Monday, 29 October 2012 00:00
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Rumbles in the aviation industry over concession, ownership, commissioning of GAT

A popular adage among Yoruba speaking people says when you offer an animal to a masquerade, you don’t ask for the rope with which you tied it. Yet another saying asks, what is a father who gave out his daughter out in marriage looking for in the backyard of his in-law at night?

These words of wisdom cannot but be relevant to the  recent happenings in the aviation industry over the concession, ownership and commissioning of the General Aviation Terminal (GAT)  Domestic Wing of Murtala Muhammed Airport, Lagos which was concessioned to Bi-Courtney Aviation Services Limited(BASL) in 2003 on Build, Operate and Transfer (BOT) agreement by the Federal Government, if one takes a critical look at the unfolding events in the industry in the last few weeks.

At a time Federal Government was in dare need of investment from private investors to address the despicable state of infrastructure in the aviation industry, some concessionaires came to the rescue with signing one form of concession or the other but no sooner the agreements began to work than the concessionaire began to face one form of disturbance or the other.

Some of the concessionaires include the Pan Express, Meavis Ltd; Terminal Zero; IAMMI;  Promoworld  Afromedia; I-Cube West Africa Ltd; Bi-Courtney Aviation Services Limited (BASL) among other. While Pan Express, Maevis Ltd and Terminal Zero got their concession terminated by FAAN even when there were court judgments in their favour, others are not having implementation of their concession agreement easy with FAAN.  

Within a short period of time  into the concession agreements,  the industry received a boost at least to a reasonable extent in Lagos. Revenue generation got a boost, the nation could boast of Airport Operations  Management System (AOMS) that could be compared to  the most advanced type found anywhere in the world. Also with the concession the nation could boast of a domestic terminal Murtala Muhammed Terminal two (MMA2) which many described as better than some international airport terminals in some African countries.

The move was applauded by all who thought the industry was on the path to reclaim its lost glory.

But less than two years into most of the concessions, the Federal Airports Authority of Nigeria, FAAN, and the Ministry of Aviation began an unslaught  against the concessionaires. First it was Pan Express, followed by Terminal Zero, Maevis, Ltd,  I-Cube and now  Bi-Courtney Air Services Limited, the operators of  Murtala Muhammed Airport 2,(MMA2) Lagos.

While PanExpress, Terminal Zero and Maevis Ltd had their concession agreements revoked without going through due process, others who are  battling with attempt by the FAAN management to revoke their concession agreements.

The airports Authority with the support of the Ministry of Aviation began to violate the content of the concession even against subsisting court orders, thus frustrating the country call for Public Private Partnership (PPP) in the industry.

The recent issue on the the concession agreement on the operation of domestic schedule services in Lagos between FAAN and Bi- Courtney Limited,  calls for a rethink on the future of private investors in the aviation industry at a time when the nation is clamouring for both domestic and foreign investments into the sector.

Since the commencement of operations at MMA2 by Bi-Courtney Aviation Services Limited, (BASL) since 2003, five different law suits have been instituted against the concessionaire by the Federal government, through the attorney general’s office; Ojeimai Holdings, which claimed to be Arik Air’s landlord; Federal Airports Authority of Nigeria, FAAN; Arik Air; and some unions in the aviation industry, challenging the tenure of the concession and who controls the GAT, but all these were won by BASL.

It is also on record that late President Umaru Yar’adua once advised that FAAN and all parties to the concession agreement on the MMA2 should abide by the Rule of Law and allow the concession to subsist and in 2010 the FAAN Regional Manager (West), Edward Olarerin formally handed over the terminal to Bi-Courtney .

But no sooner President Yar’adua died than another set of crisis sprang up on the concession.

Rather than following the due process, which allows Bi-Courtney to be given the right of first refusal in the case a new domestic operation terminal to be built in Lagos as stated in the concession agreement, Joe Obi, the Media assistant to Minister of Aviation, Princess Stella Oduah  in a statement on  who the GAT belongs to said  that the area where the GAT  is located has never been concessioned to Bi-Courtney ltd.

He added that the  agreement with Bi-Courtney has a Survey Plan which clearly marked in Square metres and the area of the GAT was never contemplated to be part of the area leased to Bi-Courtney.

Information at our disposal indicates that Bi-Courtney Aviation Services Ltd, the Concessionaire to MM2, apparently threatened by the imminent opening of the newly reconstructed and remodelled GAT, Lagos is mounting a media campaign in an attempt to blur or diminish the unprecedented achievement of Aviation Minister, Princess Stella Adaeze Oduah in giving Nigerian airports a major face-lift and dignified ambience.

Obi who however conceded to the fact that the case challenging the earlier court order that gave victory to Bi-Courtney on the GAT s still pending in the Supreme Court however pointed out that FAAN was not fully represented when the cases were heard.

