Amid socio-economic challenges prompted by the novel Coronavirus pandemic, there seems to be no let yet in the epic battle between Nigeria’s aviation unions, the Nigerian Labour Congress (NLC) and the Federal Government over the latter’s plans to concession it’s four major international airports including Murtala Muhammed International Airport (MMIA) Lagos, Nnamdi Azikiwe International Airport (NAIA), Abuja, Mallam Aminu Kano International Airport (MAKIA) Kano and the Port Harcourt International Airport (PHIA) Omagwa to private investors.
Opposition to this concession plan had intensifiedThursday, October 15, when the National Union of Air Transport Employees (NUATE), Air Transport Services Senior Staff Association of Nigeria (ATSSSAN) and the Association of Nigerian Aviation Professionals (ANAP) shut out the Minister of Aviation, Captain Hadi Sirika, from gaining entry into the Freedom Square, headquarters of the Federal Airports Authority of Nigeria (FAAN).
Though the unions had called for a one-day warning strike prior over unpaid salaries, the action of shutting out the minister who had scheduled a meeting with members of staff to resolve pending issues, an agency source told Daily Sun was an indication that the unions’ were out to checkmate his uncompromising commitment to handover those facilities to independent private sector investors and not just because of unpaid salaries. It was indeed the outcome of accumulated grievances over his insistence to go ahead with the controversial concession plans. The source said they received information that the minister who flew in from Abuja to attend the scheduled meeting, planned to use the opportunity to preach his concession plans to members of staff of FAAN, hence the unions decision to shut him out.
The unions said that the planned concession which will see the concessionaire get 60 percent of the revenue sharing formula while FAAN gets 40 percent and still has to service the Chinese debt of over US1 billion is dead on arrival, providing facts that have spurred their agitation against the plan.
Aviation unions allege plans to cripple FAAN
The General Secretary of NUATE, Ocheme Aba, had for instance alleged that the planned concession was being done in a way to cripple FAAN, explaining that besides debts incurred from the Chinese, which have grown to over $1billion, part of the 40 percent accruable to FAAN will be used for debt servicing, maintenance of other 18 airports and other sundry expenses leaving nothing for its survival.
He said: “The new Chinese terminals are going to be concessioned where the concessionaire will receive 60 percent of the sharing formula while FAAN will retain 40 percent. But from that 40 percent, FAAN will be servicing the Chinese loan, return 25 percent to the Federal Government according to the Fiscal Responsibility Act, maintain other 18 airports and pay staff salaries.
“So the point is this terminal is already on concession and what is happening is that the Federal Government is seeking to concession a concession. Now this concessionaire will take 60 percent, I’m sure you’d want to ask me what his contribution is, what is he going to do? According to the plan which is based on study of traffic flow, there will be no need for any expansion in this terminal until the year 2045.
“There is no need for expansion, in other words these terminals are meant to maintain and sustain the traffic flow in all the projections till 2045. The concession period is for 20 years, which means the concession will end in 2040; what that means is throughout the concession period, there will be no expansion for the airport. The concessionaire has no need to spend money, what the concessionaire is expected to do within the period is to maintain and upgrade; that is what is written down in the Outline Business Case (OBS).
“Now, this is a facility built to the 21 century standard, what are you going to upgrade there? So for 20 years the concessionaire will just change electric bulbs? Toilet sinks? And for doing that, he will receive 60 percent. The point in all this which we want Nigerians to know is that we cannot give our blood to a few people who have positioned themselves to benefit from it. They want to give these things to themselves and that is why they went and got a Transaction Adviser who did not go through any process of selection because there was no bidding.
“They are saying that the concessionaire has the leverage after two years to either continue with the workers or return them back to FAAN. After two years, he returns the workers to FAAN but keeps the concession so where will FAAN have the money to pay the workers or the place FAAN will have to send the workers? These are the issues we are taking our time to explain to both to the public and those who are in government and are not personal beneficiaries to this crooked arrangement.”
‘We’ll vehemently resist concession plans-NLC’
The disagreement between aviation unions and the minister took a new after the Nigerian Labour Congress (NLC) wrote a letter to President Muhammadu Buhari stating that the concession process led by Sirika was worrisome and would only end up enriching a few to the detriment of progress for the country.
The Labour Centre warned the Government that it will vehemently resist the plan should Sirika proceed with his December 2020 deadline to finalise the process without reconsidering the facts. In the letter which was signed by Ayuba Wabba, the NLC appealed to the government to consider other viable and sustainable ways of managing airports and attracting new capital for expansion and development.
