How Local Content’ll Aid Airport Privatisation

As government finalises plans to privatise four airports, stakeholders call for due diligence and injection of local content to midwife the process. WOLE SHADARE writes

The twin-problems of mismanagement and corruption encountered by the state-owned corporations constitute the impetus for talk about plan to privatise some Nigerian airports. For the government to demonstrate to investors that it is serious and committed to the privatisation programme, the first step is to make the process very transparent by throwing the bid open to would-be investors.

The scepticism

Many believe that scepticisms have always trailed the process because of the underhand scheming that usually throw such jobs to people who are very close to people midwifing the process. To make the process transparent, local investors have been asked to be involved, especially companies that have track record or experience of airport management. As the Federal Government gears up to make good its plans to privatise the Lagos, Abuja, Kano and Port-Harcourt airports, the coming months would be very crucial.

The way it goes about it would determine its seriousness for change, to do things differently from how projects are carried out without recourse to law or principles that guide investments. The planned concession/ privatisation is welcomed by majority of stakeholders in the sector who have given up on the inefficiency that characterised the management of aerodromes across the country. One can to some extent excuse the Federal Airports Authority of Nigeria (FAAN) for the seemingly inefficiency. The expertise to manage these airports is simply not there as far as the agency is still run like a civil service organisation that it is.

Nations make U-turn

Save for some nations, many countries have realised this short coming and have taken the best option to concession their airports to generate more money, block all the leakages, provide efficiency and give value to travelers and others using the facilities. The Ministry of Aviation has considered all options for ensuring sustainable infrastructural development and operational efficiency of the nation’s airports and made unanimous decision: privatise or concession the four major airports (Lagos, Abuja, Port Harcourt and Kano).

The government acknowledged at a recent interactive forum in the nation’s capital, Abuja, that aviation is critical to the economic transformation of any nation. To them, Aviation is pivotal to growth of key economic sectors, certainly not limited to travel and tourism, agricultural production and distribution, rural development, trade and commerce, manufacturing, oil and other non-oil sectors. Aviation is that critical tool necessary for economic transformation of any nation.

Indeed, the value chain creation by aviation is enormous. In previous months, a number of important stakeholders and professionals in the industry have been canvassing the privatisation or concession of airports in the country, especially in the wake of a recent report that rated the international airports in Lagos, Abuja and Port-Harcourt among the 10 worst in the Africa. Meanwhile, FAAN had swiftly debunked the rating, saying some of the aerodromes were still undergoing remodeling when the survey rated Nigeria’s airports as amongst the worst in the world.

Economic prosperity

Stakeholders believe privatisation of airports is directly tied to the economic prosperity of the country especially in increasing their operational efficiency and profitability, but most importantly in stimulating growth in the non-oil sector of the economy. Some also believe it is the most efficient way of curtailing corruption in the management of airports. Not a few believe that the country has not managed its airports efficiently as they remain a national embarrassment and the resources to do so are no longer readily available.

An aviation consultant, who preferred anonymity, said she is of the view that privatisation is an efficient way of managing infrastructure assets, noting that transparency of the exercise would liberate the government from appropriating money annually for airport operations. A striking example of how privatisation can benefit the country is curbing the unnecessary government expenditure of N63.5 billion being expended on the second runway under construction at the Abuja airport, as traffic utilisation estimates in no way justifies that expenditure. If the airports had been privately managed, the Federal Government would have been able to save this fund and deploy it to other critical social needs.

Experts’ views

Also, respected aviation expert, Captain Daniel Omale recently said, “It is needless to reemphasise the economic role of airports in a country. The huge issue about airport development, improvement and management is: who should bear the burden of continued operation of the airports? While the Federal Airports Authority of Nigeria (FAAN) has been saddled with operating and managing the 22 airports in the country, the most efficiently operated and managed airport in Nigeria still remains the MMA2, which is part of the concession agreement with Bi-Courtney Limited (BCL). “However, in recent times, the issue that has agitated the minds of stakeholders the most is government’s failure to articulate any clear cut roadmap for implementing the concession, as well as the non-engagement of identified key stakeholders in the concession process.

