Sirika Says Duration Of Airport Concession To Last 20–30 Years

The Minister of Aviation, Hadi Sirika has said that the planned concession of four airports will last for a duration of 20 to 30 years.

Sirika disclosed this in a statement signed by the Director, Public Affairs, Ministry of Aviation, James Odaudu, titled Frequently Asked Questions (FAQs).

In the document, the minister pointed out that ​infrastructure concessions of this nature come with a significant financial obligation which any responsible concessionaire will want to recoup.

He however said the duration will be subject to negotiations and the final approval will be given by the Federal Executive Council.

On why the ministry is still going on with the concession, Sirika said that the delivery of the 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.

He said the areas to be concessioned include the non-aeronautic assets of the airports located in the Passenger and Cargo terminals.

Sirika pointed out that there shall be no change in the ownership structure of the airports involved in the programme.

“They are thus comprised of the assets from the entry door of the airport to the point of embarking a plane, 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.

“What has been mandated by the Federal Executive Council is a Concession programme. 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 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.

“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 said.

On the ideal concessionaires/partners, the minister said the government is ​looking for partners who have the financial, technical and operational capabilities to manage the assets profitably and responsibly.

On how the successful bidders would be elected, he explained that the infrastructure Concession Regulatory Commission (ICRC) – the institution that oversees all concession and Public-Private-Partnerships in Nigeria has clearly laid out processes governing a transaction like this.

He observed that 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 the 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 concessioned.

On the issue of inviting foreign firms to participate, Sirika said the Ministry is looking for partners who have the financial, technical and operational capabilities to manage the assets profitably and responsibly.

He added that: “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”.

On how the issues related to the MM2 concession might affect the process, he said: ​”These are two entirely independent concession programmes and as such we are not at liberty to comment or join issues. We do however hope that all stakeholders appreciate that the concession programme we are focused on right now operates in an environment of enhanced Governance with enabling structures and processes. At the time the MM2 concession programme was initiated on there was no ICRC. We are now operating in a much more evolved and mature environment as regards governance related to infrastructure concession programmes.”

On how much the FG intend to generate through the process, the minister noted that ​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.

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