THE ongoing plan by the federal government to concession the four most viable airports across the country has again received serious knocks from nine former Managing Directors of the Federal Airports Authority of Nigeria (FAAN).
The past MDs in a joint presentation made to the House of Representatives Committee on Aviation, condemned the decision of the government to propose to concession the airport terminal buildings executed with huge loans from China to a third party who did not contribute a penny to the execution of the project.
The G9 while agreeing that it was corruption to concession the same terminals to a third party which will not sow a single penny,declared: “This is a classical case of corruption of the highest order, which the President has sworn to eradicate from Nigeria.
“If indeed the concessionaires are bringing capital to develop the airports, why is it that their first priority is to cherry-pick the busy international airports and pounce on the revenue points to collect all revenues?”
In a submission jointly signed by nine former managing directors including, Alhaji Ibrahim Mamman, Alhaji Sani Baba,; Mr John Sule Ozenua, Engineers Lawrence Adimonye, Isaac Sakpere, Muhammad Sadiq, Olufemi Shittu, Rabiu Baba and Arc M.A. Enigbokan, the previous CEOs/MDs identified the mezzanine clause in all the Chinese sponsored infrastructure in the sector stating that any contravention of such agreement with China particularly on the $500m loan granted Nigeria for the construction of the new terminal buildings at the Lagos and some other airports may lead to the invocation of the mezzanine clause.
Mezzanine financing is a kind of financing that has both features of debt and equity financing that provides lenders the right to convert its loan into equity in case of a default (only after other senior debts are paid off.
Under the agreement signed between Nigeria and China, the mezzanine clause allows China to take over the financed infrastructural projects should Nigeria or any affected country default in payment. In other words, if Nigeria should default in paying back such loans at the agreed time, China would seize the infrastructure, administer it and recover its investment.
Their submission to the lawmakers partly read: ”Contravention of Agreement with China on $500m loan for the construction of the new terminal buildings at Lagos MMA, Kano MAKIA, Abuja NAIA, Port Harcourt and Akanu Ibiam International Airport, Enugu.
The new terminal buildings in these five international airports were constructed with $500m China loan. We are all now aware of the Mezzanine clause in all Chinese sponsored infrastructures by which they lay claim to the infrastructure should the host country defaults in payment. If Nigeria should fail to pay as at when due, China would seize the infrastructure, administer it and recover their investment.
“The most reasonable thing to do is for FAAN to administer them, collect the revenue and pay back the loan. It is preposterous for the Minister of Aviation to propose to concession the same terminal buildings to a third party which will come to reap where they did not sow a single penny, while the debt liability will be transferred to FAAN and the Federal Government to pay.
The blind rush of the government to go into multiple financial agreement with the Chinese government to facilitate huge infrastructural projects particularly across the country’s aviation sector according to the past FAAN Chiefs may lead to sudden take over of such projects at any slightest payment default.
Besides the probability of allowing the take over of the airport terminal builds in the face of any payment default by Nigeria, the Managing Directors also identified safety and security of the entire nation as another critical factor the concession plan should be reconsidered highlighting security threats like drug trafficking, gun running and the likes.
”All airports are considered as boarders of the host country. So they are security posts. The entire security of the nation can be compromised if the Airports are in private hands. Setting up a Government security apparatus to oversee the security cannot solve the problems because the Private Airport Operator can create avenues to circumvent security in the transportation of arms and ammunitions, drugs, fake currency and other dangerous goods.
“The Government will then need the cooperation of the Operator of the Airport to securely manage the whole airport infrastructure. But with the present Government ownership and FAAN management of airports such nefarious activities cannot be entertained. This is one of the reasons why FAAN should be strengthened to run the airports in a profitable manner and then pay a large percentage of their earnings to the Federal Government through the TSA.
The former managing directors also condemned the situation that people who are close to a sitting President always contrive ways of fraudulently selling choice National Assets to themselves at extreme loss to Nigeria and Nigerians.
They used the occasion to canvass reintroduction of regular airport operations and maintenance funding from the current level of revenue with immediate effect to tackle security, safety, operations, airport maintenance and utility bills.
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