WHY NIGERIA RISKS PROJECT FAILURE WITH THE PLANNED AIRPORTS’ CONCESSION

Over a month ago, the Vice President of Nigeria Professor Yemi Osinbajo announced via Twitter that the Federal Executive Council (FEC) had approved the concession of Nigeria's 2 major airports – Murtala Mohammed International Airport (MMIA) & Nnamdi Azikiwe International Airport in Lagos and Abuja respectively. Recently too, the Minister of State for Aviation, Hadi Sirika followed up Professor Osibanjo’s earlier disclosure by announcing that the Federal Executive Council (FEC) had also approved the concession of two (2) other major airports – Mallam Aminu Kano International Airport in Kano and the Port Harcourt International Airport in Rivers. Mr Sirika went on to add that the Federal Government of Nigeria (FGN) will follow up with concessioning all the other airports owned by it. The FGN’s reason for the planned concessions is first that passenger traffic (especially in the major airports) is growing and the FGN can no longer foot the burden of funding expansion in the airports’ infrastructure and operations. Secondly, the FGN is aiming to improve the financial viability of smaller airports. According to a poll conducted by Guardian Newspapers, an overwhelming 79.71% of respondents believe the concession is not only needful but also overdue. Only a paltry 2.3% believe it is ill-timed while 18% say it is a move to enrich a select few.

The jury has since been out on the pros or otherwise of the concession. To further complicate matters, the Unions to be affected by the planned concession have come out to protest the shadiness of the proposed concession. One Union has said that Mr Sirika intends to use the concession to rake in millions personally. Another says Professor Osinbajo has connived with Bi-Courtney Aviation Services Limited (BASL) (Nigeria’s first private airport concessionaire/operator) to give the company a soft-landing in the process leading up to the award of the concession.

The protests were led by the National Union of Air Transport Employees (NUATE), National Union of Pensioners (NUP) and Air Transport Services Senior Staff Association of Nigeria (ATSSAN). According to an official of NUATE, Mr. Olayinka Abioye, the Unions’ grievance is that till this time, they have not been consulted concerning the government’s plan to concession the airports. He said, “The government needs to engage the unions before it can consider the concession of the airports and tackle the issues that will arise from the concession, including job losses, which should be properly looked into.” In reprisal for their being ignored, the Unions have vowed to do everything possible to cripple the concession.

With this development, the FGN risks a failure of the concession process if it fails to properly manage stakeholder relations and contestation risks. Contrary to the Unions’ position, the FG is not required to consult them in approving the plan to concession the airports. Nevertheless, in the process of concession that will commence, interfacing with the Unions is a necessity—anything less and the project could be crippled. More so, contestation risks such as these are a turnoff to investors.

Existing evidence that the concession will create value for money (VfM) is the MMIA Terminal 2 concessioned to BASL in 2007, but Public-Private Partnerships are not all about VfM. A sound concession process also considers all the considerations that go into the project from project identification to appraisal, structuring, tender, award and operation and maintenance. According to the APMG PPP Guide, a sound project management process for a concession will comprise the following:

·      Sufficient resources in a project team (not too large nor too small), a full-time dedicated project manager, and adequate incorporation of advisors;

·      Clear identification of a Project Owner and a Project Champion;

·      Existence of an advocate for the project outside the project team;

·      Clear decision framework (organized through project boards and linked to a program governance structure) and decision chain;

·      Proper stakeholder management (who should be informed about and engaged with the project from its initial stages); and

·      Fluent and clear communication (including communication to the public).

The foregoing reiterates that clear communication from government to industry stakeholders and the public is critical to the success of a project. Overall, comments made by the Union officials indicate that they are not entirely averse to concession. In fact, some aviation industry stakeholders have suggested that they want to also see the concession of other smaller Federal and State-owned airports around the country to make these airports improve profitability and halt over-reliance on revenues from the major airports for their operations and maintenance. The understanding is that the concession will affect jobs and with this concern, the Unions demand government’s interfacing with them and transparently too.

On the issue of transparency in PPPs, Nigeria recently made history as the first country to launcha PPP disclosure portal. The portal has details of about 51 PPP/concessions in Nigeria including the contract documents between the FGN and the private parties. The portal also has details about ongoing PPPs which may have achieved commercial but not financial close. This step, one in the right direction, will help quell public concerns about transparency. Using the portal, the public can follow the process of a PPP project leading up to the award of the contract, operations and maintenance phase.

At any rate, it is important the FGN creates an avenue for interfacing with the Unions. Anything less and Nigeria risks the failure of a very promising Project which has the capacity to consolidate on the more than 650,800 jobs (including tourism-related employment) and $8.2 billion (annually) contributed to Nigeria’s economy by the aviation sub-sector.