Africa Aviation: We will concession Nigerian Airports on PPP, Hon. Sirika tells stakeholders

ACI Abuja flights jet

By Renn Offor

Nigeria’s Minister of State for Aviation, Alhaji Hadi Abubakar Sirika, has presented the Federal Government’s Aviation Roadmap to stakeholders over the weekend, and saying in the process that Nigeria’s Government is now ready to move on with the concession of the airports through the process of Public Private Partnership (PPP), even as he stipulated government’s strategy for action and processes to be followed.

The event held on November 12th at the Sheraton Hotel and Towers, Ikeja, Lagos.

The Minister of State for Aviation therefore used the event to intimate stakeholders and those present of the various resolutions and established processes to be followed as the Ministry of Transport gears towards the concession of the airports.

Honourable Hadi Sirika kick started the meeting, as he informed the audience that he intends to continue to have consultations with stakeholders as they seek to navigate the sector out of the murky waters, while reminding that the event was the second consultative meeting he is having with stakeholders in the country’s aviation sector. This time, to accommodate more people, he moved the meeting to Lagos, as the first one which held sometime in May was at Abuja.

He said, ‘As part of our consultation efforts, we continue to engage key stakeholders in the sector to refine our strategy and embark on an implementation plan. Our stakeholder engagement approach includes:

Several discussions with domestic and foreign airline operators, Consultations with international agencies and regulatory bodies (e.g. ICAO, IATA, TSA, SITA,) to ensure our strategic approach is in line with international best practices’.

Alhaji Hadi revealed that his ministry has held dialogues with related Intergovernmental agencies (CBN, Ministries of Finance, Interior, BPP, DMO, AMCON) and with Unions and key aviation bodies, adding that they have also had discussions with airport operators all over the world.

Recall that over the last couple of months, the current administration has been faced with the challenges to revolutionize the airports in Nigeria in other raise infrastructure, make it more functional and profitable and to create employment. Players, experts and stakeholders in the aviation sector have argued that the current state of the country’s airports can only be improved by if the federal government concession out the airport to private investors.

The Minister, therefore, went on to enumerate that the purpose of his presentation was to ‘appraise to Stakeholders of the progress so far achieved in the aviation sector since the last Stakeholders forum in May, 2016 and to align on concrete plans to transform the sector over the next 2-3 years’.

After reaffirming the resolve of the country’s current administration to tackle problems in the sector, the Honourable Minister went on to outline the challenges facing the Nigerian Aviation Industry, among which he cited employment policy for Aviation Professionals, Foreign Exchange, Rising price and scarcity of Jet A1 (Aviation Fuel), Waiver on Aircrafts and Spares, Budgetary Constraints, Decaying and ageing infrastructure and obsolete equipment in the airports which includes the Terminal Buildings, Control Towers, Central Air Conditioning Systems, Conveyor Belts (built in the 1970’s).
Others are Poor and Intolerable condition of airport facilities and equipment ( long wait-times check-in, security screening and baggage pick up), Ageing and over bloated personnel within the agencies, Inadequate safety, security and surveillance equipment, High cost of funds and shrinking capital market, High debt profile of Domestic airlines operators, Inadequate human capital development and capacity building of aviation experts.
The Minister then delves on to reveal the strategy thrust of the Federal Ministry of Transport in responding to the issues that bedevil the sector.
‘The Federal Ministry of Transport remains committed to making air transportation the preferred and safest means of transportation in Nigeria; creating a self-sustaining business model and driving socio-economic growth in Nigeria.

‘Our main focus is to develop a hub to take full advantage of our potential; Develop requisite capacity and manpower especially Aviation business Managers and scientist to engage in research and development; Establish a business model that will make the industry self-sustaining model through Public Private Partnership, and to maximize the contribution to the socio-economic development of the Nigerian Economy through increased trade and in-flow of FDI, focusing and growing of agro- allied designated airports and resultant job creation’.

The Minister of State for Aviation went on to use the platform to present to Stakeholders key achievements of the ministry till date, saying that, ‘While resolutions to all impeding challenges facing the sector remain key to attaining our vision, we have focused our efforts in the last few months on reviewing and improving the Bilateral Service Agreements (BASA) on a case by case basis to ensure Nigeria obtains maximum benefit while flexibility clauses will be included to facilitate and protect National Interest
Runway resurfacing at Abuja, Enugu and Lagos (taxi way);

‘Completion of on-going projects in the airports nationwide, Exploring Alternative Funding sources (i.e. Pension Funds), Drive towards a lean organization for the agencies – Pyramid model (currently top management heavy). Proper placement of staff for efficiency and fairness commenced with FAAN’.

