FG clarifies concession of four international airports

Abiola SeunThe Federal government of Nigeria yesterday said it is not putting the airports for sale but rather concessioning the non aeronautics assets of the airports for optimal performance.

In a document made available by the Director, Public Affairs, Ministry of Aviation, James Odaudu, he said there shall be no change in the ownership structure of the airports involved in this programme.

The airport listed for concessioning include, Murtala Mohammed International Airport – Lagos, Nnamdi Azikiwe Airport – Abuja (International & Domestic), Port Harcourt Airport (International & Domestic) and Mallam Aminu Kano Airport (International & Domestic).

The statement read, “What has been mandated by the Federal Executive Council is a Concession programme. A concession is governed by a concession agreement whereby two parties – A private sector investor and a Public sector owner of an asset enter into an agreement that gives the Private sector investor the right to operate said asset for a specific business and within the Governments jurisdiction, subject to certain terms that are agreed upon by both parties during the negotiation and contracting phase. It is thus a form of Public-Private Partnership whereby there is no transfer of equity between the contracting parties.”

Oduadu explains further, “The concession applies to the non-aeronautic assets of the airports located in the Passenger and Cargo terminals. They are thus comprised of the assets from the entry door of the airport to the point of embarking a plane, and from deplaning to the exit doors.”

“This space commonly referred to as the Passenger terminal is comprised of retail spaces, waiting and seating areas, airport and airline lounges, baggage collection, check-in counters as well as administrative offices. The Cargo terminals are comprised of the facilities between the point of entry and up to loading and offloading points, including administrative offices within said facilities,”

On how much Federal Government intends to generate through this concession project, the document was silent only making reference to a significant amount and cost saving on the part of government without expatiating how.

It reads ” A typical airport concession transaction might rely on a deal structure comprised of an investment commitment by the concessionaire for a minimum duration, an annual concession fee and a share of net operating income.

“These are prized aviation assets and as such we expect to generate a significant amount of direct investment in what we intend to be an equitable deal for all parties.

” That said, the initial or short-term objective is to deliver significant cost savings to the Federal Government.

“FAAN will no longer be solely responsible for maintenance, investments and day to day management into these airports.

“We expect to generate significant cost savings and operating income over the period of the concession. Airports continue to be prized assets in the global logistics sector which is projected to grow.”

On the tenure of the concession, the document stated that concessions of this nature come with a significant financial obligation which any responsible concessionaire will no doubt be keen to recoup.

It stated, “To this end, we envisage a minimum of twenty (20) to thirty (30) years for the programme, which may be extended depending on performance and Nigeria’s best interests.

“That said – the duration is not set in stone and will be subject to negotiation and then final approval by the Federal Executive Council.

On the Transaction Advisors (TAs), the document revealed them to comprise a team of seasoned executives put forward by Dentons (a multinational law firm with global operations), Infrata(a global infrastructure investment advisory firm), Proserve Energy and Infrastructure Consulting Services (an indigenous advisory firm focusing on energy and infrastructure projects), Templars (a leading law firm headquartered in Nigeria) and Rebel Group ( a global leader in infrastructure, transportation and mobility advisory services).

It stated that the TAs were appointed by the Ministry of Aviation, having gone through a rigorous process as laid out by the Bureau of Public Procurement (BPP).

BPP’s laid down process for good governance in public procurement is available on their website.