Nigerian Government says no Airports Ownership Changes, Defines areas slated for Concession

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The Federal Ministry of Aviation has announced that there will be no ownership change for the planned concession of four Nigerian airports since the concessions will only apply to the non-aeronautical assets of the airports located in the passenger and cargo terminals.

According to a Frequently Asked Questions (FAQ) released by the ministry recently, the Federal Government still intends to invest in the airports, clarifying that the Federal Airports Authority of Nigeria (FAAN) will continue to manage airports after concession.

On change of ownership, the document read, “No, there will not be any change in the ownership structure of the airports involved in the programme.”. It is a concession programme that the Federal Executive Council has approved.

A concession is governed by a concession agreement whereby two parties – A private sector investor and a Public sector owner of an asset enter into an agreement that gives the Private sector investor the right to operate said asset for a specific business and within the Government’s jurisdiction, subject to certain terms that are agreed upon by both parties during the negotiation and contracting phase. It is thus a form of Public-Private Partnership whereby there is no transfer of equity between the contracting parties.

Oversight of Nigeria’s airports remains the responsibility of the Federal Airport Authority of Nigeria (FAAN). FAA continues to play this role broadly.

It further stated,

The concessionaires will be responsible for the day-to-day management of the airport passenger and cargo terminals. The FGN, as the owner and partner to the concessionaires, will make strategic investments in these assets alongside others from the private sector and development finance sector. Any investment contributions made by the FGN will be based on robust medium to long-term investment and expenditure plans to be developed by the concessionaires with oversight from the Ministry of Aviation.

“On the non-aeronautical properties of the airports slated for concessions, the FAQ clarified: “They are the assets of the airport from the entry gate to the point where passengers embark a plane, and from the point where passengers depart.”.

“The Passenger Terminal consists of retail spaces, waiting and seating areas, baggage collection and check-in counters, and administrative offices. The Cargo Terminal consists of the facilities between the point of entry and the loading and offloading points, as well as administrative offices within the facilities.

In addition, it said the ministry was not considering putting all airports up for concession since, according to it, “infrastructure concessions are highly sensitive and complex programs.”

“It often takes years for them to secure the requisite inputs and approvals from relevant regulatory bodies.

“We are starting with the most strategic assets since successful completion of this concession program will give all stakeholders the confidence required to consider other opportunities in the sector,” it said.

The government has not stated whether it would prefer indigenous investors in the concession programme. They said they were aiming for a transparent, competitive process that would produce the very best long-term partner(s) and results for Nigeria.

There are not many companies with the qualifications, experience and finances to manage assets like those up for concession. Although we do expect Nigerian companies or consortiums of Nigerian investors, we also expect the process to receive significant attention from the international community, perhaps in partnership with qualified and capable local companies and investors.”

Amid concerns about national security, it said: “No national security implications result from this concession program.”.

“The Federal Airports Authority, Nigerian Civil Aviation Authority, Nigerian Aerospace Management Agency and all other public authorities working with the nation’s security apparatus will continue to work closely with concessionaires.

“All relevant agencies have been involved, including the national security advisor.”

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