Don't Miss


Home   >   Business   >   Industries   >   Aviation   >   Government to introduce airports development charges

Government to introduce airports development charges

By on June 4, 2014

The Federal Ministry of Aviation on Monday announced plans to introduce airport development charges in all the nation’s airports in a bid to clear a debt of over N174bn.

This was disclosed by the Supervising Minister of Aviation, Dr. Samuel Ortom, when the House of Representatives Committee on Aviation visited the ministry.

The House, however, described the debt as alarming and stated that it would take more than 20 years to clear it.

Ortom, who said that the ministry had set up an inter-ministerial committee to strategise on on how to repay the debts, also noted that President Goodluck Jonathan had approved the review of the proposed merger of aviation agencies.

He said, “We know that part of the repayment of this huge debt will be from the appropriation. We are also working on establishing an airport development levy in line with the international best practice. And I think that by the time this is done, we should be in a position to raise enough money to be able to pay the loans.”

He noted that the ministry would prioritise the use of its internally generated revenue and stressed that instead of embarking on new projects, it would concentrate on ongoing projects.

“We also want to ask the Federal Government for an intervention to bail us out,” Ortom said.

The minister disclosed that although the ministry had been able to pay N64bn out of the amount it borrowed, it remained heavily in debt.

He said, “The total amount of contracts awarded as of May 2014 was N217.8bn. Of our debt, we had paid N61.4bn and have an outstanding of N174.6bn. The Chinese loan of $500m, which we are using for the construction of four airport terminals, was secured with a moratorium of seven years. But the counterpart funding of this loan to the tune of $100m was obtained by the DMO on behalf of the ministry. The interest is $13.9m and payment is supposed to commence in July.”

The Chairman of the House committee, Mrs. Nkiruka Onyejiocha, expressed displeasure that most of the projects in the sector were still uncompleted despite the huge funds spent on them.

She said, “It is worrisome that you are presenting a debt profile of over N174bn. One would tend to ask: where are you going to get this money? How did you incur such debt.

“In as much as you have stated that you are setting up a committee to look at these issues, I wish to state here that the House is frowning on this huge debt profile.

“If we go by this, it means that aviation will keep paying debts for the next 20 years, looking at the appropriation we have today.”

Onyejiocha stated that the ministry had five working days to provide details of how it spent funds appropriated to it.

She said, “We seek specific information on details of every structural change made to projects vis-à-vis the budget implication; details of projects under construction from loans; details of all agreements by FAAN in the last two years, and update on the hotel under construction at the Lagos airport. Others are details of all concessions in the last two years, how concessions fees were arrived at and proofs of remittances to the Federation Account.”

The House members also faulted the $500m Chinese loan and the additional $100m counterpart funding for the construction of four airports in the country and stressed that beautifying airports should not be given more priority than having standard navigational equipment across the airports.

According to them, most of the airports in the country were still far below international standard despite the huge funds sunk into them by the former aviation minister.

Responding to the statements by the House members, the supervising aviation minister stated that some of the airports terminals were ready for inauguration.

On the debts, Ortom said, “We have not awarded any contract since we assumed office few months ago. What we are talking about is a debt that we inherited. We have not undertaken any new project and we intend not to, looking at the debt profile.”

Sensing that the $100m counterpart fund loan from the DMO was about causing tension during the meeting, Ortom stated that the funds were paid directly to contractors handling aviation projects by the Ministry of Finance.

He noted that the finance ministry was in charge of the loan and was managing it.

The minister added that the payment of the loan would commence in July 2014 and would be cleared in six months.

 

[Punch]