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Airports for Concession, Not Privatisation

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John Ojikutu

The Honourable Minister of State for Aviation has recently briefed the public and industry stakeholders of government plans to concede certain airports to private investors as part of larger plans to privatise some public enterprises. Following the Honourable Minister’s briefings, there have been some emotional reactions from the public and more too from aviation stakeholders who ordinarily should be better informed of what has, over the years, been the financial travails of the sector but yet find the government plans of airport concession unacceptable.

The government probably decided on concession and privatisation or outright sale because of the failed commercialisation of most public sector services and enterprises. There were public enterprises that were fully commercialised like the NLG and the refineries which were expected to operate as profit-making commercial ventures without any subsidies from the government. These are expected to raise funds from the capital market for capital projects without a government guarantee and were expected to use private-sector procedures in running their businesses.

There were other enterprises like FAAN and NAMA which were partially commercialised and were expected to cover their operational costs from their internally generated revenues (IGR). This category of enterprises enjoyed grants from the government to finance their capital projects, just as the federal government had done in the past for them with the ₦19.5 billion aviation intervention fund in 2007, the grant of about $200 million from the BASA fund for the refurbishment of some airports, and the $500 million loan from China for the redevelopment of the major international airports.

Using the air traffic and passenger traffic statistics of 2014-15, the expected yearly revenue from FAAN in particular, whose facilities are planned for concession, is reported to be about N65 billion from both aeronautical (N61.5 billion) and non-aeronautical (N4.5 billion) sources. However, the chunks of revenue earnings generated have not substantially impacted on the airport infrastructures and services. For instance MMA alone that is reported to be generating about ₦2 billion monthly is worth more than ₦3 billion monthly or ₦36 billion ($100 million annually) in earnings from passenger service charge aircraft landing and parking, on both international and domestic traffic and various concession on non aeronautical services within and around the airport. Unfortunately, the airport does enjoy up to 5% of the revenue for the periodic maintenance of the airport infrastructure and services. If MMA is given out for concession today in the global market, it could generate conservatively about ₦110 billion ($300 milliom). Today the total IGR earnings on the twenty international airports is less than ₦70 billion ($190 million).

The problems of government enterprises in the sector are largely caused by the incessant huge debts of the domestic airline operators to the public operators and weak accountability of the regulator particularly of the NCAA, which has the critical role to play in checking the excesses of both the airlines’ operators and the public operators FAAN and NAMA.

The Nigerian aviation sector is just one of the three major means of transportation, providing air transport services to less than 10 million Nigerians, compared to the road and rail providing transportation services for over 60 million Nigerians annually. Air services enjoy government patronage the most, with various forms of intervention, grants, and guaranteed loans. All these are in addition to the huge revenues generated that have not significantly developed or improved the airports’ infrastructure and facilities for sustaining safe air operations. There has been no efficient and effective oversight by the responsible authority to ensure that the sector in the last sixteen years complied with a five-year budget plan as required by the Nigerian Civil Aviation Regulations 2006, Part 18.10.5.

What has developed over the years in the industry is a mixed system, one of partial commercialisation, where the government injects subsidies or intervention funds into the public enterprises, and full commercialisation, where the government gives autonomy to some public enterprises in the sector. What the government plans to develop now, and what is developing worldwide, is privatisation and concession, where the government extends partnerships to private enterprises and investors to develop the sector. This is a concept that is being adopted by most developing countries whose aviation infrastructures are expanding fast but whose development funds are limited, as with our own case. Most countries are finding it a positive advantage to adopt the policies of public-private partnership (PPP), full commercialisation, and concession of public enterprises. These options offer government savings for other social sectors of the economy and reduce unnecessary costs and duplication of efforts.

Privatisation or outright sale of public enterprises to private investors in Nigeria, as articulated by a Social group in 1988 as part of Structural Adjustment Programme (SAP), could be emotive and controversial “Privatisation is a means of exposing public enterprises to private investors or bringing private ownership, control and management into public enterprises. The objective is to increase productivity and efficiency, and to improving the financial health of the public enterprises with sufficient savings for the government from the suspended government subsidies.”

