Why FG May not Concession Nation’s Airports

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Chinedu Eze

Despite the promise by the federal government to concession the nation’s airports, starting with the Murtala Muhammed International Airport (MMIA), Lagos and three other major airports in Kano, Abuja and Port Harcourt, there are indications that this plan may not be actualised in the foreseeable future.

THISDAY investigations have revealed that government had already concessioned different parts of the airport facilities to various companies, from hospitality businesses to passenger processing, financial institutions and others and some of the agreements with these organisations have been subsisting for the past 30 years.

The Minister of State, Aviation, Senator Hadi Sirika had given assurance that the Muhammadu Buhari administration would concession the airports so that the private sector would invest and develop airport infrastructure. Earlier this year, Sirika appointed three advisors for the airport concession, establishment of maintenance facility and also the establishment of a national carrier.

But insiders told THISDAY that if the airports were given out in concession, there would be a lot of legal encumbrances, which might hamper the new concessioner from taking over and running the airports as agreed.

One inside source told THISDAY that once the airport is given out in concession, the other companies that have different agreements with the federal government would sue and this would give rise to a long legal battle, which no one would know the end.
“This is because the new operator may not want to get along with the other concessionaires who would now inhibit the plan the new operator would want to make, but those other ones already have subsisting legal agreements with have been there before the new organisation takes over the airport,” the inside source said.

The source noted that another challenge government would face is the repayment for the Chinese loans secured from the Chinese government for the building of terminals in five major airports in Lagos, Abuja, Kano, Port Harcourt and Enugu, noting that while the new concessionaire may not want to pay the loans, the agreement China had with the federal government was that the later would pay back the loan hopefully from the money generated from the airports, but now that they would be concessioned, would the new operators pay back the loan?

“It is expected that the Nigerian Civil Aviation Authority (NCAA) would on Friday (today) give the Federal Airports Authority (FAAN) certificate for the certification of the Lagos airport, which means that it would now be recognised by the International Civil Aviation Organisation (ICAO). All these will be factored in and I believe that without the concession and with government asking itself questions, these airports, especially the Murtala Muhammed Airport would be made world standard without concession,” the source said.
A FAAN official told THISDAY that some of the agreements already reached at the airports may not be transferable, noting that the major problem is handing the airport management over to a third party, which would expose the concession to legal limitations.

“The Minister’s plan to hand over the airports to a third party is going to be problematic because those who have already invested money at the airports as private investors must insist on serving the terms of their agreements. If these subsisting agreements were not there the concession plan will not have hindrances but that is a major challenge now.

“There are three critical issues with the Lagos airport and these have to do with the cooling system, the conveyor belts and the lift. We know that the airports need money to upgrade them but there are other ways this can be done without jeorpardising the already existing concession agreements,” the FAAN official said.

It is expected that government would review the concession plan in order not to mar the operations of Lagos and other airports already earmarked for concession.