Follow Us on Google
By Chinelo Obogo [email protected]
The Federal Government’s aviation roadmap which includes the setting up of a national carrier, concession of four international airports and building of an aerotropolis city appears dogged with controversies that could stall its completion.
From an agreement facilitated by the Minister of Aviation, Hadi Sirika, to hand over 49 percent stake in Nigeria Air to Ethiopian Air, to a decision to proceed with the airporst concession programme amid over 60 pending litigations and a N140 billion debt overhang on the Federal Airport Authority of Nigeria (FAAN), the list of pitfalls have continued to surge.
Concession controversies
Sirika had announced in Abuja during a meeting that Corporation America Airports Consortium has been chosen as the preferred bidder for the Nnamdi Azikiwe International Airport (NAIA), Abuja , while the ENL Consortium was selected as the reserve bidder for NAIA.
The preferred bidder for Murtala Mohammed International Airport (MMIA), Lagos, is TAV/NAHCO/Project Planet Limited (PPL) Consortium, while Sifax/Changi Consortium is the reserve bidder for MMIA.
The preferred bidder for Mallam Aminu Kano International Airport (MAKIA), Kano, is Corporation America Airports Consortium with no reserve bidder. He said Port Harcourt International Airport (PHIA), Port Harcourt, did not receive any proposals as of the RFP deadline close and as such has not had preferred and reserve bidders attached to it.
He said the next stage of the programme is the negotiations and due diligence stage, during which the Federal Government will invite preferred bidders to enter detailed negotiations with its representatives, with a view to developing a Full Business Case (FBC) before onward transmission to ICRC for review and approval.
When the bidding process for the international terminals commenced, he Nigerian Union of Pensioners (NUP), FAAN branch, exclusively revealed to Daily Sun that the Federal Airport Authority of Nigeria (FAAN) is facing a huge debt of over N140 billion.
The union warned bidders that the agency currently has over 60 pending litigation arising from several faulty concession agreements yet to be resolved and there is also the issue of the unresolved BI- Courtney concession of Murtala Muhammed Airport (MM2). The NUP said at the time, that FAAN owed contractors who have delivered their contracts over N15 billion and other reliable sources within the agency told Daily Sun that this figure does not include ongoing contracts.
NUP urged bidders to investigate not only their claims, but should also clarify from the Minister of Aviation, Hadi Sirika, how the over $1 billion loan from China for the construction of the same terminals earmarked for concession would be repaid.
Daily Sun gathered that FAAN generates an average of N70 to N75 billion annually and remits an average of N1 billion monthly into the Federation Account while monthly salaries for its 8000 staff currently stands at over N2.3 billion.
Sources also told Daily Sun that over the past four months, about N2 billion deducted from staff salaries for cooperative contributions have not been remitted.
Daily Sun gathered from reliable sources in the agency that at the inception of the Pension Reform Act in 2004, the accrued rights of staff stood at N28.3 billion. But the agency didn’t transit to the scheme at the time because it didn’t have the funds.
When the remittance of the Contributory Pension Scheme (CPS) started in 2007, the agency still didn’t transit but continued paying retirees about N500m monthly from its Internally Generated Revenue (IGR), which violates the Pension Act. By 2012, however, PENCOM insisted that FAAN should carry out another accrual valuation and when it was done, the amount had increased from N28.3 billion to about N84.3 billion. And in 2015, it rose to N103.5 billion as more staff had been employed, people were promoted and salaries were increased.
As at the time of filing this report, a source in FAAN revealed to Daily Sun that no progress has been achieved in offsetting the debts and that before any company takes over any of the airports, the billions owed workers and pensioners of FAAN would have to be paid.
Nigeria Air
At a media event held on September 24, 2022, in Abuja, Sirika informed the public that at last, the Federal Government has selected Ethiopian Airlines (ET) Consortium as the preferred bidder for Nigeria Air.
He told the gathering that ET scored 89 percent out of 100 as regards the technical bid and 15 out of 20 in respect of the financial bid. The minister said the Request for Proposal (RFP) under the Public Private Partnership (Act), governed by Infrastructure Concession Regulatory Commission (ICRC) regarding Nigeria Air was not yet completed.
The agreement is that the carrier would be driven by the private sector and Nigerian government would retain only 5 per cent stake in it, while ET will have a 49 per cent stake and 46 per cent of the airline would be owned by Nigerian investors (MRS and SACHOL). The government also anticipates raising $250 million from the private sector, while Sirika said 20 aircraft with petrol engines had been ordered for training purposes, nine of which had been delivered.
Since the revelation that Ethiopian airline will have 49 percent stake, making it the largest shareholder, the Airline Operators of Nigeria (AON) and many industry experts have strongly expressed their discontent with the model, saying that having a competitor as a major shareholder in the country’s national carrier would completely annihilate Nigerian airlines from the onset.
The AON took their displeasure further by suing the FG to court, listing Nigerian Air, Ethiopian Airlines, Minister of Aviation, Sirika, and Attorney-General of the Federation, Abubakar Malami, as defendants. Among other prayers, the airlines want the court to stop the national carrier deal and withdraw the Air Transport License already issued to Nigeria Air by the Federal Government/Nigerian Civil Aviation Authority.
They also claimed that the firm which served as Transaction Adviser for the transaction, was incorporated in March last year and alleged that the company was linked to the aviation minister. The AON alleged that the sale of shares of the proposed airline violated the Companies and Allied Matters Act and the Securities and Exchange Commission. The airlines also said that the FG is planning to provide bank guarantees for the deal, saying: “The FGN shall assist the national carrier in procuring all federal and state tax exemptions, waivers or reliefs and fiscal benefits by such time as shall be reasonably necessary to avoid any delay in the performance of the national carrier’s Operations and the FGN shall use its best endeavours to expedite the grant of such additional approvals.