Broadly defined, privatisation could include concession and all forms of PPP; but if narrowly defined, it would exclude concession and could mean outright sales. However, whatever definition is being applied, the objective is securing private investors’ management and operational expertise and investment, Similar to the MM2 concession to Bi-Courtney.

It still seems to some stakeholders that the concession of MM2 was shrouded in some kind of executive secrecy. The government, therefore, needs to assure stakeholders that the planned concession is with better intentions. Generally, there are three key features of a concession. Firstly, it does not involve the sale or transfer of ownership of physical assets, only the right to use the assets and operate the enterprise. Secondly, agreements are for a limited period of time, up to or less than thirty years depending on the context, content, and sector. Thirdly, the government, the owner of the assets must retain much involvement on the oversight in the concession through regulatory agencies.

It is expected that whatever the government would give out for concession would be well defined along these three features in order to avoid the pitfalls of past attempts. The government must bear in mind existing agreements or concessions with the Chinese government on the development of the four airports of Lagos, Port Harcourt, Abuja, and Kano, ditto with similar agreements with Bi-Courtney. The government must also be mindful of the fact that about twelve out of about twenty federal airports are joint users with the military, these include the international airports.

The government should be very clear in its plan as to what assets or infrastructure it would give for concession without disrupting the agreements with existing private operators and joint-users arrangements with the military. The plan for airport concession now should not include those aeronautical infrastructures, facilities, and systems that are necessary and critical for the conduct of flight operations, rescue operations, emergency management services, airport security systems, and national security. These are the state’s responsibility and mandatory obligatory functions to the ICAO as contained in various annexes to the Chicago Convention, essentially on aerodrome standards, air traffic control services, and airport security and so on. All these could be fully commercialized, as they are the practices elsewhere. The concession, on the other hand, should not be different from the one between the government and Bi-Courtney, and essentially for non-aeronautical infrastructural facilities and services which includes operations and management of the passenger, cargo terminal buildings and the handling facilities; aircraft parking areas with handling facilities, car, trucks, parks and toll gates.

All aeronautical facilities that are left in FAAN’s assets after the concession of non-aeronautical facilities could be merged with NAMA assets. Runways, taxiways and their associated lighting, and emergency and rescue management systems could remain part of the universal air traffic services systems. NAMA could, therefore, be fully commercialised like the ATNS of South Africa. FAAN, on the other hand, should function as a commercial holding company to oversee the management of the airports under concession.

The government should ensure that future management of the remaining domestic airports is included in the concession plans. In other words, none of these domestic airports should be left behind; otherwise, the initial reasons for the concession would be defeated. Therefore, for every international airport terminal available for concession to a company, three to four of the domestic airports should be given along with the concession.

The concession of airports, like that of the seaports in 2006, will increase capacity, invariably increasing air, passenger, and cargo traffic. It will reduce budget allocations to airports and increase revenue generation. The ports’ concession increased the capacity by over 300%; the cargo has increased from 7 million tons to about 25 million tons, and it has reduced budget allocations but has increased port revenue generation.

In addition to all these, the government should concern itself with the designing of achievable policies and programmes that would enable it to meet contemporary visions for the industry in this twenty-first century. Such policies should ensure that the responsible aviation authority provides the baseline for implementation of the concession, and the investors provide regular business plans every five years to meet the requirements of the Nigerian Civil Aviation Regulations, 2006, Part 18.10.5. The first-line approach is to ask: has the NCAA been ensuring that Bi-Courtney Airport Services complied regularly with the NCAR provision?

(Group Captain John Ojikutu (rtd) is an Aviation Security Consultant and Secretary General of the Aviation Safety Round Table Initiative)

This opinion article was written in May, 2016.

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Aviation

Flight Diversion: NCAA Investigates United Nigeria Airlines ✈️

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By Elizabeth Okwe

The Nigeria Civil Aviation Authority (NCAA) has commenced investigation into the circumstances surrounding United Nigeria flight NUA 0506 to Asaba and the confusion it has created in the public domain.

This is according to a statement signed by the Director General of NCAA, Captain Musa Nuhu.

The statement however affirmed that preliminary steps have been taken pending conclusions of ongoing investigation.