Senator Sirika also revealed that, ‘The Civil Aviation Act including the Acts establishing other agencies have been reviewed, awaiting FEC approval, and the process of engaging TAs have reached advanced stage; Duty exemption for Aircraft and Spares, Availability of Jet A1 Aviation fuel; Improvement of Airport infrastructure and navaids.

He went on to affirm the constitution and inauguration of an Inter-Ministerial Project Steering Committee (PSC) on 18th September, 2016 with the following membership: HMS (Aviation); HM(Finance); PS Ministry of Transportation ;Director General (ICRC); Managing Director FAAN; Ministry of Justice and National Budget and Planning.

He also said that the Project Delivery Team (PDT) was set up and inaugurated on 18th September, 2016 by the HMSA with the following membership: Office of the Minister of State Aviation:- Aviation (PPP Unit), FAAN, Ministry of Finance, ICRC, Procurement (MoT), Legal (MoT) and Representative to the Unions.

Others are the committee on Expression of Interest (EOI) for the appointment of Transaction Advisers completed and Request for Proposal (RFP) issued to shortlisted companies; Installation of new and Servicing of existing security equipment ; Upgrading of Nigerian College of Aviation Technology, (NCAT), Zaria into ICAO Regional Centre of Excellence.

He affirmed that Nigeria has been elected into Part Two of ICAO Council in October, 2016 , and that ICAO has confirmed to provide Technical assistance to Nigeria in the process of PPP and establishment of Aerospace University.

Honourable Sirika also revealed concluded plan by UN to establish a counter- terrorism school in Nigeria, and the repositioning of AVSEC personnel.

In his presentation, the Minister responded to some of the concerns raised by industry stakeholders, among which is this: “Is it the runways, landside, terminals, terminal facilities, airside, commercial and or allocation of gates and runways? What will be the role of over six thousand serving employees under the new proposed dispensation”?

In his response, the minister said, ‘The scope of the PPP will be determined by the Transaction Adviser after careful study and preparation of an Outline Business Case (OBC). The OBC will have to be certified by the Infrastructure Concession Regulatory Commission (ICRC) and approved by the Federal Executive Council (FEC).

‘The Staff of FAAN will be responsible for supervising all PPPs and in addition be responsible for running other airports in the country. As the Infrastructure expands, more people will be engaged to operate the new terminals. The airports being concession under a PPP arrangement will require regular roles to be played by the both the government and the private sector for success. FAAN will be the government counter party on the PPP contracts for the airport and play government’s role’.

Another question was, ‘How can there be concessions of airport without job losses”. To this the he said, ‘What we plan to have is more jobs. Our aim is to increase the size and capacity of the airports through PPP by attracting investments, to create the much needed hub in West and Central Africa.

‘In 2007, Jordan awarded a 25-year concession for the Queen Alia International Airport in Amman following a competitive bidding process. The project included rehabilitating existing facilities, constructing a new terminal with a capacity of 12 million passengers per year, and operating the airport. The project generated more than $1 billion in foreign direct investment and lead to the creation of 23,000 new jobs over its lifespan.

These are type of economic and job creation benefits we will attract by using PPP for our airports’.

Another question, ‘ In what way and manner will the government remedy and reconcile or harmonize all concessions agreements within FAAN to avoid further and future litigation in view of the new attempt to concession our airports? FAAN has the largest history of failed concessions with over Sixty-Eight pending court case?”

The Minister answered, ‘As part of the Transaction Advisory services, the TA will have a legal firm as part of the consortium. The TA will review all agreements and litigations and provide a way forward in collaboration with FAAN legal department. The Sixty-Eight pending court cases will be look into and various options of mitigation will be provided.

In addition, we plan to use modern techniques like establishing an aviation Dispute Resolution Board (DRB) of respected experts. The Board will be part of the PPP development and procurement process and will resolve all disputes in the aviation sector’.
On the issue of whether if it “Is concession/PPP the only option open to this administration to stem the tide of ugliness, cigarette and liquor selling duty frees in Nigerian Airports?”

The Minister answered, ‘We are all aware of the financial crises faced by the Country to say the least. We need funds to develop our aviation industry, which foreign investors are ready to bring in as long as there is a well-structured and bankable project for them to invest in. The investors want to invest in Nigeria because we have the numbers in terms of population required to run a successful PPP in the aviation sector.

‘Our duty free can be bigger and more equipped than what we currently have. In addition, what we are doing is a Public Private Partnership and concession is a key PPP method for attracting investments. Under the PPP the airport terminal remains the property of the government. The PPP partners will only invest in the airport terminal, provide better services and after the PPP contract period the terminal reverts to government’.

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