Aviation industry stakeholders have identified political uncertainty, policy summersault and high cost implication as barriers to the planned concession of major airports in the country.
They dismissed the idea that concessioning Nigerian airports would be the solution to the perennial problem of poor and obsolete infrastructure and insisted that the facilities were not attractive enough and may not be able to bring investors who may be willing to expend high capital outlay on them.
The stakeholders also posited that from practical experience, successful airports were largely not even the ones taken over and being managed by private concerns but those owned by government with disciplined management system.
One of the stakeholders who was responsible for the recent expansion and upgrade of the Lagos and Abuja international airports, told THISDAY that the huge capital that would be needed to upgrade facilities at these airports may be a disincentive to possible investors who may doubt whether they would be able to recover their investment.
He also observed that the Nigerian government has become notorious for repudiating agreements, which has made investing in Nigeria unattractive, insisting that policy summersault is the bane of aviation development, but
expressed the hope that things would be different this time.
“There is real challenge in the concessioning of airports. Airports require huge investment. As far back as eight years ago OR Tambo International Airport, Johannesburg, spent R4.5 billion to upgrade its facilities and the Caro International Airport spent between $500 and $1.2 billion to upgrade its facilities.
“Since we built the Murtala Muhammed Airport international terminal in 1976, it has not been comprehensively upgraded, except perch works. So, the money that will be needed for the upgrade, expansion of the apron and extension of the runway will be huge and recent in-house estimate puts it at N30 billion. These will include expansion of the apron, the runway, from 2400 to 3000 cubic feet, installation of Category 2 airfield lighting. The N30 billion estimated for the upgrading of the airport is in-house estimate, which does not involve the construction. Come to think of it, which concessionaire will be willing to spend about N40 billion to upgrade infrastructure at the Lagos airport?
“The last rehabilitation done concentrated on airport aesthetics. You need to work on the conveyor belt, electronic gates etc. Who will be willing to spend such amount of money with the uncertainties government policy hanging on your head? Just look up the cost of upgrading and the building of new airports in other parts of Africa,” the stakeholder said.
He also said that many investors would not want to do long term investment in airport development in Nigeria because of the political terms or even undertake a concession, stressing that political uncertainty is the major reasons investors are unwilling to invest in airport facilities in Nigeria, adding that with such uncertainty an investor is not sure of his return on investment and urged that for government to attract big investors it should build trust first with policy consistency.
“Lagos airport requires total change of conveyor belts. The quality type that can last very long that is in keeping with global standards. There should be upgraded security networks with state of the art, advanced technology security equipment. Ideally, in modern airport, there is no physical contact with passengers and their luggage. Nobody has anybody’s time; you just do what you are directed to do and there will be seamless movement and facilitation. So, we need to upgrade the security infrastructure. It will go a long way if you procure the right equipment. So, what is the timeframe that will be given to the concessionaire for return on investment? Such agreements are usually long-term,” he further said.
Speaking, the Managing Director and CEO OF Aero Contractors, Captain Ado Sanusi, told THISDAY that in order to avoid the failure of the past efforts to concession the airports, the federal government should define what it wants to concession; is it the terminal, the runway, the general aviation or others.
He said that government could seek the assistance of the International Finance Corporation (IFC), a subsidiary of World Bank, which has specialty in concession of assets, recalling that Jordan’s major airport was concessioned with the assistance of IFC and it remains a success story.
He emphasised that the challenge in concession of airport in Nigeria is that vested interests usually erode fairness and transparency, which has been the major problem why the concession programme never succeeded so far.
“Government should define the parameter of the concession. What areas do you want to concession? What infrastructure do you want to be upgraded and expand? What is the number of years you want the concession to run? In order to succeed you have to engage the assistance of international originations that have experience in airport concessioning. But the problem of concession in Nigeria is that vested interest overrides the goal of concession and that’s why it has never worked,” he said.
X-raying the concession programme, the former General Manager, Commercial, Federal Airports Authority of Nigeria (FAAN), James Shalangwa, told THIDAY that the federal government was still groping in the dark about concession because the plan that government officials have is littered with loopholes, which will undermine the success of the programme.
“If you ask me, I will tell you categorically clear that the federal government does not know what it is doing as far as airport concession is concerned. What do they exactly want to concession? Is it the management of the airport. I am asking this question because all the facilities at the airport are already given out in concession. They are managed by the private sector. So, what they want to concession is the management of FAAN,” Shalangwa said.
He noted that the Minister of Aviation and Aerospace Development, Festus Keyamo, had assured labour that the workers in FAAN would be protected when the airports are concessioned; but noted that no provision was made for those who have retired and for those who are on pension, whose number is put at about 3000-4000.
“The pensioners have not been factored in the process. How many airports are they concessioning. I heard that the Minister said that it is not only the major airports that will be concessioned but the unviable ones will be tied to the profitable ones, but how are you going to generate traffic on those unviable airports and you can see that passenger throughput has gone down because many people are no more travelling by air because of the economic crunch,” he said.
Shalangwa challenged those who are always comparing Nigerian airports to others in other countries and said that it is wrong comparison because Nigeria faces lack of sincerity in governance and reiterated that investors will find it difficult to take over Nigerian airports because of their level of development and observed that they need huge capital outlay and poor return on investment and called the federal government to rebuild the airports first before thinking of concession.
