The plan to concession the Akanu Ibiam International Airport (AIIA), Enugu, by the federal government through the Ministry of Aviation and Aerospace Development to a private firm under the finance, rehabilitate, operate and transfer for 80 years has been described as ridiculous and mysterious in the global aviation industry.
Aviation stakeholders said that effective concessions require careful planning, robust contractual agreements, and strong regulatory frameworks to ensure successful outcomes for both parties, which they doubted existed in this present proposed agreement with Aero Alliance Consortium, reports Daily Independent.
Industry experts also said that the 80 years concession period lacked global template, noting that no airport should be concessioned for more than 30 to 40 years and renewable, if parties involved agreed to the existing or new terms.
Also, attempt to get the view of the Federal Airports Authority of Nigeria (FAAN) on the issue proved abortive as Mrs. Obiageli Orah, the Director of Public Affairs, FAAN, directed our correspondent to Mrs. Ijeoma Nwosu-Igbo, the General Manager, Public Affairs of FAAN, who as at the time of filing this report, was yet to get back to our correspondent.
A 56-page draft concession agreement between the Federal Ministry of Aviation and Aerospace Development/Federal Airports Authority of Nigeria (grantor) and Aero Alliance Consortium (concessionaire) under a public-private partnership (PPP) arrangement, obtained by our correspondent, indicated that the airport was being proposed for 80 years concession period with numerous terms and conditions.
The now shut Enugu airport was among the five remodelled aerodromes by Princess Stella Oduah as the Minister of Aviation by the China Civil Engineering Construction Corporation (CCECC), with a $500 million loan secured from China and counterpart funding provided by Nigeria towards the successful execution of the project. Other airports under the project were Lagos, Abuja, Port Harcourt and Kano.
The over 20 years at 2.5 percent interest rate loan for the project has a grace period of seven years before payment.
The draft document said that the concession period would commence on the effective date, while ending on the 80th anniversary of the agreement or earlier if the agreement was terminated in accordance with the rules guiding it.
Also, the draft spelt out that where the conditions precedents had not been satisfied and achieved or waived by either party 180 days after the execution date, not exceeding 270 business days from the execution date, either party may terminate the agreement with immediate effect by giving a termination notice to the other party.
On the existing employees of FAAN at the airport, the draft agreement stated that the staff would be identified on an agreed list, and employed by the grantor would be transferred to the concessionaire at the effective date on the agreed conditions.
Some of other agreed conditions are that all employment related liabilities arising prior to an agreed transfer date would remain with the grantor, while those arising after an agreed date would be the responsibility of the concessionaire.
The agreement also specified that the staff must be retained at the airport for the first two years with no reduction in salary at the commencement of the project, adding that in case of a restructuring, staff not required following such restructure would be reabsorbed by the grantor.
The draft agreement added: “After the first two years, the concessionaire has the right to employ staff under its own terms and conditions. “The grantor shall reabsorb staff not required by the concessionaire and make provision for pension and gratuity of re-transferred staff.”
However, the draft agreement did not specify the contractual sum, current revenue generation by FAAN at the airport, projected revenue earning and was equally silent on the percentage of revenue generation that would be earmarked for FAAN periodically.
Commenting on the proposed agreement, Grp. Capt. John Ojikutu (retd), aviation analyst, expressed support for concession of all airports, but said the major focus should be on the non-aeronautical commercial services and not aeronautical services especially at the joint users’ airports with the military.
But Ojikutu queried the 80 years tenure concession agreement for Enugu airport, wondering how the concessionaire was selected among other bidders if any.
He further expressed worries that the contractual sum was not in the public domain, stressing that the 80 years tenure was like “a complete sale” of the airport to the concessionaire.
Ojikutu insisted that concession years should not exceed 30 years, declaring that anything beyond this was tantamount to exploitation of the public by the concessionaire in conivance with the government.
He said: “How much is the concession since a company is already chosen? Was there any bidding before the chosen company? The 80 years concession sounds more like a complete sale unless the annual return to government is made known to the public.
“What are the generated revenues of the Enugu airport and what is the government expected from the investment on it? We need to know how much revenue is generated now at the airport and how much will be generated by the company and what percentage of the revenue the government is expecting.
“These are necessary information. With the present passengers and flight traffic, the government should be taking nothing less than 30 percent of the expected revenues.
Concession is the answer to the management of all the government airports. It is a global practice today, but must be done in a transparent manner.”
Besides, Capt. Peter Adenihun, aviation stakeholder, said that concession of an airport where a private entity takes its management and operation could be a good idea with potential benefits like increased efficiency, improved services and attracting investment.
He also said that the scheme comes with its risks, which include potential conflicts of interest, lack of transparency, and the possibility of increased costs for users.
Adenihun expressed that the success of an airport concession depended largely on careful planning, transparent negotiations and effective monitoring to ensure that the public interest was protected while also allowing for private investment and improved airport operations.
On the proposed 80 years concession period for Enugu airport, Adenihun challenged the government to make public the documents, processes, benefits to Nigerians and the country’s gain from the exercise.
He said: “Private companies are often more adept at managing operations and providing services due to their experience in the commercial sector, potentially leading to better customer service, faster processing times, and increased efficiency in various airport functions.
“Private investment can help modernise airport facilities, upgrade infrastructure, and bring in new technologies, ultimately improving the overall user experience and attracting more passengers.”
Also Comrade Ocheme Aba, the General Secretary of National Union of Air Transport Employees (NUATE), accused the government of carrying out airport concessions in the dark and creating a vacuum in the system. Ocheme expressed that the draft agreement lacked an articulated aviation masterplan.
According to him, an 80 years airport concession with a single lifespan was inexplicable, unless there was a provision for intermediary renewals such that each segment recognised the global standard airport lifespan of 25 to 30 years. He added: “In my view, any airport can be slated for concession as long as prevailing conditions are accounted for in the concession agreement, but in the absence of an articulated aviation masterplan, it makes little sense to dabble into such a critical cornerstone of the aviation industry without tailoring the concessions to fit into a plan.
“My candid view is that it is inadvisable to carry out airports concession in the dark, or in a vacuum, especially the kind of piecemeal approach we are engaged in. In the absence of an articulated aviation masterplan, it makes little sense to dabble into such a critical cornerstone of the aviation industry without tailoring the concessions to fit into a plan.”
On the protection of the workers, Ocheme declared that the preoccupation of the unions in the concessions plan had always been on compliance with rules and procedures, transparency/openness, and settlement of labour issues, which bother on safeguarding legitimate concerns of existing workers and pensioners of FAAN.
Also, Capt. Samuel Caulcrick, former Rector of the Nigerian College of Aviation Technology (NCAT), Zaria, said that concessions typically had a specified duration, after which the agreement may be renewed, extended, or terminated.
Caulcrik pointed out that effective concessions required careful planning, robust contractual agreements and strong regulatory frameworks to ensure successful outcomes for both parties.
He, however, described an “80-year concession of Enugu airport as reckless,” saying that it cuts through many generations and economic uncertainties.
