Punch: Airports Concession: FG Must Get It Right

THE Federal Government’s decision to proceed with the concession of the Lagos and Abuja airports is a crucial step forward in revitalising the aviation sector. Four international airports — in Lagos, Abuja, Kano and Port Harcourt — are eventually to be placed on offer. This project should be pursued with both urgency and utmost caution to avoid past mistakes and deliver the benefits of a revamped aviation industry.

Vice-President Yemi Osinbajo and the Minister of State for Aviation, Hadi Sirika, confirmed President Muhammadu Buhari’s final approval to proceed with concessions for the Murtala Muhammed International Airport and the Nnamdi Azikwe International Airport. It provoked the usual opposition from public sector aviation workers who staged disruptive protests against the plan.

We remain steadfast in our total support for the liberalisation of all economic sectors and transfer of commercial assets to the private sector. We are guided by global trends and Nigeria’s sad experience in state control of businesses. Private sector lead — through privatisations, concessions, leases or public-private participation — is the only viable alternative to boosting productive activities, creating jobs and unleashing the full potential of Nigeria’s 180 million people, natural resources and investment draw.

The International Air Transport Association says that properly developed aviation industry contributes to the national economy by supporting hundreds of thousands of jobs, stimulating tourism and hospitality sub-sectors, facilitating skills and technology acquisition and projecting image. Airports are the fulcrum of the sector: typically incorporating runways, helipad, control towers, hangars, terminals, airport aprons, restaurants/shops, lounges and financial services outlets.

But Nigeria’s airports are national embarrassment. A controversial $500 million Chinese loan to revamp them failed. No Nigerian airport featured in Africa’s Top 10 in a 2016 survey, while three South African airports, Johannesburg, Cape Town and Durham, as well as Kigali in Rwanda made the list. Port Harcourt was once ranked the world’s worst international airport.

The argument for privatisation here is unassailable. Successive governments and managements have run virtually all state-owned enterprises aground. Nigerian National Shipping Line and Nigeria Airways are defunct; NAHCO, Sky Power Aviation survived only after being privatised. A former minister confessed that Ajaokuta Steel Company has cost the government over $10 billion and still counting, with very little production to show, while the Nigerian National Petroleum Corporation loses billions of dollars each year through fraud, loss-making refineries and idle facilities. We strongly urge the government to proceed with urgency, tact, transparency and honesty in the concessions. Nigerian government’s track record in concessions is dismal; often fraudulent and patently destructive. While the workers’ opposition to concessions must be overcome, the government must also address theirs and all other Nigerians’ hatred for rigged privatisations.

Airports are not only business entrepots and travel, tourism and hospitality hubs, they are also security zones. On no account should the concessions be undertaken through the all comers’ highest bidder route that had cost this country so dearly. The template has allowed incompetent emergency consortia formed by officials and their dodgy business partners to corner unbundled state assets. This ruined the power sector privatisation, caused the serial failure of NITEL auctions and faulty deals for Lagos International Trade Fair Complex and many others. Concessions for MMA 2 and airport toll gate are controversial with concessionaires filing debt claims and law suits against the Federal Airports Authority of Nigeria.

Rather, we suggest that international firms and consortia already operating the best airports around the world only should be invited with the terms and conditions clearly spelt out: emphasis should be on technical, financial and managerial competence. Only among such short-listed global players should highest bid feature. We insist that no Nigerian company today has the competence and ability to pull in the foreign direct investment and the technical expertise that our airports need to make them regional hubs and boost job creation. Airports are international businesses, not oil blocks.

Workers’ unions’ citing of national patrimony and security concerns is deceptive, uninformed and a base appeal to emotion. Stakeholders’ demand that the government spell out its plans in relation to control of control tower, navigational aids and runways is, however, timely. Concessions are usually given for terminals, parking lots and the business areas, while the state retains control of runways and security facilities. Britain has not compromised its national security or given out “national patrimony” by ceding control of London Gatwick Airport and London City Airport to Global Infrastructure Partners, a US-based consortium headed by Nigerian-born Bayo Ogunlesi. London Heathrow, Europe’s biggest, is operated by a consortium led by Ferovial of Spain and includes firms from China, Canada and Singapore. Saudi Arabia, the conservative Islamic kingdom, aims at complete privatisation of 23 airports by year end with European firms already winning bids. It has pegged stakes by Saudi nationals at maximum 25 per cent. Three European consortiums (from Germany, France and Switzerland) early this year won concessions to run four Brazilian state airports. India and Russia have also opened up to foreign operators. Canada in 1998-2000 divested control of all its major airports save for a few small ones.

Critical for success is how Nigeria makes and enforces the rules. Never again should we enter into lopsided agreements weighed heavily in favour of concessionaires. The agreements should be reasonable and safeguard Nigeria’s economic and security interests. Our concession law deserves a critical review while workers’ severance benefits should be given priority. The government should be prepared to implement all obligations it makes to avoid a repeat of the failed Nigeria-Virgin Atlantic deal.

Wisely, countries opting for privatisation and concession are not swayed by sentiments, but often look to Western and emergent Asian markets for tested partners with FDI, expertise, track record, skills and technology transfer in mind. We should follow this proven template. The National Council on Privatisation should expressly bar any official from interest in the concessionaires. FAAN should be reorganised, separating it from control of its 22 airports and restricting it to being a mere landlord with spartan staff.

Government should strengthen regulatory agencies, crush corruption in agencies like customs, immigration and security forces and leave the specialised business of running airports in private hands.

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