This development has already created doubt in the minds of some industry players about the sincerity of the government and the credibility of the process it would eventually adopt. Aviation security consultant, Grp. Capt. John Ojikutu (rtd) queried the government’s failure to engage with Bi-Courtney Limited, which has the track record of dealing with various agencies of government over the years as the operator of the only existing model for airport concession in the country, the Murtala Muhammed Airport Two (MMA2), Lagos.

He also cited the critical insights the government could glean from such an engagement to find solution to the gray areas affecting concession of an aviation establishment. Former Director General of the Nigerian Civil Aviation Authority (NCAA), Dr. Harold Demuren, alluded to the same fact in his address at the recent Aviation Day event organised by the International Air Transport Association (IATA) in Abuja, when he averred that the engagement of Bi-Courtney Limited by the government is critical for the success of the planned airport concession. Demuren reportedly stated: “There is need for PPP in aviation in Nigeria as it is obvious that government cannot do it all. But with the experience of the Murtala Muhammed Airport Two, MMA2, Lagos, the government has not shown good faith.

Such crisis in the MMA2 PPP must be resolved immediately, or else investors would not invest their resources in the sector.” Chief Executive of Belujane Konsult, Chris Aligbe said the government must put administrative and legal frameworks in place before embarking on another concession exercise. Aligbe also acknowledged the important role of Bi-Courtney Limited in the concession process, stating: “Bi-Courtney Aviation Services Limited has shown an example about how airport terminal could be effectively run with MMA2 even under unfair and uncertain political atmosphere and lack of regulatory laws to govern its concession.

The terminal has epitomised just a little of what the private sector can infuse if given the chance to participate in airport infrastructure development and management.” Speaking in the same vein, Chairman, Bi-Courtney Aviation Services Limited, Dr. Wale Babalakin at a forum recently highlighted the important role it may have to play in the development of the aviation industry. He affirmed that the country’s airports could be turned around in 30 months if the right approach and attitude were adopted.

Babalakin, in his address as the lead speaker at the quarterly business breakfast meeting of the Aviation Safety Round Table Initiative (ART), a highly regarded aviation industry think-tank, held in Lagos, submitted that “only private capital possessed the potential to drive initiatives”.

He advised the government to divide the nation’s airports into four zones, comprising Lagos, Abuja, Kano and Port Harcourt before offering them to interested concessionaires, adding that each zone should then be made responsible for the growth of all airports within its jurisdiction. He had further stated: “I heard some people say that only Lagos airport is viable. I don’t agree. If you want to challenge it, my position is give us (Bi-Courtney Limited) Abuja. If you think it is not viable, we will take it. I want to assure you that to make them viable requires somebody sitting down and thinking of how to make them viable. I don’t expect the airport from day one to be viable.

I expect that whoever takes them over would realise that you must create activities around the airport that would attract those who want to fly to and from the airport. “You see, the days are gone and gone for good where governance is about ability to spread the resources. In Nigeria of the future, governance must be about ability to create resources. If your capacity is how to spread resources, even honestly, without corruption, without anything going by the side, you will still be a grade C economy.

Growing up, my father used to tell me that the world is tired of those who can do well when the circumstances are right, what the world needs now are those who can do well when the circumstances are not right,” Babalakin added. Spokesman for Bi-Courtney Aviation Services Limited (BASL), Remi Ladigbolu explained that all over the world, airports are being privatised outright, or given out as concessions to private operators. “If Britain can concession Gatwick Airport terminal to a Nigerian, Adebayo Ogunlesi, what more do we have to say? What the industry needs desperately is a thorough liberalisation and overhaul of the regulatory agencies to make them more efficient and more professional so as to be able to stamp out corruption.”

Conclusion

Aviation is a precise science; highly regulated by law and expensive to maintain with profit margins very low. To many, it is totally unacceptable for investors in this high-risk sector to invest in uncertainty, as huge losses will occur. Unfortunately, evidences of all of that are blatantly visible in Nigeria’s aviation sector over the years, thus, there is lack of critical, safe and efficient infrastructure needed to drive the economic recovery agenda of this government.

Wole Shadare