“It is important to note that when our airports especially the ones earmarked for concession were dilapidated, private capital did not invest towards their rehabilitation. It would be an insult to the collective sensibilities of the Nigerian public for government to invest huge public funds into the reconstruction and rehabilitation of our airports and hand them over to private sector players for profit maximization at the expense of the tax- paying public.
“It is important to note that when our airports especially the ones earmarked for concession were dilapidated, private capital did not invest towards their rehabilitation. It would be an insult to the collective sensibilities of the Nigerian public for government to invest huge public funds into the reconstruction and rehabilitation of our airports and hand them over to private sector players for profit maximization at the expense of the tax- paying public,” Wabba wrote.
He highlighted ideas like Green Field Concession and Corporatisation or full autonomy of FAAN instead of the planned concession which it said would end up adding no value at all to the airports.
“The Green Field Concession is where investors are invited to make fresh investments in clearly delineated areas of deficit in our airports infrastructure including terminal expansion, runway expansion and upgrading of critical aviation equipment and facilities. Such investments should be recouped from the additional revenue from the patronage and services accruing from the use of the upgraded facilities.”
“Another alternative is to corporatise FAAN”. Under this arrangement, government would retain 45 percent equity share while the remaining 55 percent is broken down for public acquisition. This is the model adopted in South Africa when it was faced with our kind of dilemma. This would help build investor confidence while assuaging the concerns of labour.
“Another way to optimise infrastructure layout, service delivery, revenue generation and served markets is to ensure the complete autonomy of FAAN as is the case in Ethiopia. This should be void of political meddlesomeness which has been the bane of the efficient performance of Nigeria’s aviation sector,” he said.
The NLC alleged that the planned concession was to maximize profit for a few individuals at the expense of tax payers and that the fine lines in the tender documents exempts the would-be concessionaire(s) from improving any facility at the airports in the next 25 years.
It alluded to a potential hemorrhage of government revenue, industrial crisis which will follow the massive layoff of workers stating that there is no compelling reason to gift away national assets to private hand who would not improve on what is all through their stay as concessionaires. The NLC also puts FAAN’s current revenue generation into account, stating that the airport manager currently generates enough to pay N70 billion into the coffers of government annually.
“As it is, the Federal Airports Authority of Nigeria (FAAN) currently generates about N100 billion into the coffers of the government yearly. When FAAN expenditure of about N30 billion is removed from the net income of N100billion generated by it, there is a handsome N70billion left to government to re-invest in the maintenance and upgrade of our airports,” he said.
Aviation ministry says due process being followed
The Director, Public Affairs, Ministry of Aviation, James Odaudu, had earlier posted a lengthy statement on the official Facebook page of the ministry, saying the ministry does not approve infrastructure concession programme as the role is independently played by the Infrastructure Concession Regulatory Commission (ICRC Establishment Act 2005). The ICRC is Nigeria’s regulatory agency responsible for regulating all infrastructure concessions and Public-Private-Partnerships in Nigeria.
“The ICRC has approved and issued an Outline Business Case (OBC) Compliance Certificate for the further development of a concession programme focused on the passenger and cargo terminals in four airports only. Those familiar with international best practices will appreciate that programmes of this size and importance require due diligence and project scooping which takes all possible considerations into account –social, financial, legal and strategic. To this effect, ICRC’s rigourous process requires all initiators of concession programmes to procure independent Transaction Advisors(TA) to provide expert advice on the viability of the proposed transactions, which is used to inform the development of an Outline Business Case review by ICRC. The procurement of these TAs is regulated by the Bureau of Public Procurement and guided by the Public Procurement Act 2007.
“This process led to the appointment of a team of reputable internationally recognised advisors that include Infrata, Denton, Proserve and Templars. The certification of the OBC by the ICRC means that the transaction is thus viable and has taken a myriad of factors into consideration. This OBC certificate, with all supporting documents, will then go to the Project Steering Committee(PSC) before the process moves into the public procurement phase which will involve a Request for Expression of Interest (RFQ and then a Request for Proposal (RFP). Throughout this process, all key stakeholders will remain engaged by the Ministry and the relevant agencies under it.
“Concessions and public-private-partnerships differ from privatisation programmes. In a concession or PPP, the assets remain the property of the government and so are subject to the regulations and processes already outlined. Private programme, which is not at all what this programme is, are driven by the Bureau of Public Enterprises (BPE) and involve a full or partial sale of equity in the asset, thus a transfer of ownership to private parties,” Odaudu said.