MMA2 Concession: FAAN Misleads The Public—Babalakin
The recent intervention by the Infrastructure Concession Regulatory Commission (ICRC) has raised the hope of an early resolution of the controversial issues surrounding the first successful, privately-funded Design, Build, Operate and Transfer (DBOT) airport terminal in Nigeria, the Murtala Muhammed Airport Terminal Two, popularly called MMA2, operated by Bi-Courtney Aviation Services Limited (BASL), a member of the Resort Group.
The intervention, led by the Acting Director-General of ICRC, Mr. Chidi Izuwah, brought the managements of the Federal Airports Authority of Nigeria (FAAN) and BASL together under the same roof, where both listed the areas of disagreements in the MMA2 concession agreement inked by both parties in 2003.
Although tempers rose occasionally at the meeting, Iwuzah tactfully brought the situation under control, saying “we are not here to fight or exchange words with each other, but to listen to both parties and see how we can resolve all the issues in contention amicably without involving the judiciary again”.
Chairman of the Resort Group, Dr. Wale Babalakin (SAN), who led a strong team of BASL directors and management to the meeting first made his presentation. The team comprises a Director/Group Consultant, Professor Olugbenga Ogunmoyela, Chief Executive Officer of BASL, Captain Jari Olubunmi Williams, Legal Counsel, Mr. Tola Oshobi (SAN), Head of Terminal Operations, Mr. Bolaji Salu, Head of Aeronautical Services, Mr. Raphael Uchegbu and Head of Corporate Communications, Chief Stephen Omolale-Ajulo.
Babalakin expressed regrets that certain misconceptions had been “sold, bought and distributed to Nigerians about the MMA2 concession” by FAAN, adding that one of the misconceptions was that the concession agreement was drawn by BASL for the agency to sign. This, he dismissed as untrue, as, according to him, the agreement was drafted by one Professor Akanle, a consultant engaged by the Ministry of Aviation.
Besides, he also dispelled the misconception that the concession did not follow due process, arguing that Royal Sanderton Limited won the bid for the reconstruction of the burnt domestic terminal building and could not do anything on the site for one year following which BASL was invited as a reserved bidder.
He said FAAN had “sold” these misconceptions to Nigerians to justify the flouting of the agreement its officials read and signed and as a way of discouraging private investors from helping the Federal Government to lift the aviation sector from his current terrible state.
Babalakin lamented that from day one that BASL inked the MMA2 concession agreement with FAAN, the agency had serially flouted it with reckless abandon. Besides, he said all the arbitral decisions and various court judgements, even up to the Supreme Court, which were in favour of BASL, were never obeyed by FAAN. This, to him, is discouraging to the private sector, “which is the only sector with the energy to provide infrastructure in the country”.
He further complained to the ICRC that although part of the agreement states that all domestic flight operations in Lagos State must originate from MMA2 or any other terminal to be managed by BASL, the then Minister of Aviation, Princess Stella Oduah, went ahead to redevelop the General Aviation Terminal (GAT) and encouraged Arik Air to continue operating from there, thereby earning all the revenues due to BASL illegally. He therefore urged the commission to “study all the available documents on this and ask FAAN to hand over GAT to us and account, in arrears, for all the revenues received so far from the facility.”
Babalakin lamented the monumental investments his firm had lost in the process of executing the MMA2 concession and listed them as a 50 per cent reduction in revenue due to BASL but being collected illegally by FAAN at GAT; millions of dollars invested in regional flight operations, which was approved by the Ministry of Aviation, but which FAAN and the Nigerian Civil Aviation Authority (NCAA) frustrated from taking off; over N500million used in clearing the GAT and building a dumpsite for disused aircraft which littered the then derelict terminal building; millions of naira used in building fire hydrant and underground fuel tank and the over N4.7billion used in building a link road between MMA2 and GAT, among others. According to him, the immediate past Aviation Minister, Chief Osita Chidoka, directed that these monies be refunded to Bi-Courtney after series of meetings between FAAN and BASL, but FAAN has continued to ignore the directive till date.
He also told the ICRC that as far back as 2009, a Federal High Court had awarded a judgement debt of N132billion against the Federal Government/FAAN for consistently flouting the MMA2 concession agreement, which has been accruing interest and had not been paid till date.
“Apart from this, in 2007, we wrote to the Federal Government and FAAN that we were ready to provide electricity to the airports, including the International Wing, the Air force base and others so that there would be 24/7 power supply, but they refused to approve this,” he further lamented, saying the environment in the country is very hostile to the private investors.
