The issue of mismanagement and underutilisation of scarce resources in Nigeria has led to huge wastage of resources and manpower, just as the privatisation of aviation agencies as recently re-echoed by Capt. Adebayo Araba, rector of the Nigerian College of Aviation Technology (NCAT), Zaria has received mixed reactions. IME AKPAN reports.
Privatisation of state owned enterprise has become a key component of the structural reform process and globalisation strategy in many economies. Hence several developing and transition economies have embarked upon extensive privatisation programme in the last decade or more as a mean of fostering economic growth, attaining macro – economic stability and reducing public sector borrowing requirements arising from corruption, subsidies and subvention attributed to unprofitable state owned enterprises.
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For the Nigerian aviation industry, the issue of privatisation was somehow dead and perhaps buried until recently when the rector of the Nigerian College of Aviation Technology (NCAT), Zaria, Capt. Adebayo Araba, hinted of government’s plans to privatise the college and some other agencies in the aviation industry.
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“As it is now, the main source of revenue is the ticket sales charge, the 7 per cent? of the 5 per cent . Notwithstanding, we have students, sale of forms and school fee. Recently, I directed that any student owing school fee should not be allowed until the fee is cleared. We don’t do caritas operations here or Salvation Army. But so many years ago, because of the problems we were having in the aviation industry, we were doing a lot of training without recourse to school fees. But now because of the new orientation in the ministry, everyone has to pay school fees now; it is mandatory for the continuation of training.
“Maybe I should say this to you; the orientation the present administration is bringing to the college even to the ministry in total is a bit different now. There is this plan of privatisation and commercialisation of all the agencies, including this college. So some of the things we were doing before and relying on the government are going to be solely the responsibility of the college mow,” said Araba.
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The rector who explained that the new plan was aimed at boosting the college’s mileage just as it applied to other government agencies, emphasised that it was a better way to go for government agencies. He stressed that it would enable the college partner with private investors both within and outside the country.
Since Capt. Araba revisited the issue there have been mixed reactions from aviation experts and stakeholders. One vociferous group are the aviation unions that have been opposed to privately run organisations over the ones that are government run.
The national presidents of the Air Transport? Senior Staff? Services Association of Nigeria ( ATSSSAN), Benjamin Okewu, and his National Union of Air Transport Employees( NUATE) counterpart, Safiyatu Mohammed, threatened that if the minister did not desist from what they described as “desperate move to short change the aviation sector through the privatisation and commercialisation options” for NCAT and the Federal Airports Authority of Nigeria (FAAN), the unions would mobilise its members to stop the government from executing the plan.
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The union leaders who further described the act as “another attempt to plunder the sector for private ends” argued that “it is totally unacceptable for government to consider commercialising a critical institution like NCAT which is involved in capacity building for the aviation sector.” Doing so, they argued, “will mean only students from rich homes will be trained as pilots and air traffic controllers in an industry that is grappling under the yoke of dearth of such personnel” even as the rector had stated that “we are going to maintain the status quo, no matter the pressure on the college.
“We are charging N7.5million about $50,000 for a pilot training; this N7.5million we are charging is all-inclusive. That means accommodation and feeding. We are still going to maintain the status quo because if you look at the economy of this country how many families can really afford this amount?”
The unions reasoned that commercialising or privatising NCAT and FAAN “will end up like the untidy concession agreements in the aviation sector where the interest of Nigerians is not guaranteed. It is another attempt to take the industry through the throes of job loss, low morale among staff, as well as the enrichment of private individuals.”
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They noted that privatisation and commercialisation in the country were always executed by government officials for selfish interests adding that the senate’s recent investigation into the past exercise revealed that the expected intention had not been met.
“We are not going to allow this to happen in the aviation industry again. The history of privatisation and commercialisation of government enterprises in the country show that the programme does not benefit the country but some individuals who are cronies to the people in power.
“The policy if allowed to take effect will widen the gap already created in the aviation industry in the country. Look at the number of aircraft we have in the country. How many of them are flown by Nigerian captains?
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“Now with an increase in the school fees at the capacity development arm of the aviation industry, it means we will have less Nigerians as pilots, air traffic controllers and aeronautical engineers, among other professionals in the industry. What you have is what the people in government want to achieve and these we will not allow them to achieve this time around,” said the unions.
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Also, the assistant secretary general of Airline Operators’ of Nigeria (AON), Muhammed Tukur, noted that though commercialisation was a good thing in any country, the Nigerian experience has not helped the process. He added that rather than the nation’s privatised companies to progress, they retrogressed.
