FG Gives Reasons For Concessioning. Lagos, Abuja,Two Other Major Airports
…Says FAAN Will Not Be Dissolved
The Federal Government through the Ministry of Aviation has stated that it decided to concession four major Nigerian airports to develop and profitably manage customer-centric airport facilities for safe, secure and efficient carriage of passengers and goods at world-class standards.
The airports are Lagos, Abuja, Port Harcourt and Kano Airport.
This is just as the Federal Government also said that , it does not have plans to dissolve the Federal Airports Authority of Nigeria(FAAN), when these irports have been concessioned, adding that “FAAN will continue to play its role as statutorily required. Any material changes to FAAN will need to come via an act of law.”
These explanations was given by the Aviation Minister , Senator Hadi Sirika in an online statement titled, “Frequently Asked Questions (FAQs) About Airport Concession” signed by the Director of Public Affairs, Ministry of Aviation, James Odaudu
Sirika in the statement said that since Nigeria is Africa’s largest economy and most populous nation, with a broad range of investment and tourism opportunities investing in and continuously developing the asset up for concession is key to unlocking these opportunities.
He added that Nigeria airports have huge potential, but they are currently operating at a sub-optimal level due to a myriad of factors that will be addressed through their concession.
Speaking further on why the Federal Government is not not concessioning all the airports, he said that infrastructure concessions are very complex and sensitive programmes and that they often requiring years of planning and preparation to secure the requisite inputs and approvals from the relevant regulatory bodies.
He stated that the Federal Government decided with the most strategic assets because successful delivery of this concession programme would give all stakeholders the confidence required to consider other possibilities in the sector.
On the parts of the ‘airport’ are to be concessioned, the Minister said, “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.”
Sirika explained that the Federal Government would not sell these airport as been speculated and that the ownership structure of the airports to be concessioned will not change
“No, there shall be no change in the ownership structure of the airports involved in this programme. 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.”
On the alleged conflict between this concession programme and the terms of the EXIM Bank loan agreement entered into between the FG and the Peoples Republic of China which saw CCECC build new passenger terminals in Lagos, Abuja, Kano, Port Harcourt and Enugu Airport, the Aviation Minister said that there was no conflict between the Federal Government and the Chinese Government, adding that CCECC was contracted to deliver a number of infrastructure projects throughout Nigeria in 2013.
He further explained that the Passenger Terminal development works are a small part of this, and the Federal Government has every intention to service its obligation.
Explaining the role of FAAN after these airport have been concessioned , Sirika said that “FAAN remains responsible for overseeing the management of Nigeria’s airports. FAAN will continue to play this role broadly.”
Speaking on whu the Federal Government id concessioning instead of selling the airports, the Minister said, “The Passenger and Cargo terminals of each airport, although separated for the purpose of the concession programme, are within the various federal airport complexes and as such, are of tremendous national importance from an economic and security perspective. We believe it remains in Nigeria’s best interest to maintain ownership for this reason. Furthermore, as is often the case with large, multifaceted infrastructure developments, the scale of investment required to build the airport complexes envisaged in the aviation sector road map will require the support of the Sovereign Wealth Fund in a way that an outright privatization will not allow at this time.
He said that the Federal Government apart from concessioning the passenger terminals, will also concession the cargo terminals at the four airports
The Federal Government, he said was looking for partners who have the financial, technical and operational capabilities to manage these assets profitably and responsibly.
On the successful selection of bidders, Sirika said, “The infrastructure Concession Regulatory Commission (ICRC) – the institution that oversees all concession and Public-Private-Partnerships in Nigeria has clearly laid out processes governing a transaction like this. The Transaction Advisors – a coalition of independent and reputable organisation have been mandated by the Ministry of Aviation (having received approval from the Bureau of Public Procurement for their appointment) to drive this process transparently, ensuring that regulations laid out by the ICRC are followed whilst also ensuring that Nigeria gets the best partner(s) and deal possible given the unique attributes of the assets to be concessioned.”