It is inconceivable that anyone would not only contemplate, but also hold fast to the jaundiced belief that a nation as big and great as Nigeria ought not to progress beyond having a terminal like MM2.

Regarding allegations that there are subsisting court orders restraining anybody, including FAAN which is the Landlord of all Federal airports in Nigeria from further development of the GAT, we need to stress that the cases are still on-going.

In fact, our case is currently before the Supreme Court, challenging the Orders being referred to mainly, but not limited to the fact that in several of these cases, FAAN, as a principal interested party was never fully represented.

Most of the cases and attempts at arbitration were conducted without the full incorporation and participation of FAAN. Those behind Bi-Courtney, relying on their privileged positions and closeness to the corridors of power at the time conspired to leave out FAAN in most of the adjudication and arbitration processes.

Perhaps it is pertinent to emphasise the point that most of the Concession and Lease Agreements in the aviation sector prior to the coming on board of the present Minister were heavily skewed against the national and public interest.

The review and cancellations of some of these agreement is therefore done in the overriding public and national interest. The interest of an individual investor or Corporate entity cannot be allowed to override the public good.

Rather than following the Rule of Law after Bi-Courtney had obtained judgments against FAAN on the concession, the Minister of  Aviation Minister, Princess Stella Oduah alleged that the concessionaire had broken several clauses in the agreement on the specification of the MMA2 infrastructure and remittance of funds to government.

“What puts you and I in relationship is that agreement that assigns responsibility and says as long as you do yours and I do mine, we are in it together. But when you have contractual obligations that you unilaterally decide not to comply with, then there is something wrong with the relationship that I have with you,” Oduah explained.

Speaking in the same vein, managing director, FAAN, George Uriesi said that as far as he is concerned, the agreement over the tenure of MMA2 stands at 12 years, not 36 years. The FAAN boss also said the concession agreement allowed the investor or the concessionaire to invest N3.9 billion in the terminal under a BOT arrangement for 12 years, and wonders how the concessionaire now claims that he invested N39 billion.

Uriesi and Oduah maintained that the concessionaire has not remitted to the government concession fee or rent for the space occupied by MMA2 as stipulated in the agreement because the general aviation terminal, GAT, was not released to BASL, which believes that the GAT is part of the concession agreement. Uriesi explained that the concession to BASL is of a space, insisting that GAT was not part of the concession. Oduah was also emphatic that GAT was not part of BASL’s contract.  “GAT is FAAN’s property; GAT is FAAN’s airport owned by the Federal Government of Nigeria. It is not Bi-Courtney’s and was never given to Bi-Courtney,” the minister explained.

But contrary to these submissions, FAAN had in a letter with reference No: FAAN/1300/BD/402A/Vol.1, dated October 12, 2006, FAAN actually offered Bi-Courtney a 36-year period. This could be further confirmed by a specific memo written on FAAN letter head with reference number FAAN/1300/BD/402A/Vol.1, dated October 12, 2006, and addressed to the managing director of Bi-Courtney Consortium Limited, titled: “Re: Tenure of New MMA Domestic Terminal By Messrs Bi-Courtney on BOT Business Arrangement,” stated that on the basis of the KPMG report which recommended 36 years as the tenure for the concession, “FAAN is offering BCC Limited a concession period of thirty-six (36) years on the new MMA domestic terminal, Ikeja, being developed by Messrs BCC Limited on build, operate and transfer business arrangement.

Please, formally indicate your acceptance, or otherwise, of this concession tenure so that we may conclude the formalisation of the documentation of the project.” Jaiye Oyedotun, then director of commercial and business development of FAAN, signed the letter.

However the Minister, hiding under the airport remodeling programmed which has been a subject of criticism in many quarters decided to embark on the demolition and remodeling of the terminal.

 But last Monday, the terminal which is yet to get most of its facilities fixed was commissioned amid unwarranted controversies.

In a suspicious manner, FAAN management in alliance with the Ministry of Aviation hurriedly shifted the commissioning earlier scheduled for 3:00 pm was shifted backward by seven hours to 9.00am but was eventually declared opened at about 11.00am by the Secretary to the Government of the Federation, Senator Pius Anyim.

Many dignitaries invited for the commissioning stayed away. Notable among them was the Chairman of the Senate Committee on Aviation, Senator Hope Uzodinma and the Chairman of House of Representatives Committee on Aviation, Honourable Nkeruika Onyejeocha.

Sources close to the ministry and FAAN confided in Nigerian Compass that the commissioning had to be done the way it went because the edifice was embroiled in legal issues and they wouldn’t want a situation where a court injunction would prevent the commissioning.

Also some sources close to the National Assembly said the dignitaries stayed away because they don’t want to be seen supporting illegalities as there were pending issues the Minister of Aviation has not provided answers to in the contract leading to the re-construction of the GAT.