FAAN is rated as the richest of all the agencies in the ministry of aviation for it boasts of big and small tenants at 22 airports, including airstrips that it is supposed to collect rents either directly or indirectly. But controversies over agreements on revenue collection between FAAN and the concessionaires are becoming more disturbing by the day thereby making stakeholders to argue that the agency would be run profitably if it was not managed by the government.
It is believed that the various contracts have not been in favour of FAAN. In a report submitted at the investigative hearing organised by the Senate Committee on Aviation on how to resolve problems in the aviation sector, it was revealed that FAAN has 447 businesses operating as concessionaires and tenants on the premises of the Murtala Muhammed International Airport (MMIA). The committee was told that that FAAN had incurred huge losses by not charging fees in line with economic realities, affirming that revenue loss was the bane of FAAN’s inability to provide world class services and maintain the international wing of the Lagos airport.
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Regrettably, the report noted that 30 out of the 79 concessionaires had expired and neither the federal government nor the concessionaires had talked about renewing them. Consequently, they have continued to operate as “hold-over” concessionaires. The report added that only 17 per cent of FAAN concessions have agreement or formal documentation. Over 83 per cent do not have any documents.
Among the companies operating at the airport, a common thread running through all of them is the non-billing and under-valuation of concession fees, thus making the agency lose huge revenue annually.
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The food and beverage concessions, which could generate N6.7 billion per annum to FAAN fetch the authority about N111 million per annum. Therefore, FAAN loses about N6.5billion annually.
Again, since 2002, Airline Services and Logistics Plc (ASL), is said to have been remitting to the agency N12 million per annum as concession fee instead of N120million. By the time the fraud was discovered in 2008, the company had raked in N648 million.
Also, for the oil and gas concessions, the report noted an economic loss in excess of N13 billion per annum arising from non-billing and undervaluation of concession fees and fuel throughput charges respectively. Several other examples of material economic losses exist and these have been documented in the report.
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FAAN, according to the report did not have agreements/contracts governing its relationship with airlines, several concessionaires and corporate organisations operate without subsisting agreements, requiring operational and safety permits, environmental impact assessment and mitigation plan.
It was also noted that several concessionaires had easily taken advantage of FAAN by conveniently paying lower concession fees for the business rights granted to operate at the airport, even where concession agreements clearly provided the right for FAAN to earn more.
In March 2009, the former minister of aviation, Babatunde Omotoba, terminated the service contract of Pan Express Services Ltd because of failure on the part of the concessionaire to remit the agreed sum to FAAN. PESL won the concession to collect port charges on behalf of FAAN at the rate of N60 million per month but before Omotoba terminated the contract in March 2009, the company allegedly owed about N600 million, which FAAN admitted the collector had not paid despite the intervention of the aviation minister. When FAAN took over, it generated an average of N75, 022, 548 million per month, N15 million above what PESL was generating.
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It is believed that FAAN’s inability to identify all its concessionaires and to revalidate their agreements after expiration has depleted the revenue of the agency. It is also argued that what the agency is currently generating could not take care of the basic facilities and that the situation was made worse by its failure to block all the leakages which its officials have capitalised to drain its lean resources.
Dauda Ajeye Nuhu, aviation analyst does not seem to favour the privatisation of FAAN as the solution. He believed that putting up the agency for sale might compromise security at the nation’s airports.
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“There is no doubt that the condition at Nigerian international airports like Murtala Muhammed International Airport, Lagos; Aminu Kano International Airport, Kano and Port Harcourt International Airport, Omagwa in Rivers State has deteriorated to the point of reproach to Nigeria as a sovereign nation.
“Security, sanitary and operational matters seem to be at issue, besides corruption. Poor services as some have observed fall short of even local standards. What happened to Nigeria and where are we headed as a country? Is privatising Nigerian airports or any port the best way to go about solving these problems? The answer to this is absolutely no!
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“Nigerian airports should and must provide security, whether such airports are large, small, international or local. Any port or airport provides a possible entry point for normal business people ,as well as? also possible adversaries. Safeguarding these airports should foremost be considered a security function when it comes to national security, and should never be left to second party or contractors. Imagine trying to keep our country safe by contracting our defence service to a foreign nation that may potentially be a foe.
“Until we come to appreciate the concrete role airports play in national security, the hype of airport privatisation will linger,” said Nuhu.
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