“The Authority wishes to reassure the traveling public that it will leave no stone unturned as it has always done in the past to ensure continued safety of the aviation industry” it concluded.

But in its defence few hours after the incident, United Nigeria Airlines claimed the flight was diverted to Asaba as a result of bad weather.

Achilleus-Chud Uchegbu, the airline spokesperson, said the pilot was properly briefed about the diversion, noting that the cabin crew made “wrong announcement upon landing safely in Asaba [and] created confusion among the passengers.”

Capt. Musa Nuhu DG, CAA

However, unconfirmed reports indicate that the regulatory agency may have suspended the operations of wetleased aircraft in the stable of United Nigeria Airlines pending the conclusion of the investigations.

According to the sources, the Civil Aviation Authority is not satisfied with the explanations of the airline and is determined to unravel the remote and immediate causes of the flight misdirection.

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Aviation

Omni-Blu AOC: Olateru Duely Resigned as Director of Airline, NCAA DG Affirms

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Contrary to recent reports regarding the involvement of the Director-General of the Nigerian Safety Investigation Bureau (NSIB), Engr Akin Olateru in the management of Omni-Blu Aviation, a jet and helicopter charter company, it has been revealed that the NSIB Director-General actually resigned his position as a Director in the company before taking up appointment with the company.

Director general, Nigerian Civil Aviation Authority (NCAA), Capt. Musa Nuhu who has put the controversy to rest, has also revealed that the documents provided by the management of Omni-Blu aviation show that the Director General of Nigeria Safety Investigation Bureau (NSIB), Engr. Akin Olateru, duly resigned from the company before taking up appointment with government.

Capt. Musa Nuhu DG, NCAA

The NCAA DG spoke yesterday at the launch of a book ‘Handbook on Public Relation Practice and Aviation Reporting’, written by Sam Adurogboye, former public relations manager of NCAA.

He said the NCAA only asked somes questions in the course of the processing of the AOC which some quarters have conined to be suspension.

“It is unfortunate that it is coined that NCAA has suspended the AOC processes of Omni-Blu Aviation. One of the directors of Omni-Blu who is DG NSIB, Engr. Akin Olateru, a very close colleague and a friend of mine is a shareholder in Ombi-Blu and this was something he had before he came to the public service. Just because you came to public service does not mean you should wipe off your previous years.

Engr Akin Olateru
Director-General /CEO, NSIB

“There was just a question from NCAA that it appears there was a conflict between this application and the Act of NSIB and NCAA. So, they were asked to respond and they responded. He has provided all the documents, he has shown proof he has resigned and he has declared his interest in those organisations. So, he has provided the appropriate documentation to show that there is no conflict of interest.

“We cannot wipe out our previous lives just because we got to work for government, but there are conditions. In an industry that you are a CEO or a staff, you cannot have an interest, but there are procedures and he has given proof for those procedures; he has showed us that he actually resigned and that letter is actually confirmed by the Corporate Affairs Commission (CAC). He showed that he has done all the necessary declarations to show that he has resigned.

“The only thing is that he has given the necessary documents required, but we have to take it through the normal procedures, legal process so that when documentation is done that he has been cleared, somebody tomorrow will not go and challenge it. It is important to go through the process of clearing him so that the records are put there. Anybody that comes in the future, can look at the file, see that the issue was raised, but the appropriate information had been provided and individual is cleared”, he said.

Nuhu said the process would be completed during the new week.

“However, in this new week. It would have been done, but our legal adviser travelled out with me. So, we will work on it and the process will continue.”, he added.

He said the conflict of interest aspect has also be resolved.

It was reported last week that the NCAA had suspended the Air Operator Certificate (AOC) processes for Omn-Blu Aviation (OBA), which would enable it to operate as a scheduled operator.

Ombi-Blu currently operates as a chartered helicopter and jet company.

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Aviation

Soludo Renames Anambra Airport After Literary Icon, Chinua Achebe

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By Elizabeth Okwe and Ojone Grace Odaudu

Governor Charles Chukwuma Soludo has renamed the Anambra International and Cargo Airport, Umueri, to Chinua Achebe International Passenger and Cargo Airport.

