Airport Concession: Stakeholders Make Case for Indigenous Companies

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Aviation

The federal government is at an advanced stage of the concession of four major airport facilities in the country, as many companies both local and international have expressed interest. But stakeholders in the aviation industry have observed and pointed out the gains, if indigenous companies with expected competencies are given the chance to manage some of the airports’ infrastructure as concessionaires, Chinedu Eze writes

Airport concession, which was part of the President Muhammadu Buhari’s road map in the aviation industry was the only programme that attracted controversy when the Minister of Aviation, Senator Hadi Sirika first muted the idea in 2016. Aviation unions dug their trenches and poised for a fight. They swore that no airport in the country would be given out in concession.

They acknowledged and supported the minister’s plan to establish a national carrier, Aerospace University, aircraft leasing company, and Maintenance, Repair and Overhaul (MRO) facility which are other programmes in the road map, but insisted that no airport would be given out in concession, despite the explanation by Sirika that government does not have the funds to modernise the airport facilities and put it in the standard obtained in major countries of the world.

But today, while it cannot be said that the unions have backed down, they and other Nigerians are beginning to see the gains if the private sector is involved in airport development in the country, hence the support for public, private partnership (PPP) plan of the federal government through concession.

In October the federal government announced that many companies had expressed interest in the concession and THISDAY gathered that out of about 13 companies that indicated an interest in the concession, only three were indigenous.

The airports’ facilities to be concessioned include the terminals at the Murtala Muhammed International Airport, Lagos; Nnamdi Azikiwe International Airport, Abuja; Aminu Kano International Airport, Kano, and the Port Harcourt International Airport, Omagwa.

Of the three indigenous companies, many have posited that only Bi-Courtney is believed to have all the necessary competencies and track record to manage airports. Investigation revealed that others are merely looking forward to partnering foreign companies for the job.

Many stakeholders who spoke to THISDAY said that Nigerian companies should be given a chance to manage some of these airports because of so many benefits, which include job creation, no capital flight, security, and skills acquisition.

They faulted the federal government for not giving a company like Bi-Courtney the opportunity of first refusal before seeking to advertise the bidding process abroad. They added that Bi-Courtney, over the years, has proven capacity to deliver and has all it takes to manage the international airports.

Security

Aviation security experts have also noted that because of the critical role airports play in the life of nations, they should not be handed over to foreign concerns that may build espionage systems, which the security operatives may not have the sophisticated equipment to detect, noting that in many African countries, expatriate personnel who come in as engineers, scientists and others are spies for their home countries.

The CEO of Centurion Securities and the former Commandant of the Murtala Muhammed International Airport (MMIA), Lagos, Group Captain John Ojikutu, acknowledged this and said that is the reason why he did not want sensitive aeronautical infrastructure to be included in the facilities that would be given out to the private sector in concession.

He added that because more than 12 of the federal airports are joint users with the military, it will not be ideal to handover the country’s airports to foreigner as concessionaire.

“This is the main reason why I do not support the inclusion of any aeronautical infrastructure, facilities, and services in the concessions, and ICAO (the International Civil Aviation Organisation) too does not support it either for African member states. Moreover, more than 12 of the federal airports are joint users with the military. This again is one major reason I have been demanding the establishment of the National Aviation Security Committee (not Civil Aviation Security Committee) so that the national civil aviation security programmes, written by the Nigerian Civil Aviation Authority (NCAA) are vetted by the committee.

“We need a unitary security control for the multiple security agencies in the airports. The multiple agencies and multiple controls bring conflict of interest and put airport security and national security in danger. This is the reason for the establishment of the Transport Security Administration (TSA) of the US,” Ojikutu said.

On June 27, 1976, Israeli forces used their knowledge of Entebbe Airport in Uganda to rescue 139 citizens, when Air France Flight 139 was hijacked and flown to Uganda and only Israelis were detached and detained. The success of that operation was credited to the Israelis’ knowledge of the airport.

Ojikutu who is also the Secretary-General of Aviation Round Table (ART) said that such espionage and action could take place in Nigeria.

“If you don’t have an efficient contingency plan for crisis management, you can have more than the Entebbe experience. We had a similar experience in 1993 at MMIA when a UN aircraft carrying troops coming from Operations Desert Storm landed in Lagos without security clearance. The troops came out and were walking freely around the airport with their riffles. Airport workers ran away. We were having a meeting with FAA (US) Federal Aviation Administration) officials in the office of the airport manager when my attention was called to it. I had to talk to the troops to return to the aircraft while we tried to get diplomatic solutions in solving what eventually got some controllers suspended. The situation, like the (Umar Farouk) Abdulmutallab case, caused the suspension of Nigeria Airways direct flight to NY except through Dakar, which the Nigeria government rejected,” he said.

