the construction of a new terminal, last week in Ilorin, they did the same thing , to give way for the construction of a new terminal. In Sokoto, Minna contractors have taken over the site, same in Maiduguri, Katsina, while the commissioning of other terminals in Kano, Yola, Owerri , Port Harcourt and Enugu will flow in quick succession .
In Port Harcourt, we are building a fantastic terminal, when it is finished, people will not even believe it.
We are having 73 separate projects we are working at airports nationwide, this is happening   in a historic way in FAAN to demonstrate  that great things can happen in the public service .

What are your reactions to the avalanche of criticisms by stakeholders on the projects?
Such critics are status quo champions. They want to continue to hold this industry back, because they were eating at the expense of the industry for my years. For once, the industry has discarded them and get on board focused people to get things done , as far as they are concerned, now that they have been discarded, everything is bad, nothing is working; it is ethnic cleansing , it is bad. They can continue to criticise and sit back and start complaining; the express train will leave them behind. They will wake up one day and will not recognize the industry they are in anymore. They will realise that the industry has modernised, that is the situation we are in.

What efforts are being made by the agency to fix airport runways, airfield lighting and other support facilities beyond the terminals?

We are collaborating with other agencies to ensure that the needed facilities are in place. We are working hard with the Nigeria Airspace Management Agency to fix many of this. It was an aberration to ever build an airport runway without air field lighting.
It is unpardonable. We have resurfaced runways at Maiduguri, Calabar , and other airports. Very soon, we are resurfacing Benin Airport runway, it is a six weeks process. We are actually doing many things that have not been done for more than over thirty years.
The question to all these critics, where were they when the industry was not working for over thirty years, when nothing happened in the industry? The critics would be happy to join committee after committee set up by previous ministers of aviation and government, only to travel all over the place doing nothing.  Finally, some advanced work is being done to move the industry forward and all we hear is people talking all sorts of nonsense. We do not have time for them.

What is government doing to address the poor power supply situation at the Lagos airport and other airports?

At the Murtala Muhammed International Airport, Ikeja, Lagos, we have finally completed the new power plant, we are currently testing it now.  We are working out an arrangement, how the power plant could even supply power beyond the airport to Ikeja. There were six generators when the airport was opened in 1979, the generators have over time being cannibalised to service one another until all six are not working. But, now FAAN has acquired six brand new generators for the Lagos airport that has capacity to run the entire airport for now and the expected growth in the next ten years.

However, because of the amount of diesel required to power the generators, because it depends on it, since 2009, when they were acquired, we will go a step further to discuss an independent power project , to set up a proper power plant that will serve the entire Lagos Airport area and the environs if need be , from gas . We are already talking with a couple of independent power plant power providers, with the believe that in the next five years, we would have completed the project and the current Diesel generator power capacity  could be devolved and sent to other airports, because we may not be able to do an independent power plant at all airports except in Lagos , Abuja and Port Harcourt.  We believe there is no way forward other than independent power plant.

What is your projection for passenger in the next five years?

We expect the passenger movement in the next five years to explode. We have had four years of double digit growth in the aviation industry; that is an aberration. We have had double digit growth in the last few years. We had four years of double digit growth, which shows that the latent demand is very high. What we did not have is the capacity to enable the growth, the terminal that was here at the GAT, was for four hundred thousand passengers, but now processing 1.8 million passengers annually.

Now we are providing a four million passenger capacity terminal, this is good for another ten years growth. Our next plan is to expand the apron to allow for space for more aircraft parking, in five years’ time I see a thriving aerotropolis . You will soon start seeing the construction of a lot of sites, the time for them to start construction is coming, there will be huge construction site in Lagos, Abuja, and we will meet with the greater Port Harcourt City to discuss the interaction of our greater aerotropolis and the new greater Port Harcourt City being built around the airport. So, it is a lot of work, the result will start to show in a couple of years.

When are you expecting the Chinese investors to start work on the new terminals?
We have just concluded discussion on the proposal to get a loan facility, which process is not very easy. We sent a team to China since January, we expect that by the end of this month they would have sorted out the deals, and once that is signed on, we wil1l continue to see construction. Hopefully by June, the site will start taking off, the Chinese are ready and they are just ready for us to sign the dotted lines.

Tags: Business, Criteria, Featured, Investors, Nigeria, PPP

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