Stories by Louis Iba
Federal Government’s affirmation last week that it was going ahead with concessioning of its four international airports has indeed stirred up a hornet’s nest among aviation sector stakeholders. Government plan is to get core investors who would efficiently manage the Murtala Muhammed Airport, Lagos; Nnamdi Azikiwe Airport, Abuja; Port Harcourt International Airport; and Malam Aminu Kano Airport, Kano by injecting private sector equity and expertise so as to get the best out of the airports in the interest of Nigerians and the economy.
Why bring in private sector?
Daily Sun, however, learnt that the government, in its bid to hand over the four airports to private investors, is currently torn between two options – outright privatisation or concession. The four airports handle hundreds of international flights daily and are considered as the most lucrative in terms of passenger and cargo patronage as well as revenue generation for the government.
With dwindling incomes from the petroleum sector, government now lean on cash to continue pumping into the maintenance, upgrade and expansion of infrastructure on the four airports to meet with contemporary needs and also cope with the high volume of passenger and airline traffic that they now attract believes it time to exit the sector. But aside the issue of paucity of funds, there are also concerns about the high level of mismanagement of funds earmarked by successive governments for these airports. The government thinking therefore is that it is only the private sector that would be able to inject the requisite funds to boost the state of infrastructure at these airports and also halt or check graft in the industry.
The aviation sector currently contributes an infinitesimal 0.04 per cent to national GDP but the government targets growing the sector’s GDP contribution to about 15 per cent with concession agreement. According to the Minister of State for Aviation, Mr. Hadi Sirika, the government finds it difficult to achieve its dream of creating a sub-regional or regional hub out of one or two of these airports to attract more airlines and passengers to increase revenue earnings from the aviation sector due to lack of funds to inject into the airports.
Sirika said, “the present government will not allow these airports terminals to remain like that. The Nigerian airports have the potential to do between 70 and 100 million passengers annually, within the next five years, if the right things are put in place but it currently stuck with just 15 million passengers annually. This capacity can be improved upon to generate more money for the government and create jobs for citizens if private investors are allowed to participate.”
Privatisation or concession?
Daily Sun learnt that the initial plan of the government was to get the four airports privatised by the Bureau of Public Enterprises (BPE). But the decision, which happened to have been leaked to labour unions in the industry, was stoutly resisted. Why privatise the nation’s most economically viable airports? Would it not indeed have made more economic – and even common sense – handing off the many non-viable airports scattered all over the country (some of them having no aircraft or maybe just one or two flying into them in a week) to private investors and allow them fashion out ways of making them viable, rather than give away the ones that are already doing well? Was it not another attempt to sell out viable public assets to wealthy private citizens? These were some of the hard questions labour had posed to the government.
The unions, dissenting under the umbrella of Air Transport Services Senior Staff Association of Nigeria (ATSSSAN), National Union of Air Transport Employees (NUATE) and National Union of Pensioners (NUP) faulted the government’s privatisation programme calling for a re-think.
“We are fully mobilised to resist any such move to privatise the four most viable airports as standalone while leaving out the non-viable ones,” said Olayinka Abioye, General Secretary of NUATE, while addressing a protest march at the Lagos airport. “We are fully aware that some powerful political cartel jostling to buy these viable airports but we will resist it as we can’t mortgage the destiny of over 6,000 workers who stand to lose their jobs,” he added.
On his part, Chairman of NUP, Alhaji Rasaki Ope, said “the privatisation of the viable airports is borne out of the quest for materialism, it’s done out of selfish interest and to support capitalism in the country to the detriment of Nigerians.”
Daily Sun learnt that the government had initially targeted the privatisation of not just the four airports but also others like those in Calabar, Owerri, Sokoto, Ibadan, Akure, Benin, among others. It was, however, learnt that it was an Herculian task getting the right investors (both from home and abroad) at this time to even show interest in buying the non-viable airports. The recession in the Nigerian economy as well as depreciation in the value of the naira was particularly not helpful in luring investors into buying those assets whose viability or quick returns to investors was certainly not guaranteed. But even those who opposed the outright privatisation of the four viable airports had also cited the crisis in the privatisation of the power sector distribution firms as enough reasons to discourage the government from doing so with the four airports. Over the weekend, it appeared the government had not just listened but also yielded to such public reasoning.
