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FG may privatise FAAN, some airport terminals

By BusinessNews Staff on June 7, 2015

There is an indication that the federal government may divest at least 51 per cent ownership of the Federal Airports Authority of Nigeria (FAAN) to private investors. It has also emerged that government plans to concession some major airport terminals, while others may be partly funded by governments of the states where they are located.
An informed source disclosed to THISDAY that although this was the recommendation of the immediate past Minister of Aviation, Osita Chidoka, the new government, which wants to run a lean administration is positively considering executing the recommendation.
Industry stakeholders had posited that privatising FAAN by giving controlling share to institutional investors while government retained about 49 per cent, which could be bought by government major institutions like PENCOM was the only way to make FAAN profitable and eliminate corruption that has bedeviled the agency.
Under normal circumstance, FAAN should be generating revenue to fund its major and minor projects and at the same time contribute to the nation’s GDP, but presently it generates about N1.5 billion monthly, which cannot offset its overheads, salaries and settle debts to its contractors.
Industry sources allege the airports are not efficiently managed in that every month, the agency goes cap in hand to banks to raise funds to pay workers’ salaries and allowances.
Over the years airports under FAAN have been poorly managed and when compared to the Lagos domestic terminal that was built and is being managed by Bi-Courtney Aviation Services Limited (MMA2), the later meets international standards in every ramification with very clean environment, clean toilets and modern facilities.
About two years ago the federal government secured $500 million loan from China Exim Bank to build four terminals in four major airports in the country located in Lagos, Abuja, Port Harcourt and Kano and this loan ought to be paid from revenues generated by the agency.
According to an official of the agency, from the way FAAN is managed, it may not be able to generate funds to pay back this loan. He said government has decided to make the agency more profitable by privatising under a Private, Public Partnership (PPP) arrangement, which would enable the investor to manage the agency, while government appoints directors on the board.
“Government can retain the security apparatus, fire and marshallers, just as FAAN is in control of such in MMA2, but government can adopt different privatisation models. FAAN can easily attract investors because it continuously generates revenue. Viable airports terminals should be given out on concession while state governments should partly fund the airports located in their states. We have to move away from the old system whereby government insists on managing business ventures that it cannot actually manage efficiently,” the source told THISDAY.
It is however feared that government will face the challenge settling entitlements of existing workers, many of whom would be laid off by new FAAN management. Already, workers who are sceptical about the privatisation plan are worried that what happened to the defunct Nigeria Airways Limited workers might happen to them.
“Government must have to raise huge funds to settle the workers, although high number of the technical staff would be retained.
“Will government be able to pay the entitlements of the workers, they will lay off which will involve billions of Naira. It is not as if anybody wants to stay permanently in this job, but I hope government will not do it the way it did with the workers of Nigeria Airways,” a senior official of FAAN said.

[ThisDay]

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