Flights to Lagos inn

Lagos airport concession

As the Chief Operating Officer of Bi-Courtney Aviation Services Limited, the concessionaire of the Murtala Mohammed Airport, Ikeja, Lagos, he is charged with making sure the airport is run efficiently and profitably too. To do this, he needs to work closely with the Federal Airports Authority (FAAN), the statutory body that supervises the management of facilities at the airport and which concessioned MMA2 to Bi-courtney in a Build Operate and Transfer agreement.

Yet, this relationship, which should be a close and fruitful one, is strained. The reasons border on accusations and counter accusations of debt and refusal to honour contractual agreements.

But Bi-Courtney was quick to counter FAAN claims, saying that it is infact FAAN which is owing the company N11 billion. According to Bi-Courtney, the concession agreement it has gives it control over all scheduled domestic flights in and out of Lagos State.

At a Senate Committee appearance in May, Richard Asuebeogun, managing director of FAAN, said the organisation was being owed N714 million by Bi-Courtney for revenues collected on its behalf and which Bi-Courtney is yet to remit.

Relying on a court judgement on March 3 2009, which says Bi-Courtney should run the General Aviation Terminal, GAT, the company said FAAN is supposed to relinquish control of the terminal to the concessionaire and also remit all revenue it has so far collected because, as far as it (Bi-Courtney) is concerned, those monies are revenue which should legitimately come to the company.

FAAN insists that GAT is not part of the concession agreement, and so does not form part of the revenue expectations of the concessionaire. “What they say we owe them is for take-off and landing of aircraft at the General Aviation Terminal (GAT). They are relying on a judgement which stated that Bi-Courtney has right over GAT.

The concession agreement does not include GAT, so they cannot be laying claims to services rendered at that terminal. In any case, we have briefed our lawyers. In the previous case, they listed only the Attorney General as defendant. We now want to be joined in the case,” said Akin Olukunle, general manager, public affairs of FAAN.

Bi-Courtney insists that its counter-claims were genuine, based on obligations under the concession agreement between it, the Federal Government of Nigeria, and FAAN, dated April 24 2003, and as varied by the supplementary concession agreement, dated June 26, 2004, and the addendum on February 2, 2007.

“You can have cargo flights, or international flights but all scheduled domestic flights in and out of Lagos state are covered by the agreement,” Mr. Mourinho said, adding, “it is on these terms that the banks loaned us money.”

“MMA2 has capacity for 4 million passengers a year; I am doing only 1.5 million. Will I now tell the banks that I am now making less than 40 percent of my projected revenue?” He asked rhetorically.

“This is an issue that has been heard at the High Court, Appeal Court, and Supreme Court and all judgements are in favour of Bi-Courtney”, Mr. Marinho said.

Efforts to get response from FAAN on these particular issues were unsuccessful, as the spokesman refused to respond to further enquiries.

Before now, the late President Umar Yar’Adua, perhaps seeing the futility of government’s position, directed the ministry of aviation to abide by the terms of the agreement, since it is valid. At a meeting held in July 2009 involving the parties, the late Yar’Adua said the review of the concession period to 36 years, though valid, would need to be reviewed. In the document of the special meeting on aviation, held on July 7 2009, made exclusively available to NEXT, Yar’Adua directed that the concessionaire be given the right of first refusal to develop GAT.

“Whatever infractions that may have occurred are internal matters of government who will revert to Bi-Courtney if there is reason to do so,” the report added. The document concluded that the reviewed period will have to be ratified by the Federal Executive Council before it can be binding on government. The FEC is yet to ratify this part of the agreement.

Regulatory and legal issues

A competent source who spoke on condition of anonymity, attributes the current imbroglio to government’s penchant to always leave important things undone. He said as at 2003, when the federal government was signing the first concession agreement with Bi-Courtney, there was no existing framework on how it should operate, practically giving the concessionaire the liberty of dictating the terms. According to him, concession arrangement were novel, and there was little in terms of competence on the side of government agencies to draft an agreement that would be beneficial to the country. This created a lopsided background for the concessionaire to arm-twist the government to concede certain privileges.

Not until November 2008, over a year after the final draft of the agreement had been signed, did the government inaugurate the Infrastructure Concession Regulatory Commission (ICRC), the agency that is to regulate all concession and public private sector partnership (PPP) agreements and infrastructure development.

But Mr. Marinho dismissed this claim as unfair, saying the government had the Bureau of Public Enterprises (BPE) protecting its interest. “This document was with BPE for months They had consultants and lawyers who were working on it on their behalf,” he said.

According to him, Bi-Courtney was not the initial winner of the concession bid. “There was a company called Sanderton, which was supposed to build the MMA2. They were on it for nearly nine years and they could not develop the project before we came in. So they already had a framework they were working with before we came in,” Mr. Marinho said.

He said the concession documents were with the BPE, Ministry of Aviation, Nigeria Civil Aviation Authority (NCAA), and FAAN and so they are familiar with the contents. “If it were these institutions that are making these accusations, then I would be worried.”

However, our source said the concession agreement was drafted mainly by Bi-Courtney, as FAAN was reluctant to submit its own position. “FAAN showed no preparedness to draft the document; thus Bi-Courtney took over. So the perceived lopsidedness of the agreement cannot be blamed on Bi-Courtney,” he said.

Ibn Na Allah, member, House of Representatives Committee on the Judiciary, collaborates this. According to him, the airport concession agreement was skewed in favour of the concessionaire, and for this, he is furious. Na Allah said FAAN lacked the human capacity to be able to put up a decent agreement that would be in the interest of the country, thus giving the concessionaire undue advantage of drafting the agreements to suit them.

“Any staff of FAAN legal department who took part in the drafting of that agreement should by now be rotting in jail because they sold out Nigeria,” he said.

Spokesman for the ICRC, Gbenga Odugbesan, said the commission is making an effort to correct an already bad situation, adding that the commission met with the parties in January and followed up two weeks ago in order to reach an amicable settlement.

“ICRC is working hard to resolve the issues and experts have been engaged to offer inputs into the agreements. The interest of the commission is not to jeorpadise each party, because the government needs massive sum to fix infrastructure and it cannot do it alone”, he appealed.

Ope Banwo, a lawyer, said the development is a reflection of government not being accountable to the people. According to him, many of the interested parties in the agreement were not carried along, hence the disagreement. “While it is the responsibility of government to ensure all interest groups are taken care of, they don’t do that. In fact, there should be public hearings for people to debate any proposed government concession before the government gives it out, but we only see when they are signing the contract.”