Credible Local Company

Ojikutu said that the government’s first choice ought to be an indigenous company and remarked that the concession parameters should be made clearer, recommending that government should make clear the models for the concession, adding that concession should include both international and domestic terminal facilities.

“We have just one experienced company in Nigeria today. The alternative we, therefore, have for Bi-Courtney could be a foreign company in the absence of a credible local company. Bi-Courtney experience in airport management is unique because it is BOT (Build, Operate, and Transfer). Unfortunately, the model of the planned concession is still not well defined or transparent. For me and for the concession to be meaningful, it must be only the non-aeronautical and aside from having periodic maintenance programmes, it must have periodic development plans.

“It must not be limited to the four international airports but must include the domestic airports. Each of the international airports must go into the concession with four of the domestic airports, that way a local company can gain experience from the principal foreign company. The concession of the domestic airports along with the international airports will save the government the revenue that would be needed for regular repairs and the periodic maintenance of the aeronautical infrastructure and services. We must have the records of the worth of each airport and revenue earnings, the costs of repairs, and periodic maintenance to be able to accurately determine the benefits from the concessions,” he said.

Efficiency

The Managing Director of Flight and Logistics Solutions Limited, Amos Akpan told THISDAY that a Nigerian managed airports efficiently in the UK, so a Nigerian company can efficiently manage Nigerian airport facilities as a concessionaire.

“A Nigerian owned company bought over, successfully managed, and sold with profit the London Gatwick and Stansted airports in the UK. Nigerian financial institutions have foreign collaborators that would be joint financiers of the project.

The problem will be the clarity of the items concessioned, the terms, the tenure, and the respect for the terms by the parties involved. The business viability in terms of the existing market and the potential market is attractive.

“I repeat what we already know which is: will successive governments and their institutions respect (honour) the terms in the concession agreement? Hurdles to clear also include the issue of existing concessionaires within the current four viable airports. Nigerians are financing and managing more complex institutions than the four airports planned for concession. Air Peace is more complex to manage than Enugu airport, or Port Harcourt airport, or Lagos airport. Dangote conglomerate is much more complex. Forte Oil, Oando, BUA Group, Zenith, GTBank, etc are owned and managed by Nigerians,” Akpan said.

Collaboration

CEO of Mainstream Cargo Limited, Mr. Seyi Adewale, said that concession would be more successful if foreign companies partner indigenous ones.

He noted that there are strong views and perspectives from both sides of the divide (options) but from his independent analysis, the advantages are skewed more in favour of a joint foreign and local collaboration or partnership for the following reasons: in the joint partnership, the foreign firm would have an international airport already in its management and they would leverage on this for Nigeria’s immediate advantage, including international synergy.

“The local partner will leverage its strength on local knowledge, public sector management, labour unions management, and general stability. The existing arrangement would have clauses to protect local content including staff percentage up to 85-90 per cent and the foreign and local partner would share reasonable equity amongst themselves,” Adewale said.

He also said there could be repatriation based on management, technology, and ICT fees in favour of foreign partner should only be for an agreed period and thereafter, it must be domesticated and knowledge transfer would have been realised, remarking that the foreign firm would bring real and new funds and investment into the sector.

He said there could be further knowledge transfer in energy efficiency; environment management control and airport management is enhanced.

“However, I recognise that we have local companies that have proven to be stars and can favourably compete with foreign companies. In aviation particularly, Bi-Courtney has proven capacity to deliver. Bi-Courtney in my opinion must further prove its financial capacity (that new and real funds) would be invested in the airport as necessary because this is very critical to the growth and development of any concessioned airport they potentially may be interested in. This issue is to avoid another ‘DISCO Quagmire’ as witnessed in the electrical sector post-PHCN,” he added.

In his own response, an aviation analyst, Inyang Okoro, said: “Sincerely, I really do not know what the federal government wants. This is a government that is constantly drumming for made in Nigeria goods. As far as I am concerned, Bi-Courtney has demonstrated capacity. Since it started managing the MMA2, power has never failed, water has never stopped running. Everywhere looks cleans, elevators and others facilities are working efficiently. Why not give it a chance? Why look elsewhere?”

Companies that have submitted their expressed interest in the concession programme are waiting and hoping for the process to come to an end and winners for the concession to emerge.