Despite all this, he praised the management of MMA2 for “their resilience in managing the terminal so well to the extent that we have never had a total blackout in MMA2 in the last 10 years”.
On the Four-Star Hotel and Conference Centre projects, Babalakin said, “we are ready to finish the two projects but we are completely scared of FAAN because of its antecedents. For example, we spent $2million dollars to buy tiles and another $1. 2million to airlift them for the projects, only for FAAN to frustrate us. What is more painful is that an international company that we signed agreements with on the two projects pulled out of Nigeria because of the harsh business environment,” while describing the situation of the Hotel and Conference Centre as a “monumental embarrassment”.
Asked to react to Babalakin’s submissions after he had left the venue for an official engagement at the University of Lagos (UNILAG) where he is also the Pro-Chancellor and Chairman of Governing Council, the Deputy General Manager, Public Private Partnership, Mrs. Monica Alphonse, who spoke on behalf of FAAN, said on the various judgments in favour of BASL, only the Attorney-General of the Federation (AGF) was sued but not FAAN, adding that the agency was also not represented at the Arbitration Committee set up by the AGF, who is the Chief Law Officer of the Federation, to resolve all the contentious issues.
She chastised the judiciary, saying: “I am surprised that courts in Nigeria could give judgements against FAAN when it was not one of the respondents, or a party in all these cases,” despite the fact that AGF represents the Federal Government and all its agencies.
Although she agreed that the concession agreement gave BASL exclusivity over domestic flight operations in all airports in Lagos State, despite this, she still insisted that GAT where Arik and Air Peace airlines currently operate domestic flights from was never part of the MMA2 concession, saying “what is contained in the agreement is only where MMA2 was built”.
She also said FAAN could not have granted BASL permission to provide electricity in the airport because the Ministry of Works, Housing and Power was in charge of power generation and distribution, which the company should have applied to, for approval for its power projects instead of FAAN. However, it was in the signed agreement that this would be approved by FAAN.
Despite all this, she said, “yes we have been having concessions, we want to do concessions. We want the confrontation to end since it is not good for both parties”.
But, while commending Babalakin “for service to the nation and for believing in the rule of law” and the management of BASL for the effective way it has operated MMA in the last 10 years despite all the challenges surrounding the concession of the terminal, Iwuzah appealed to both parties to “bury the hatchet for us to find a permanent solution to these problems for the benefit of ordinary Nigerians”.
He further praised BASL “for the efforts made so far in ensuring MMA2 lives up to its status as a model PPP (Public Private Partnership) aviation terminal. We therefore want to encourage you to continue to do more and ensure efficient service delivery to Nigerians and foreigners alike”, adding that the commission would resolve all the issues surrounding the MMA2 concession.
According to him, ICRC was aware of the “pains, especially considering the financial risks you had both assumed on this (MMA2) transaction and we are more than ready to give our support towards seeking an out-of-court settlement that will be beneficial to FAAN, Bi-Courtney and the general public”.
The director-general, who said the commission officials came on a monitoring visit to MMA2 facilities and the Four-Star Hotel and Conference Centre projects being executed by BASL to know the level of implementation of the concessions so far, explained that “the success or failure of Public Private Partnership (PPP) transaction in Nigeria does not only depend on the advice and solutions proffered by our commission, but largely on the willingness of the parties to accept the advice and implement our recommendations in resolving disputes.”
Iwuzah added: “The MMA2 and the Hotel and Conference Centre concessions are two projects that are particularly dear to our hearts… The projects no doubt have had their fair share of challenges which the commission is not unaware of. We want to assure you that the commission is equally concerned about the difficulties these projects have experienced even as a model Greenfield Aviation PPP terminal in Nigeria. We have therefore continued to engage the Hon. Minister of State for Aviation since his assumption of office on these challenges and believe they will be resolved soon enough in order to strengthen the relationship between the parties”.
After the speeches, the teams of ICRC, FAAN and BASL officials embarked on tour of the facilities at the terminal and the Hotel and Conference Centre projects after which they returned to the negotiation table to assess what they saw.
Iwuzah said he had seen everything and was in a better position to write his recommendations to the Federal Government, adding that FAAN and BASL should be prepared for more meetings to resolve all the contentious issues.
While FAAN said it was willing to resolve the issues, Ogunmoyela and Williams also told the commission that the management of BASL appreciated its intervention, adding that the firm was ever ready for the amicable resolution of all the issues involved for the sake of the country.