Raging Controversy over Airport Concession

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While members of the labour unions have vowed to abort federal government’s plane to concession major airports in the country, industry stakeholders insist concession is the key to airport development, writes Chinedu Eze

Over the years attempts have been made to bring in private investors to inject money in airport development, but labour unions in the industry have always opposed it. They always argue that the development would lead to the sack of workers.

But industry analysts have always insisted that in the short-run people may lose jobs but in the long-run such airport facilities under concession would engage more workers. They also note that existing skilled manpower would not lose their jobs.
Currently the Federal Airports Authority of Nigeria (FAAN) suffers under a bloated workforce. Many of the people who are working there are administrative personnel that were allegedly recruited without due process and sent to the airports.

Like other agencies in the sector and generally the nation’s public service, every Minister that comes allegedly recruit loyalists, including relatives, children of his friends and relatives of the members of the National Assembly and stuff the agencies.

Industry analysts explained that concession would strip FAAN of this “flotsam” and streamline the agency, as many of those staff not needed would be sacked from the airports under concession; then when the facilities are expanded by the concessionaires, skilled manpower would be recruited.

But the kernel of the controversy is that labour is opposed to concession because they believe workers would lose their jobs. But the federal government insists that if the airports must be modernised and developed, funds must come from the private sector and those who provide the funds must manage the airports for a period under the Public, Private Partnership (PPP) arrangement.

Controversy
The butt of the current bickering is that last week, the Minister of Aviation, Senator Hadi Sirika announced that the Infrastructure Concession Regulatory Commission (ICRC) had given the Minister of Aviation the certificate of compliance to concession four major airports in the country, including that of Lagos, Abuja, Port Harcourt and Kano.
The unions kicked against it because in addition to expected loss of jobs by their members, they fear the seeming lack of sincerity and transparency about the concession.

Over the years, industry experts have alleged that the major problem with attempts to concession the airports have to do with the fact that those who want to midwife the programme usually have a mind-set, those they want to hand over the airports to without sincerely going through a transparent process of bidding and openness in order to give the airports to the most qualified.

This is what the Director General of the International Air Transport Association (IATA), Alexandre de Juniac, pointed out recently as one of the problems of concession in Africa, whereby government gives out airports to the highest bidder who would up charges to quickly recover the cost of concession and the burden goes back to the passengers and raises high cost of air travel.

The unions alleged that the Minister might have zeroed his mind to a particular company that he would concession the airports to and therefore would not allow transparent and open bidding.
ICRC

On Tuesday, during world press conference held at the Lagos airport, the unions faulted the process adopted by the Minister, alleging that he was using deception to handover over public utilities to designated private concerns.

Speaking on behalf of the unions, the General Secretary of National Union of Air Transport Employees (NUATE), Ocheme Aba told journalists that the Minister of Aviation was allegedly fraudulent in his attempt to concession the airports.

He insisted that the plan to concession Lagos, Abuja, Port Harcourt and Kano was criminal and against public interest.
He argued that the airports slated for concession were the live wires of other 22 airports in the country, adding that several staff of the Federal Airports Authority of Nigeria would lose their jobs.

He insisted that efforts to resolve the issue with the Minster had been futile in the past and vowed that the unions would continue to kick against the attempt.

“It is highly regrettable that both the Minister and the ICRC are engaging in a ruse, and are indeed taking Nigerians for a ride. We can say with authority that everything so far about the issue of concession for the four airports have been single handedly decided by the Minister himself, and the ICRC has not carried out any due diligence on the concession exercise. If it did, the Commission would have discovered wide gulfs of deception in the exercise.

“For example, while the Project Delivery Team (PDT) – which includes the ICRC – was still discussing the issue of Transaction Adviser (TA), the Honourable Minister of Aviation was on air announcing the approval of FEC of a TA and his fees. Both the TA and the fees were apparently decided solely by the Minister. Up till date, the PDT has not been allowed to take a position on the matter, its effort in that direction is being frustrated surreptitiously”, the unions alleged.

