February 28, 2021

The gains of concessioning Asaba International Airport — Okowa

FAAN pushes for non-aeronautical revenue generation

File: Asaba airport

…Concessionaires to pay N1 billion upfront

By Festus Ahon

THE International lounge of the Asaba International Airport hosted prominent Deltans, top Government functionaries and investors Tuesday as the Airport was concessioned to a master concessionaire (FIDC-Menzies Consortium, now incorporated as Asaba Airport Company Limited) and sub-concessionaires of technical partners with a designated area of investment for 30 years by the State Government after five years of rigorous and painstaking exercise.

Among the sub-concessionaires is Air Peace airline which has the mandate of the anchor airline with the construction and operation of Maintenance, Repair and Overhaul (MRO) facility at the airport. Multiflight Cargo and Logistics will manage the cargo aspect and its development. Arbico Construction Company will develop the Business Park, Hotel and Convention Centre; Rainoil Limited and Cybernetics Limited are to develop tank farm and aviation fuel supply, while Quorum Aviation Limited will handle private jet and helicopter terminal development.

Secretary to the State Government, Chiedu Ebie and Director-General, Delta State Investment Development Agency, Olorogun Lucky Oghene Omoru signed on behalf of Delta State Government.

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The Airport which was conceived and built by the Administration of former Governor Emmanuel Eweta Uduaghan was improved upon after it was downgraded towards the end of the exit of the last administration by the Nigerian Civil Aviation Authority, NCAA.

Upon the downgrading, the Administration of Governor Ifeanyi Arthur Okowa, despite the daring economic challenges at the time, took a bold step to address the concerns raised by the NCAA and expanded on the runway and provided other facilities to give the Airport International standard and to accommodate bigger planes.

Speaking at the Concessioning ceremony, the Secretary to the State Government, SSG, Mr Chiedu Ebie said the Airport would create more jobs for Deltans and stimulate the export of agricultural produce and other items, adding that the step would also engender huge economic activities within the State and its neighbours.

Ebie said the other aspects of development expected from the concession was in the area of other facilities such as the movement of cargoes to foster export operations, hotels, a conference centre, industrial site, office facilities, tank farms and a hangar for the maintenance and overhaul of aircraft.

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He said: “We expect that with the investments that are coming and the revenue that will accrue, it will make a lot of economic sense for the benefit of Deltans,” explaining that the State Government was partnering with the private sector to boost revenue in the State.

Governor Ifeanyi Okowa in his remarks at the ceremony said the decision to concession the Airport was taken in the best interest of Deltans.

Okowa disclosed that the Osubi Airport which was shut down some months ago would soon begin operation,  saying that the State Government would support the reopening process of the Airport.

He said: “As we may be aware, this airport was conceived and built by the previous administration of Dr Emmanuel Uduaghan, CON, not only as a passenger airport but one that will tap the vast economic potentials accruable from the proximity to the eastern commercial cities of Onitsha and Nnewi, and be a hub for the export of agricultural and manufactured goods.

“Unfortunately, the vision suffered a major setback when the airport was downgraded to a Category 3 airport by the Nigerian Civil Aviation Authority (NCAA) just a few months before my administration came into being. That meant the airport could only accommodate smaller aircraft such as the Q400 and DASH 8. In the face of an economic recession at the time, we were confronted both with the challenge of upturning the downgrade and turning the airport into a model economic platform that is self-sustaining through a robust public/private partnership.

“In the face of an economic recession at the time, we were confronted both with the challenge of upturning the downgrade and turning the airport into a model economic platform that is self-sustaining through a robust public/private partnership. This administration had to fully rehabilitate/reconstruct the runway, taxiway and other ancillary works, completed the perimeter fence, and evacuated the hill beside the airport for the provision of the obstacle-free zone for the runway as demanded by the regulatory authority. Subsequently, the airport was upgraded to Category 6, which enables aircraft as large as the Boeing 737 to land.

“In addition, this administration completed the installation of the Instrument Landing System and the Airfield Ground Lighting System. As a result, the airport can now handle night operations; in the last two months, the airport has operated several night flights as approved by the NCAA and the Nigeria Airspace Management Agency (NAMA).

“I am happy to report that the airport now has a medical centre. The Firefighting Station has been completed while the Watchtower for firefighters is 80% ready. Meanwhile, the previously unserviceable Automatic Weather Observation System and the Low-Level Wind Shear Alert System have been repaired and are functioning, improving the overall safety of the airport. This assurance of safety and the attractive nature of the route has continued to attract new airlines to the Asaba International Airport.

