The Concession Of Airports

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Muritala Muhammed International Airport, Lagos

The Vice President, Professor Yemi Osinbajo, announced the approval of the concession of the Murtala Muhammed International Airport, Lagos and the Nnamdi Azikiwe International Airport, Abuja  on September 11 , 2017. The concession of the Kano and Port Harcourt airports were also approved a few weeks later. This means that the Federal Government tends to enter into partnership with private corporate bodies to ensure development and an effective management of the airports.

Concession is commonly used across the world to ensure  social economic growth by mobilizing private entities capital and expertise to complement public resources. It also enables huge investments in public infrastructure and services without public debt. To this extent, the decision of the government to concession these airports is a welcome development.

The London Gatwick Airport is run by Global Infrastructure Partners, an independent investment fund based in New York, United States with worldwide stakes in infrastructure assets. The concession agreements serve as a means to remove the Federal government infrastructural burden on the annual budgets and enable allocations to other expenditures.

One of the reasons the concession of the airports is considered overdue is that the government has, over time, failed to bring the airports to world minimum standards, in spite of the huge expenditure in the refurbishment and remodeling of the airports in the immediate past administration. Simply put, the government has failed in the management of the airports.

However, running effective and quality services in the airports typically requires concessionaires to obtain service permits and operating licenses. This means that the government has important roles to play in the process. The benefits of concessions can only be realized when they are properly done. The relationship between the airport and the concessionaire is usually formalized through a legally binding contract. This should be carefully crafted and implemented to avoid controversies and bad faith on the part of all partners and stakeholders to the agreement. In particular, government officials must learn to respect the terms and conditions of agreements entered into on behalf of the government.

Furthermore, in carrying out the concession arrangement, we urge the government to place high premium on transparency and accountability. It should let Nigerians know what to expect from the agreement in terms of improvement in service delivery at the airports. This means that the processes should lead to the selection of the best companies with sufficient resources and technical capacity to bring the airports to globally competitive levels.

The importance of creating a good governance environment for the current concession arrangement is underscored by previous concession experiences in Nigeria that were dogged by controversies. A case in point is  the concession arrangement of the Murtala Muhammed Airport 2 (MMA2) to Bi-Courtney. Although the effort brought the first airport terminal of international standard to Nigeria some years ago, the Bi-Courtney concession agreement encountered serious legal, quality control and management issues.

Several stakeholders are involved in airport concessions. These include air travelers, the prospective concessionaires, airlines, and the local community, including passengers, greeters and concessionaire employees. Airports may face competing demands from these stakeholders because they often have their own challenges and concerns related to the airport concession programme. These have to be addressed.

One of these challenges has manifested in the protest by labour unions that has followed the current approval to concession four airports. The government must create an environment that would foster a healthy and productive relationship among parties and stakeholders for the benefit of all, as the concession process unfolds.