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Aviation Minister Buttresses Need to Concession Nation’s Airports

by timenews
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…says concession would aid air transport value chain growth

 

The Minister of Aviation, Senator Hadi Sirika, has buttressed the necessity to concession Nigerian airports driving home that via concession the Country would 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.

In a statement made available to Aviation journalists, Sirika noted that Nigeria is Africa’s largest economy and most populous Nation, with a broad range of investment and tourism opportunities, hence, investing in and continuously developing the asset up for concession is key to unlocking these opportunities.

He pointed out that Nation’s airports have huge potential, but that they are currently operating at a suboptimal level due to a myriad of factors that will be addressed through their concession.

The Minister however, said that not all the airports would be on concession because infrastructure concessions are very complex and sensitive programmes, requiring years of planning and preparation to secure the requisite inputs and approvals from the relevant regulatory bodies.

“We are starting with the most strategic assets because successful delivery of this concession programme will give all stakeholders the confidence required to consider other possibilities in the sector,” he stated.

He explained that the concession applies to the non-aeronautic assets of the airports located in the Passenger and Cargo terminals.

“They are thus comprised of the assets from the entry door of the airport to the point of embarking airplane, and from deplaning to the exit doors.

“This space commonly referred to as the Passenger terminal is comprised of retail spaces, waiting and seating areas, airport and airline lounges, baggage collection, check-in counters as well as administrative offices.

“The Cargo terminals are comprised of the facilities between the point of entry and up to loading and offloading points, including administrative offices within said facilities,” Sirika explained.

He cleared the air on the mode of concession, saying that it is not outright sale as there  ​shall be no change in the ownership structure of the airports involved in the programme.

According to him what has been mandated by the Federal Executive Council (FEC) is a Concession programme, stating that “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 the said asset for a specific business and within the governments 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.”

Sirika further said that selling or fully privatising these facilities was opposed because the Passenger and Cargo terminals of each airport, although separated for the purpose of the concession programme, are within the various federal airport complexes and as such, are of tremendous national importance from an economic and security perspective.

“We believe it remains in Nigeria’s best interest to maintain ownership for this reason. Furthermore, as is often the case with large, multifaceted infrastructure developments, the scale of investment required to build the airport complexes envisaged in the Aviation Sector roadmap will require the support of the Sovereign Wealth Fund in a way that an outright privatisation will not allow at this time,” he elaborated.

He also stated that there was no conflict between this concession programme and the terms of the EXIM Bank loan agreement entered into between the federal government and the Peoples Republic of China which has seen China Civil Engineering Construction Corporation (CCECC) build new passenger terminals in Lagos, Abuja, Kano, Port Harcourt and Enugu Airport.

The Minister stated that CCECC was contracted to deliver a number of infrastructure projects throughout Nigeria in 2013 of which the Passenger Terminal development works were a small part of it, and that the federal government has every intention to service its obligation.

He announced that the federal government is sourcing ideal concessionaires/partners who have the financial, technical and operational capabilities to manage these assets profitably and responsibly.

On the selection of successful bidders, Sirika said the infrastructure Concession Regulatory Commission (ICRC) as the Institution that oversees all concession and Public-Private-Partnerships in Nigeria, has clearly laid out processes governing a transaction like this.

“The Transaction Advisors; a coalition of independent and reputable organisation have been mandated by the Ministry of Aviation (having received approval from the Bureau of Public Procurement for their appointment) to drive this process transparently, ensuring that regulations laid out by the ICRC are followed whilst also ensuring that Nigeria gets the best partner(s) and deal possible given the unique attributes of the assets to be on concession,” he stated.

On when the public procurement process go live, the Minister said: “We are now have OBC Certificates of Compliance from the Infrastructure Concession Regulatory Commission.

“We are currently finalising the documents required for the procurement phase, after which we will commence the next stage of the process; publishing a Request for Qualifications (RFQ) – a critical phase of the public procurement process.

“The RFQ will give interested parties, local and international, ample time to prepare their submissions. Once the deadline for submission has been crossed, we will then begin the pre-qualification process.

“Only Pre-qualified parties will be invited to respond to a Request for Proposal (RFP), which will also be published as per ICRC guidelines and general best practice in Public Procurement.

“We are looking for partners who have the financial, technical and operational capabilities to manage these assets profitably and responsibly.

“We envisage a competitive process and as such we will be advertising broadly.

“All qualified companies or consortiums shall be allowed to submit proof of relevant qualifications once we have published a request for qualifications (RFQ).”

He said the federal government is looking at a minimum of 20 to 30 years for the concession tenure because infrastructure concessions of this nature come with a significant financial obligation which any responsible concessionaire will no doubt be keen to recoup.

Sirika however, added that the tenure may be extended depending on performance and Nigeria’s best interests, “the duration is not set in stone and will be subject to negotiation and then final approval by the FEC.”

 

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