New Telegraph

PPP: Evaluating options in closing aviation infrastructure gap

Early days

It is still early in the day to begin to assess the Minister of Aviation and Aerospace Development, Mr. Festus Keyamo. A peep into the visit of the Minister to Lagos airport to inspect facilities at the aerodrome gave an indication of where Keyamo is headed. His brief discussion with the Managing Director of the Federal Airports Authority of Nigeria (FAAN), Mr. Kabir Mohammed, on revenue generation equally indicates that the agency would have to redouble its efforts to block leakages.

His equal disposition towards the private sector engagement in helping FAAN out in its myriads of infrastructure challenges has seen him take a position that will make private sector engagement to be very robust under his administration. He was overheard while discussing with Mohammed that he came with a mindset of Public Private Partnership (PPP) with a view to helping the sector generate more revenue and provide infrastructure for the good of users of the airports in the country.

PPP mindset

According to him, “I am a very sector person. I came in with a mindset of private sector engagement. The government needs money from every corner for infrastructure development. FAAN MD, please do more in areas of revenue generation through outdoor advertisements and others.” PPP is a funding model for public infrastructure projects and initiatives such as new airport terminals, new airports, concessions, and other initiatives that would fall majorly into private hands because of the huge funds required for the facilities. Government agencies represent the public partner at the local, state, and/or national level.

The private partner can be a privately owned business, public corporation, or consortium of companies with a specific area of expertise. PPP is a broad term that can be applied to anything from a simple, short-term management contract — with or without private investment requirements — to a long-term contract that includes funding, planning, building, operation, maintenance, and divestiture. PPP projects (also known as P3 projects) are helpful for large ventures that require the procurement of highly skilled workers and a significant cash outlay to get started. They are also helpful in many countries of the world including Nigeria countries that require the state to legally own any infrastructure that serves the public. Not a few agree that with the way things are in the aviation sector particularly as it affects infrastructure, the only solution rests on PPP. Therefore, for any government seeking to expand infrastructure, the public-private partnership offers an option that lies somewhere between public procurement and privatization, as it brings private sector competencies, efficiencies, and capital to improving public assets or services when governments lack the upfront cash.

Spelling out the conditions

Obviously, as good as it is for any government to partner with private investors, certain conditions must however be considered for it to yield the desired results which include: clearly defined terms of agreement that are flexible to amendment, the ability to respect the agreement signed at all cost, need for representatives of both parties to have a good grasp of what they are about to commit their different interests to, ability to intelligently and transparently interpret the terms before signing the deal. Going through all these will surely make the partnership achieve its aim and target for the two parties.

The different nations and individuals that had embraced this policy and still embracing it and keeping to the terms have sweet stories to tell as through such partnerships many countries have been able to successfully provide standard dividends to their citizens in their areas of needs. Nigeria’s aviation sector is no doubt one of the sectors of government going through a myriad of problems including infrastructural challenges as witnessed in the obsolete structures adorning the different airports which required trillions of naira to upgrade. Some of the airports including the gateway airport in Lagos still carry the architecture of 1979 built after the Amsterdam Schiphol airport which has been transformed many times. It is no longer news that it was during the tenure of former President Olusegun Obasanjo that the first PPP policy was embraced in the aviation sector through the agreement signed between the Federal Airports Authority of Nigeria (FAAN) and Bi-Courtney Aviation Services Limited (BASL) that gave birth to the beautiful edifice now popularly called MMA2 at the local wing of the Lagos local airport.

Setbacks, way forward

Unfortunately, this beautiful deal not quite long went bad as the government’s representative, FAAN suddenly woke up to question an already signed and sealed deal, while Bi-Courtney on the other hand continues to stand its ground on why the existing agreement should remain. To back up its position, the MMA2 managers have since dragged the government to court. There are many other PPP arrangements in the sector that have gone sour, which sadly have put a question mark on the credibility of partnerships in Nigeria amongst the circle of both local and international private investors.

The partnership between the maverick chairmen of the Virgin Group, Sir Richard Branson to help set up Virgin Nigeria between 2004 and 2005 finally hit the rock over attempts to change the rule of the game midway. According to Branson, “we have Virgin’s ill-fated footsteps by setting up a new airline in Africa in conjunction with the Nigerian government. Together a very good airlinethe first airline in West Africa that was ever IOSA/IATA operational safety audit accredited but unfortunately it got tied down to the politics of the country. “We led the airline for 11 years, we fought a daily battle against government agents who wanted to daily make a fortune from us, politicians who saw the government’s 49 per cent as a meal to seek all kinds of favour. Nigerian people are generally nice but the politicians are very insane. The joint venture should have been the biggest African carrier by now if the partnership was allowed to grow, but the politicians killed it.” For sure, these strong words that came from Branson which is still hunting PPP policy in the country must have sent a very strong signal to private investors around the world about the danger of PPP policy as it affects the aviation sector.

Last line

The way it is, the government may have reached a point it has no other choice than to engage the private sector as the last hope of solving the infrastructure challenges affecting the industry.

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