‘MMA2 operations have been at a loss’

Chief Wale Babalakin, Chairman, of Bi-Courtney Aviation Services Limited (BASL), operators of the Murtala Muhammed Airport Terminal Two (MMA2), addressed the media recently as part of activities marking the 10th anniversary of the terminal. He later spoke with Bukola Aroloye on a wide range of issues, such as the achievements and challenges of managing the terminal, the tenure of its concession and the various court cases between the Federal Airports Authority of Nigeria (FAAN) and BASL, among others. Excerpts:

What do you consider as the achievements and challenges of operating MMA2 for 10 years?

We’re marking the 10th anniversary of the Murtala Mohammed Airport Terminal 2 (MMA2) having begun operation on the 7th of May 2007. We have come to celebrate the epoch-making and forward-looking event which is the development of the first privately-funded airport terminal developed for commercial flights in the whole of Africa. Our celebration is essentially a thank you message to all those who have made this event possible and sustained us till today despite a formidable resistance from certain segments of the authorities in Nigeria. The management and staff of Bi-Courtney Aviation Services Limited, operators of MMA2, have worked diligently to ensure that the terminal remains the envy of all terminals in Nigeria today. They have been providing electricity continuously in an unbroken manner in this terminal for 10 years now. Our gratitude to the management is further enhanced by the fact that terminals who have more than 20 times our resources have experienced consistent blackouts while with our modest resources, we have provided consistent electricity. Their effort is a demonstration that if we encourage the right persons in Nigeria, the sky would be the limit of our success. MMA2 has an obvious passenger and airline demand due to its safety, efficiency and technology. Over the years, the terminal has been home to major airlines flying to various destinations in Nigeria. It has handled over 20 million passengers, 400,000 flights and created employment for over 100, 000 people in the past 10 years. The award-winning terminal is also home to retail outlets, shops, restaurants and banks offering a wide range of products. The major challenges we have are the refusal of the Federal Airports Authority of Nigeria (FAAN) to obey our concession agreement and the opposition from different quarters that have stifled the project. MMA2 is a product of courage and tenacity

Do you consider the efforts put in MMA2 as the first Public-Private Partnership (PPP) in the country worthwhile?

MMA2 is the pioneer privately-funded airport terminal developed for commercial flights in the whole of Africa. The efforts are worth it, just that the regulatory authorities refused to honour our concession agreement. We call on the regulatory authorities to honour the concession agreement which has been approved by every level of government, including the Presidency and confirmed by all the strata of the courts in Nigeria. This is the only way to reward our pioneering efforts. We are grateful that our eye-opening efforts had led to the upgrading of some airports in Nigeria and the decision of the federal government to concession airports in the country.

Looking back do you think MMA2 has achieved its optimum in terms of operational capacity, 10 years after?

FAAN has continued to stifle the development of the airport. The airport had approval for the following: Hotel and Conferencing facilities, Mono Rail, Fuel Hydrant and Power Plant, which were never allowed to materialise. MMA2 is built to process five million passengers per annum. During the dispute with Virgin Nigeria, IATA (International Air Transport Association) inspected our facility and confirmed it was a world class facility. As an IATA–confirmed world class facility, MMA2 possesses an apron capable of handling wide-bodied aircraft, departure and arrival halls with holding capacity for 4,000 passengers, flight information displays and public address systems, 31 check-in counters, common user check in systems, security screening and baggage handling facilities, VIP and Executive Lounges, ease of access for persons with limited mobility, six finger Avio boarding bridges and four bus departure gates serving eight remote aircraft positions, facilities for regional operations, multi–storey parking lot for 800 cars and cargo processing facilities, among others. However, we have not been able to optimise all these facilities because of efforts by the regulatory authorities to frustrate us.

How have you been coping with maintenance of the facilities?

We spend millions upon millions of naira monthly to keep MMA2 running. Our revenue has been eroded by about 50 per cent with the redevelopment of GAT by FAAN because the regulator has been busy collecting the revenue due to us from that terminal, which is part of our concession. So, it’s not been easy coping with maintaining our state-of-the-art facilities at MMA2.

