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Minister of Aviation, Senator Hadi Sirika at the three day Public hearing on aviation agencies at the National Assembly Complex in Abuja

Concession: Aviation Ministry denies conflict with CCECC; silent on actual concession earnings

  •  Says concession timeline not set in stone
  • Reveals Transaction Advisors’ identities
IN a bid to explain its planned concession quest, the Ministry of Aviation has released responses to possible questions that have been asked with regards the concession of the nation’s highest generating airports albeit the responses did not explain in details the entire situation.

The Frequently Asked Questions (FAQ) released by the Ministry alleges that there is no conflict between the planned concession and the agreement reached with the Peoples Republic of China EXIM Bank just as it tried to clarify some contentious areas the planned concession has thrown up over the years.

According to the document, the delivery of the concession project will help Nigeria achieve its objective in terms of air transport value chain growth by developing and profitably managing customer-centric airport facilities for safe, secure and efficient carriage of passengers and goods at world-class standards.

It further stressed that Nigeria is Africa’s largest economy and most populous nation, with a broad range of investment and tourism opportunities.

According to the document, investing in and continuously developing the asset up for concession is key to unlocking these opportunities stressing that the airports have huge potential, but are currently operating at a sub-optimal level due to a myriad of factors that will be addressed through their concession.

Four airports are earmarked for concession: The Murtala Mohammed International Airport – Lagos, Nnamdi Azikiwe Airport – Abuja (International & Domestic), Port Harcourt Airport (International & Domestic) and Mallam Aminu Kano Airport (International & Domestic).

The document on any impending conflict between Nigeria and China over the concession read, “There is no conflict. China Civil Engineering Construction Corporation (CCECC) was contracted to deliver a number of infrastructure projects throughout Nigeria in 2013. The Passenger Terminal development works are a small part of this, and the Federal Government has every intention to service its obligation.

This however has not quelled allegations that there is a subsisting concession agreement between the Nigerians and Chinese with regards the terminals.

On how much Federal Government intends to generate through this concession project, the document was silent only making reference to a significant amount and cost saving on the part of government without expatiating how.

It read,” A typical airport concession transaction might rely on a deal structure comprised of an investment commitment by the concessionaire for a minimum duration, an annual 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 into these airports.

“We expect to generate significant cost savings and operating income over the period of the concession. Airports continue to be prized assets in the global logistics sector which is projected to grow.”

On the tenure of the concession, the document stated that concessions of this nature come with a significant financial obligation which any responsible concessionaire will no doubt be keen to recoup.

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 process for good governance in public procurement is available on their website.

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