Nigeria’s Aviation Ministry denies conflict with CCECC; Silent on actual Concession Earnings
Ministry of Aviation has released responses to possible questions that have been asked regarding its planned concession bid for the country’s most important airports, but the responses haven’t always explained the situation in detail.
According to the Frequently Asked Questions (FAQ) released by the Ministry, there is no conflict between the planned concession and the agreement reached with the People’s Republic of China EXIM Bank, just as the Ministry attempts to clarify some contentious issues concerning the planned concession.
This document indicates that Nigeria will be able to achieve its objective in terms of air transport value chain growth through the development and efficient management of customer-centric airport facilities for the safe, secure, and efficient transportation of passengers and goods at world-class levels.
Further, the document emphasized that Nigeria is Africa’s most populous nation and largest economy, presenting an array of investment and tourism opportunities.
As indicated in the document, investing in and investing continuously in the assets up for concession is key to unlocking these opportunities. The document states that airports have enormous potential, but currently operate at sub-optimal levels due to a multitude of factors that will be addressed through their concession.
For a concession, four airports have been identified: Murtala Mohammed International Airport – Lagos, Nnamdi Azikiwe Airport – Abuja (international and domestic), Port Harcourt Airport (international and domestic) and Mallam Aminu Kano Airport (international and domestic).
Documents written by Nigeria and China on possible conflicts over the concession stated that “there is no conflict.”. The China Civil Engineering Construction Corporation (CCECC) was hired to deliver a number of infrastructure projects throughout Nigeria in 2013. The development of the Passenger Terminal is only a small part of this, and the Federal Government intends to meet its obligations”.
However, this has not dispelled allegations that there is a concession agreement between the Nigerians and Chinese regarding the terminals.
The document was silent on the amount of income the Federal Government intends to generate through this concession project, referring only to a significant amount as well as cost-savings for the government without explaining in detail.
It read,” A typical airport concession deal would consist of an investment by the concessionaire over a specified duration, a concession fee and a share of net operating income.
“These are prized aviation assets and as such we expect to generate a significant amount of direct investment in what we intend to be an equitable deal for all parties. That said, the initial or short-term objective is to deliver significant cost savings to the Federal Government. FAAN will no longer be solely responsible for maintenance, investments and day to day management of these airports.
We expect substantial cost savings and operating income over the concession period. Airports continue to be prized assets of the global logistics industry, which is expected to grow.”
According to the document, the concession duration is a significant financial commitment for a concessionaire, and a concessionaire within their rights would be eager to recoup this amount.
It stated, “To this end, we envisage a minimum of twenty (20) to thirty (30) years for the programme, which may be extended depending on performance and Nigeria’s best interests. That said – the duration is not set in stone and will be subject to negotiation and then final approval by the Federal Executive Council.
On the Transaction Advisors (TAs), the document revealed them to comprise a team of seasoned executives put forward by Dentons (a multinational law firm with global operations), Infrata(a global infrastructure investment advisory firm), Proserve Energy and Infrastructure Consulting Services (an indigenous advisory firm focusing on energy and infrastructure projects), Templars (a leading law firm headquartered in Nigeria) and Rebel Group ( a global leader in infrastructure, transportation and mobility advisory services).
It stated that the TAs were appointed by the Ministry of Aviation, having gone through a rigorous process as laid out by the Bureau of Public Procurement (BPP). BPP’s laid down the process for good governance in public procurement is available on their website.