“Moving forward, we chose concession as the most viable option for the airport to be run more professionally, efficiently, and profitably for the overall good of the State. The Project Steering Committee invited bids for a Transaction Adviser to guide the State Government and manage the process. Bids were received from 14 consortia, and after a rigorous selection process, Halcrow Infrastructure Consortium was appointed and approved by the State Executive Council for appointment as Transaction Advisers for the Concession of Asaba International Airport.

“After a thorough and rigorous review/analysis of the bids by a separate committee headed by the Secretary to the State Government, the First Investment/Menzes Consortium was the preferred bidder, having provided the demonstrable capacity to meet all the requirements of the Master Plan while also outlining their financial commitment and injection of new investments.

“It is their duty to manage the airport and develop the various strategic business units in the form of; Cargo Business and the development of the Cargo Terminal Development of the Logistics Hub and Cargo WarehousesThe operation and management of the Tank FarmThe development and management of the Business Park.

“The development and management of the Hotel and Convention Centre. An Airline operating out of Asaba International Airport as an Operational HubAircraft Maintenance, Repair and Overhaul (MRO) facility.

“The concession shall be for an initial period of thirty years with the following terms as approved by the Delta State Executive Council and the Delta State House of Assembly.

“The name of the Airport shall remain Asaba International Airport. However, the Concessionaire, upon discussion with the State, can include a tagline to the existing Airport name for the purpose of branding. Competing Airport:  There shall not be any publicly or privately-owned new airport, whether greenfield developments or expansions in Delta North Senatorial District of Delta State, during the concession period. Employment of Deltans:

“The Concessionaire shall at all times be under an obligation to maintain an employment ratio of twenty per cent (20%) of its staff for the operation of the Airport comprising indigenes of Delta State; Mandatory Capital Projects; The Concessionaire shall undertake the development of Mandatory Capital Projects, and they shall be completed within a period of three years from the effective date of the transaction.

“The Mandatory Capital Projects include Airport/Terminal Facility, Cargo Facility, Maintenance, Repair and Operations (MRO) Facility, Tank Farm Facility, Industrial Park and Office Facility, and Hotel and Conference Facility.Concessionaire Obligation:

“The Concessionaire shall be responsible for the management, operation and maintenance of the airport, keeping it in good operating repair and condition throughout the concession period at its own cost and risk, and in accordance with Prudent Industry Practice and the provisions of the Agreement. Exemption of Payment of Tax: The Concessionaire shall be exempted from the payment of some specific taxes to the State for a period of five (5) years, to enable it to concentrate on the development of the mandatory capital projects as listed above; Rights of Inspection of the Airport Facilities:

“The assets and all infrastructure constructed by the Concessionaire, together with all related investments in, and upgrades to the assets, shall be handed back to the State at the end of the concession period. The Concessionaire shall purchase and maintain in full force and effect any and all of the insurances required for the operation of the airport.

“The Concessionaire shall pay to the State a royalty fee of 2.5% of the annual Earnings Before Interest, Taxes, Depreciation, and Amortization. The Concessionaire shall pay to the State an annual fee of One hundred-million-naira (N100,000,000.00) each year during the concession period, with 10% escalation every five (5) years of the concession period.

“The Concessionaire shall pay to the State an upfront fee of N1b only on or before the close of business on the 15th day following the signing of this agreement.

My good people of Delta State, with over N28b expected to be pumped into the airport development by the Consortium over the concession period, the benefits to the State in terms of employment generation, economic growth, urban renewal, and tourism potentials are enormous.

“My good people of Delta State, with over N28b expected to be pumped into the airport development by the Consortium over the concession period, the benefits to the State in terms of employment generation, economic growth, urban renewal, and tourism potentials are enormous.

“In concluding this address, I am happy to announce that based on my personal intervention on the Osubi Airport closure, the Federal Airports Authority has made a commitment to resume operations at the airport within two weeks. I am relieved that the hardship which the closure had inflicted on our people and businesses is about to end. We will work closely with FAAN to ensure that the target date is met.

“The State Government is supporting the resumption process with some logistics, particularly in the area of covid-19 protocols, even though the airport is not our property. Furthermore, we have had fruitful discussions with the management of United Nigeria Airways to commence full operation on that route immediately it is reopened and they have assured us of their readiness to do so. It is my earnest hope and expectation that other airlines will follow suit”.

Vanguard News Nigeria