.By inaugurating the GAT, even when the project has not been completed and when the matter is “in the Supreme Court,”  a legal practitioner who made her view known to Nigerian Compass on the issue, the Ministry and the minister may be charged for contempt of court.

The legal practitioner, Christy Olayide said the action is a breach of subsisting court order which remains in force until a court of competent jurisdiction rules otherwise.

“When a court passes a judgment on an issue, though you have the to appeal, if not satisfied with the judgment, but the judgment would remain in force until another court of competent jurisdiction rules otherwise, explains Olayide in a simple legal language.

Another stakeholder in the industry faulted the remodelling and commissioning of GAT the aviation ministry and FAAN runs contrary to the concession agreement.

The Stakeholder who does not want identity disclosed for personal reasons, said the action of the federal government runs contrary to the spirit of Public Private Participation (PPP)  in the industry.

“How do you expect another investor who went to borrow loan running to billions of dollars to come and invest in this industry when it is now a common occurrence that the government would turn around one day to either revoke or begin a parallel project around the concession.

Bi-Courtney had gone to obtain loans  from commercial banks at very high interest rate. Yet, a minister woke up one morning and decided to reverse a standing concession agreement even with a subsisting court order. She to build a similar terminal in the local wing. Why can’t they go to another airport and start a new thing. Now look at the plans they are setting up.

For goodness sake government has no business in this business of constructing or remodeling airports as we are doing today in the country. Back to Bi-Courtney issue, by the time that GAT becomes functional; that is if the court does not stop its operations, all the airlines would leave here for GAT because naturally, the government can decide to run that terminal at a very ridiculous rent.

Also the airlines will all move there and refuse to pay rent and if anybody tries to disturb them they would use their connections in Abuja and continue to increase their debt profile, because it is public fund they used to build it. No interest. Just free money. But here you can’t try it with a private company which has to pay staff and service its debts and want to break even.”

Furthermore, investigations by Nigerian Compass on the ceeding of the GAT to BASL, revealed that FAAN and the ministry of aviation are in breach of the agreement. On May 17, 2007, Femi Fani-Kayode, then aviation minister, in a letter signed by Garba Mamman, of the federal ministry of transportation (air transport), actually ceded the GAT to the concessionaire.

The letter with reference number T. 4464/S.35/C.2/T3/49, titled Re: Formal notification of the use of the apron area of the current domestic terminal (the GAT area), and addressed to both director general of the Nigerian Civil Aviation Authority, NCAA, and the managing director of FAAN, reads: “I am directed to forward herewith a letter from Bi-Courtney Limited on the above subject and to inform you that the honourable minister of state 1 (air transport) has approved the company’s request as follows: (i.) The continued use of the old terminal’s parking space to park planes before they are ferried to the new apron for boarding; (ii.) To ferry passengers from the new terminal to the parking area for boarding.”

Steve Omolale Ajulo, spokesman of BASL told Nigerian Compass that from the onset of the concession agreement, it was agreed upon that GAT was to be used by the MMA2 since it was part of the planning. He explained that with the understanding that BASL had to use GAT, it was instructed by FAAN to build a new temporary apron for all disused aircraft. An effort which cost BASL N594 million, which eventually moved all the disused aircraft there to enable the company, take over the GAT. Similarly, the concessionaire was directed to expand the link road between MMA2 and the GAT, which it did.

Assistant General Secretary of Airline Operators of Nigeria (AON) Alhaji Mohammed Tukur in his comment on the concession, ownership and commissioning of the GAT said there are two issues to the controversy.

Tukur who agreed that the federal government has every right to concession any part of its operations where it lacks competence to private companies that could boast of such competence, for improved and efficient service delivery, however noted that the terms of such concession agreement must be followed to the letter.

The AON who also agreed that there is room for review of contracts between the federal government and the concessionaire, was quick to add that such review must not be carried out unilaterally by either of the parties. 

Tukur explained further by saying that the moment such concessioning agreement is signed all its content must be obeyed and nothing must be allowed to cause a breach of such agreement.

“ That  issue between FAAN and Bi-Courtney could be seen from two ways. One government can concession any part of its operations to any private enterprise for the purpose of efficiency. But must  follow every letter of the agreement.

If the Federal Government decides to throw away the contract midway without considering the interest of the other partner , it is very bad, The most dangerous part of the issue which I consider is criminal and must not be allowed to continue is a situation where government which makes a law becomes the one that will go against it.

There are cases we all know that Bi-Courtney has won on that concession; we also know that FAAN has gone to the Supreme Court while should FAAN with the support of the Ministry of aviation be the one that would go against the Rule of Law under a democratic government. FAAN should have waited for the outcome of the Supreme Court judgment before commissioning the terminal, Tukur said.