Minister of State for Aviation, Hadi Sirika, told aviation journalists that concession, rather than privatisation, was what the government had finally opted for. “The only way to redress the current parlous state of the Nigerian airports is to give them out to concessionaires,” he said. He said the airports will still remain the properties of the Federal Government, but handed over to the private sector players for proper management for a period of time. The success story of the domestic terminal of the Murtala Muhammed Airport, popularly called MMA2, offer a ready example of why concession was a better option to pursue. The airport is considered by many users as the symbol of infrastructural efficiency and cleanliness.
Said Sirika: “We no longer have money to put in public properties like airports but we will not sell or privatise.”
“The airports will be given to concessionaires, the big four and later six of the cargo designated airports and this will help us not just to grow and expand the sector but put us in the right path to be established as a hub,” added Sirika.
Investment prospects
Sirika said Dubai and Doha airports, for instance, are world-class because they have spars, malls and supermarkets whereas the notable features at Nigerian airport terminals are cigarette and liquor shops.
Sirika said concession would provide lots of opportunities for Nigerian businesses within these four airports if they are upgraded to international standards.
“Airports like Dubai, Doha people go there not just to see the airports, but to shop, the magnificence of the airport is attractive on its own. People go there to use their amazing duty free (shops) where you get spars, malls and the likes, but what do we have in our duty-free except cigarettes and alcohol shops? With concession, we can change that and attract more investors and make our airports the cynosure of all eyes.”
He said concession will not only achieve aesthetics; but pointed out that right now the four airports are in so sorry state that they cannot handle large bodied aircraft like the Airbus A380 or the Boeing 787 dreamliner.” But if we get this concession right, the success of the four major airports must be able to attract the establishment of an aircraft Maintenance, Repair and Overhaul (MRO) facility in the country which will be private sector driven,” he added. Many stakeholders feel more comfortable with the concession idea, provided it is done in a transparent manner and would-be winners of the bids are reputable firms that will deliver on all their work-programmes
First Nation explains why 2 aircraft can’t fly
First Nation Airways says its inability to source foreign exchange (forex) with the ever changing Central Bank of Nigeria (CBN) policies on exchange rate has made it difficult for the airline to carry out the mandatory maintenances on its two aircraft. Director of Flight Operations for the airline, Capt. Chimara Imediegwu, who addressed journalists at the weekend said the airline operates just two aircraft and that once the two have problems and cannot be immediately fixed, it was better in the interest of safety to temporarily suspend operations until the air worthiness of the aircraft could be guaranteed.
Nigerian Civil Aviation Authority (NCAA) regulations, however, require an airline engaged in scheduled commercial operations to have a minimum of three aircraft in its fleet. Asked why First Nation was flying just two aircraft instead of three as mandated by the NCAA, Imediegwu explained that when the airline got its licence, the law required just two aircraft as prerequisite and not three.
He explained that the NCAA only increased the minimum fleet requirement to three for new entrants while allowing existing operators who had two aircraft to remain in operation. He said that barring any last minute hitch, the airline would resume flight operations on September 15, 2016 as the maintenances of the two aircraft would have been completed by then.
“The challenges of sourcing forex with the constantly changing CBN policies and ROE leave us sometimes in situations where aircraft parts cannot be obtained when ordered from abroad due to bank’s inability to transfer funds timely enough,” said Imediegwu.
“We suffer repeated failures in our bidding systems to get slots at foreign maintenance facilities because of the disruptions of these forex transfers. And to reduce the disruptions, airline operators are sometimes compelled to source forex from the parallel market at cut-throat rate, even though the sums required are mostly in hundreds of thousands of dollars,” he added.
The Director of Flight Operations stated that contending with these challenges made the airline plan well ahead and to kept the NCAA informed of the progress of the maintenance of its aircraft.
CSR: Dana Air supports autistic children
Dana Air says it is partnering with an NGO, Green October Initiative, to support children living with autistic disability.
According to the Accountable Manager of Dana Air, Mr. Obi Mbanuzuo, the partnership is part of the airline’s way of appreciating and showing love to people living with disabilities, while also providing necessary support to non-governmental organisations that share similar objectives.
“Autism is largely misunderstood by many and this makes it difficult for affected children to cope with the demands of the society,” said Mbanuzuo.
“Supporting the Green October event is just our way of showing commitment to the wellbeing of people living with the disorder and the need for us all to fight against the stigma they face,” he added.
Mbanuzuo said both organisations will be holding the Green October Event 2016 on October 1, at the Oriental Hotel, Lagos, to drum up support for autism children. “Some Nigerian music and movie stars have been lined up for the event, which will focus on raising funds for children living with autism,” he added. He said the airline is involved in a number of other charitable projects through the Dana Foundation.