The unions also explained, “At the last meeting of the Project Delivery Team, in late 2019, it was decided that the airports concession issue be degraded to the bottom of the list of aviation priority projects while upgrading the National Carrier, Aviation Leasing Company, and the Aircraft Maintenance and Repair Organisation for quick delivery.”

The unions insist that lack of sincerity in the whole process has confirmed that the concession programme would not serve the interest of Nigerians and therefore must be stopped.

More Opposition
Apart from what the unions described as unwholesome circumstance, they said it is already in the public domain that labour vehemently opposed to the selective concession of Nigeria’s four major international airports based on the fact that privatisation, of which concession is a form, has turned Nigeria into “a huge theatre of the absurd”, adding that the Nigerian experience in privatisation leaves a very sour taste in the mouth, “even for a person with no taste bud.”

“Check it out: Ajaokuta Steel Complex, steel rolling mills, NITEL, PHCN, and so many more. All tell tales of squander and plunder, with nothing to recommend that method of business to any Nigerian government. In aviation, we have not been spared from concession foul odour.

“The story of the failed privatisation of the then national carrier, the Nigeria Airways, which took the airline’s life, is still reverberating since 2004. All ongoing concessions of economic activities of FAAN have only resulted in losses in revenue to the Authority.

“With all these at the back of our minds, we ask, dear God, why any Nigerian government official would choose to waste public funds in chasing shadows in the name of privatising airports when nothing whatsoever has changed about the Nigerian situation.”
They noted that, “already, the circumstances surrounding the ICRC issuance of Certificate of Compliance to the Minister of Aviation has clearly demonstrated that personal interest cannot be extricated from Nigeria’s privatisation experience.”

“The decision to concession four out of 22 airports is the height of subterfuge. These four airports are the live wires of Federal Airports Authority of Nigeria, and the rest of the airports depend on the four for sustenance. As a matter of fact, without the four, the other airports will die automatically. Therefore, to concession these four airports is to close FAAN completely,” the unions said.

Need for Concession

Besides the fear for loss of jobs and seeming lack of sincerity in the concession process, many industry analysts believe that concession may be the only reliable option to develop airport facilities in the country.
Government had made it clear that it does not want to give out the airports permanently by privatising them; so the only option is to concession the facilities so that the concessionaire would manage the airport facility for a given years, add to the infrastructure and hand it back to the government at the expiration of the concession tenure.

Analysts also believe that when concessioned, the airports would multiply the current revenue they generate and eventually double the number of people that currently work at the airports.
Not only, the problem of decayed facilities would come to an end because the major objective for the concession is to upgrade, modernise and expand the facilities to be in tandem with better airports of the world and also meet international standards.

Industry consultant and CEO of Belujane Konsult, Chris Aligbe who said he has studied airport concession and problem faced by Nigerian airports over the years, noted that the solution to the decayed airport infrastructure is injection of private sector funds, as government would not be able to fund the modernisation of the airports because of other essential and critical needs it has to meet.

“In Nigeria we do not have an African standard airport and if we don’t create it we may never have a headway. Concessioning is mandatory for us, the labour unions may protest but that is the only solution.
“The decision to concession four international airports is the best decision because government does not have the money to invest in airports. We have a lot more complex situation than Ghana because of our peculiarity so we need to resort to concession, government cannot do it. The idea that concession would engender poor security situation is not to be an excuse.
“If we want to join the comity of developed aviation, we must take a step. We have also not created the infrastructure and standard for tourism to grow, we cannot separate aviation from tourism, we need strong airlines and infrastructure for tourism to grow,” he said.
Aligbe said under concession, N45 billion revenue expected from the airport from the current N22 billion is a child’s play.
“That is mere $12 million; even the Murtala Muhammed International Airport (MMIA) will generate more than that if concessioned. They have no idea what a concessioned airport can generate until they compare the revenues of the airports under government management and the one that had been concessioned.
“MMIA can generate more than that, followed by the Abuja airport. People do not know the magnitude of the money the airports could generate. There is a system of incompetence in the management of the airports. The system they are managing is incompetent, which is imposed on competent managers and making them look incompetent. What will be realised will be huge – much more than N45 billion,” Aligbe stated.