Providing Recipe for Airport Concession

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Wale Babalakin

Chinedu Eze

Last week industry think-tank group, Aviation Round Table (ART) held a conference on concession and the Chairman of Bi-Courtney Aviation Services Limited (BASL), the builder and operator of domestic terminal at the Lagos airport, MMA2, Dr. Wale Babalakin, reeled out his experience as concessionaire and made recommendations on how concession of airport facilities could work in Nigeria.

Babalakin, who may have gone through bitter-sweet experience in his bid to contribute to airport development, noted that government must be disposed to abide by its agreements for the private sector to confidently invest in infrastructure development of the country; not just in aviation but also in providing other social amenities for Nigerians.

The President Muhammadu Buhari administration from its inception in the first tenure made it clear that government may not have the resources to develop airport facilities; so it made the plan to concession the airports, specially the terminals.

But because of past experience of bungled concession experiments, many industry stakeholders and other Nigerians are circumspect about the planned concession and have emphasised on government ensuring that the deal is transparent and in keeping with the agreement reached.
Speaking at the web conference, Babalakin said, “When I hear about concession, all I say is that please follow the law only so that you are not exposed to phenomenal damages, especially if some of the bidders come from outside.

“I doubt if anybody who is coming from a very structured company will bid for any of those facilities because they will always ask for reference and they will be told that MMA2, though successful has been completely undermined, hindered by refusal to honour agreements. I also hope that when this concessioning takes place, there will be an independent body that will act as the regulator. The regulator cannot be a participant in the management of airports, it cannot. It is conflict of interest. You cannot be a judge in your own court.”

He explained the reason why there should be independent regulator that should oversee the management of the concesioned airport facilities.
“Recently, we were trying to increase our passenger tax; we have kept the same thing (charge) for about 10 years even with inflation and devaluation. Fortunately for us, in our agreement with government we got approval from FAAN (Federal Airports Authority of Nigeria), from the Ministry on the bandwidth that we could charge.

“We have not exceeded that bandwidth, we wrote to NCAA (the Nigerian Civil Aviation Authority), informing NCAA that we will go ahead to do this; we already have authority for it. And NCAA wrote back to us that we should seek the consent of FAAN.

“Why should we seek the consent of our competitor, on the same terrain who is not honouring his own side of the bargain? Why should we? We are not troublesome but this is a matter that we could all go to court and resolve in a month. We are not troublesome, we just want to operate in our own sphere, give hope to Nigerians that it is possible to invest in infrastructure in Nigeria and have appropriate returns,” Babalakin said.

He expressed happiness that the federal government decided that it wants proper concessioning process, noting that once the agreement is signed, it is more important that government sticks to the rules of the game.
“We have spent 13 years trying to enforce an agreement and till date we only have about 30 per cent to 35 per cent of our right under the various agreements implemented.

“As you mentioned that in recent times a new chief executive of FAAN has been engaging us in negotiations, this is a breath of fresh air. Because in the last 12 years what we have received is battery. We finished the concession on schedule; only the private sector can finish a concession on schedule because its finances are tied to that project. “You can count the number of public works that are finished on schedule. We have 40 per cent of guarantee traffic, the agreement we signed assured us of all domestic traffic, but till date we don’t have it.

“Rather, our regulator decided to be competing with us with government money next door. So we have to use private sector money, then next door there is somebody with government money. The General Aviation Terminal (GAT), which is now being concessioned, I hope ICRC (Infrastructure Concession Regulatory Commission) knows that the Supreme Court has ruled that, that terminal belongs to us and not to FAAN.
“And if they proceed with it they will be violating the judgment of the Supreme Court, which has far enormous implications for the nation,” Babalakin said.

He emphasised that government must abide by the rules of its agreements, stressing, “Nobody will take things seriously when they know that you have no regard for resolution process.”