What is the tenure of the concession agreement?

The concession agreement consists of three documents, which are: the original agreement dated 24th of April, 2003, supplementary concession agreement dated 26th June 2004, and after reviewing the whole situation, FAAN offered a 36-year concession to BCL on 12th October, 2006 and BCL accepted on 13th October, 2006. This resulted in the addendum dated 2nd February, 2007. The concession period was extended from 12 years to 36 years because FAAN’s original design for the terminal was a large warehouse like Abuja Domestic Terminal. A visit to Cape Town’s domestic terminal in South Africa impressed us immensely.

FAAN’s financial advisers, First County Consultants, recommended a concession period of 33 years to enable Bi-Courtney repay the project loans, cover operating expenses, maintain facilities to a good standard during the concession period, recoup its equity investment, make a profit, and “walk away “from the investment at the end of the concession period (hand over MMA2 to FAAN). On 12th October, 2006, FAAN wrote to offer Bi-Courtney a concession period of 36 years – an amendment provided for by Clause 2.8 of the Agreement. On 13th October, 2006, BCL wrote to accept FAAN’s offer.

Are you convinced that the PPP arrangement in Nigeria can ever evolve to an acceptable international level?

We welcome the idea of concession as far as it is done properly and in accordance with the rule of law. Nigeria must respect agreements legally entered into with investors. Nigeria must respect court judgements to enable its PPP evolve to an acceptable international standard. For example, a court in a state in the U.S. gave an order suspending Trump’s travel ban and within hours, the order was obeyed.

What is the current position on the ownership of GAT?

GAT stands for General Aviation Terminal. Every airport has a general aviation terminal which is essentially for the use of private aircraft and non-scheduled domestic flights. But, FAAN went ahead and redeveloped GAT in contravention of our concession agreement. And today, two major airlines are operating from the GAT, paying our revenue to FAAN. The GAT could have continued to operate without infringing on the rights of Bi-Courtney under the BOT Concession Agreement provided its services did not include scheduled domestic flights. Private jets, charter flights, helicopter services are all integral aspects of GAT services. Under the concession agreement, our rights as the Concessionaire include but not limited to design, develop, finance, construct and manage an aviation domestic terminal within Lagos State; all scheduled domestic flights in and out of FAAN’s airports in Lagos State are to be operated from our terminal (MMA2) and FAAN would not cause the erection or development of a shopping mall or any facility capable of impeding and/or threatening Bi-Courtney’s revenue generation. But, with the redevelopment of GAT, FAAN has become our competitor instead of regulator. FAAN has violated the Exclusivity Clause in our agreement.

What has been the effect of the various violations on Bi-Courtney’s obligations to its creditors?

The loss of over 50 per cent of passenger traffic to FAAN’s GAT and over 50 per cent of available revenue from passenger flights, the cumulative (actual) operating losses of billions of naira from 2007 to date, business losses of billions of naira from uncompleted/partially completed projects, totaling several billions of naira in business losses since 2007 to date have all impacted negatively on our terminal, leading to our inability to meet loan repayment obligations to banks from the earnings of MMA2. Based on the rights conferred on Bi-Courtney by the concession agreement, we raised funds privately and borrowed money from banks to build the terminal, but today, the loss of a larger part of our revenue through FAAN’s activities has led to our inability to meet financial obligations to the agency under the concession agreement. Our business is severely threatened!

Is there a way forward over the various court cases and judgements over the concession?

We are seeking the assistance of all and sundry for the payment of the N200billion owed to Bi-Courtney Aviation Services Limited by the federal government of Nigeria. As far back as 2012, the Federal High Court awarded damages of N132 billion to Bi-Courtney Limited. Six appeals against the judgment in the Court of Appeal have been dismissed. Even the appeal to the Supreme Court by Arik Air through Ojemaie Holdings was also dismissed. No nation can truly achieve its potential if it treats its dynamic citizens this way.

Given your unpleasant experience thus far, would Bi-Courtney still consider taking up any PPP contracts in the country in the future?

Of course, we welcome the idea of concessioning, if it is done properly and in accordance with the rule of law.


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