The Federal Government’s plan to concession the operations of its four international airports has continued to attract mixed reactions from stakeholders. While the government says it is forging ahead with the decades-long privatisation proposal, aviation sector workers and a sceptical public are worried that it could go all wrong and worsen a decidedly bad situation. The challenge, therefore, is to organise a creative, intelligent privatisation that will deliver value and raise the standard of the aviation business in Nigeria.
It will not be an easy task and if precedence is a guide, it could, if wrongly handled, leave the country’s airports in a worse shape than they are today. To their credit, the Minister of Transportation, Rotimi Amaechi, and the Minister of State, Aviation, Sirika Hadi, have, since taking office, committed themselves to seeking private capital for the state-owned airports. This is the only intelligent option to instilling sanity, given government’s dwindling revenues, the incompetence and inefficiency of the Federal Airports Authority of Nigeria, the endemic corruption that has seen prodigious sums of money appropriated for airports vanish, the dilapidated state of the airports and the political interference in operational details.
Hadi said recently that efforts were on to retain a transaction adviser to facilitate the grant of concessions for Murtala Mohammed International Airport, Lagos; Nnamdi Azikiwe International Airport, Abuja; Port Harcourt International Airport and Aminu Kano International Airport, Kano. He explained that the government could no longer shoulder the financial burden of upgrading infrastructure and the four would be the first batch in the plan to open all FAAN’s 22 airports to private sector investment.
However, opposition has come from some stakeholders, the first being the usual suspects – public sector workers in FAAN and other state agencies – who instinctively resist privatisation to protect their jobs. As usual, they clothe their opposition in patriotic robes, arguing, though with some merit, that past concession arrangements by the Nigerian government had been mired in opacity and fraud and delivered little value to the public.
We stand resolutely for the privatisation programme through concessions. There is no record of any Nigerian federal public commercial enterprise that is efficiently run today. On the contrary, their inefficiency is compounded by allegations of horrendous corruption. When the government obtained a $500 million Chinese loan to “re-model” airports for instance, multi-billion naira contracts followed and the then Minister of Aviation, Stella Oduah, boasted repeatedly of her feat, only for stakeholders and her successors to wail thereafter over the broken airport facilities, the same infrastructure she claimed to have transformed. Samuel Ortom, who briefly oversaw the ministry, complained that he had to contend with N174 billion debts despite the dilapidation of the airports. Port Harcourt, one of the airports supposedly “remodelled,” was voted the world’s worst in 2015 in a survey by Guide to Sleeping in Airports, a travel website.
According to the International Air Travel Association, airports are business complexes that include hangars, fuel depots, petrol stations, shopping malls, office complexes, hotels, restaurants, banks and warehouses, while some also link major road and railway hubs. Airports are an integral part of the aviation industry that provides 58 million jobs down the value chain worldwide, contributes $2.4 trillion to global Gross Domestic Product, while the value of international trade shipped by air reached $6.8 trillion in 2015.
Nigeria has great potential to harvest from upgrading its aviation sector, which suffers from under-investment, lack of expertise and poor governance. A master plan rolled out by the government envisages a massive investment in terminals, runways, aprons, hospitality and navigational aids. There is no hangar of world class standard in the country yet that can handle anything beyond the simplest maintenance needs of civilian aircraft. Rafael Echevarne, a director of Airports Council International, says that “airports are asset-intensive businesses that require large minimum investments.” An ACI report adds that airport assets “are geographically fixed, need long-term viability to pay back investment and have no real alternative use.”
There can be no stronger arguments for the urgent privatisation of the four of which only two – MMIA and NAIA – are currently turning in modest revenues amid glaring inefficiency. Others are serial loss-makers. To maximise value in passenger growth, job creation and efficient services, the government should proceed quickly and wisely with the concessions. Our airports are a national disgrace.
Nigerian workers are short-sighted: it is actually in their own long-term interests as professionals for government to let go and allow private investment. The money required to upgrade infrastructure to global standards is no longer there; our government lacks the discipline, policy consistency culture and incorruptibility to provide first rate infrastructure and operate a complex international business concern like the running of airports. Instead of opposing the plan, the air transport unions should negotiate generous payoffs for their members, upgrade their technical skills and pursue the option suggested by Olayinka Abioye, Assistant General Secretary of NUATE, that workers could consider buying airport assets. This is the way to think in the 21st century.
However, we share labour’s and other stakeholders’ concerns that the privatisation should not go the way of previous concessions and asset sales such as the power sector sell-offs that were marred by cronyism. We agree with the unions that the government concession agreements are deliberately written to favour the concessionaires at the expense of the country’s interests.
We call, therefore, for a critical look at the concession law by the ministers, the National Assembly and the Economic Management Team before committing the airports into private hands. When Britain privatised its airports, it later compelled the buyer to sell some of the airports, including London Gatwick, to others to avoid a monopoly. Saudi Arabia has commenced a plan to sell all its 27 state-owned airports by 2020 and six are expected to be privatised by year end, but under a regulatory and liberalised framework that favours both operators and Saudi citizens.
The government should buy into the IATA standard for privatisation that emphasises service delivery, cost-effectiveness and “a framework that benefits both the industry and the customers.”