In his speech at the 63rd Nigerian Independence Anniversary which took place at Dr Alex Ekwueme Square, Awka, on October 1, Soludo informed the applauding large audience that the airport was named after Achebe after wide consultations because Chinua Achebe is an African and global hero.

Soludo recalled that in his lifetime, Achebe declined to accept two high Nigerian national honours in protest against what he perceived as injustice to his home state that had tacit support from high officialdom.
For Soludo, it’s now incumbent on Achebe’s home state of Anambra to honour Anambra’s greatest gift to the literary world. Mr Governor stated that his administration will work in tandem with the Federal Government to offer an international airport worthy of the Achebe legacy.

Chinua Achebe is globally acclaimed as Africa’s most influential writer. His classic novel, Things Fall Apart, published in 1958, ranks amongst the greatest novels ever written in the world.

Achebe was the founder of Association of Nigerian Authors (ANA) in 1981 at the University of Nigeria, Nsukka, where Soludo was then a young student.

It needs to be stressed that Achebe was not just a writer. He was at once also a critic, activist, organiser, publisher, politician, and an uncommon leader who served as the President-General (PG) of his native town union in Ogidi, Anambra State. As a national political leader, Achebe was the Vice-Chairman of Aminu Kano’s Peoples Redemption Party (PRP) of the Second Republic.

A man of unshakable principle, Achebe wrote the following words when he rejected the award of the high national honour of Commander of the Federal Republic (CFR) in October, 2004: “I write this letter with a very heavy heart. For some time now, I have watched events in Nigeria with alarm and dismay. I have watched particularly the chaos in my own state of Anambra where a small clique of renegades, openly boasting its connection in high places, seems determined to turn my homeland into a bankrupt and lawless fiefdom. I am appalled by the brazenness of this clique and the silence, if not connivance, of the Presidency.” Achebe also rejected the award when it was re-offered in 2011.

If he were to be alive today, and seeing the dire circumstances of the country, Achebe would have made his word count as he did in his 1983 epochal book ‘The Trouble with Nigeria’ that began with these famous damning words: “The trouble with Nigeria is simply and squarely a failure of leadership. There is nothing basically wrong with the Nigerian character. There is nothing wrong with the Nigerian land or climate or water or air or anything else. The Nigerian problem is the unwillingness or inability of its leaders to rise to the responsibility, to the challenge of personal example which are the hallmarks of true leadership.”

Chinua Achebe’s oeuvre is indeed intimidating starting from the legendary Things Fall Apart in 1958 and grandly lapping all the way through No Longer at Ease, Arrow of God, A Man of the People, Anthills of the Savannah, Girls at War and Other Stories, Beware Soul Brother, Morning Yet on Creation Day, The Trouble with Nigeria, Chike and the River, Home and Exile, Hopes and Impediments, The Education of a British-Protected Child, There Was A Country etc.

When Chinua Achebe died at exactly 11:51pm (US time), that is 4.51am (Nigerian time), on Thursday, March 21 at the Harvard University Teaching Hospital, Massachusetts, USA, aged 82, it was one death that shook the entire world as tributes came pouring in from all the continents of the world, from presidents down to paupers.

The great Kenyan novelist, Ngugi wa Thiongo, who Achebe mentored paid him this tribute: “Achebe bestrides generations and geographies. Every country in Africa claims him as their own.”

The then American President Barack Obama extolled Achebe thusly: “A revolutionary author, educator, and cultural ambassador, Chinua shattered the conventions of literature and shaped the collective identity of Nigerians throughout the world. With a dream of taking on misperceptions of his homeland, he gave voice to perspectives that cultivated understanding and drew our world closer together. His legacy will endure in the hearts of all whose lives he touched with the everlasting power of his art.”

Soludo has delivered a universal masterstroke by renaming the airport to Chinua Achebe International Passenger and Cargo Airport, Umueri. Global tourists will in due course flood in because of the Achebe appeal in the same manner that Bard College, New York, USA built the Achebe House in the University.

Governor Soludo’s drive to turn Anambra State into a liveable and prosperous homeland that will be a destination point instead of a departure lounge has received the ultimate uplift with the naming of the Achebe International Airport.

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