By Prince Okafor

Aviation stakeholders have engaged in a contentious debate over the Federal Airports Authority of Nigeria, FAAN, and the Nigerian Airspace Management Agency, NAMA, move to exit the Treasury Single Account, TSA, and reduce the 40 percent remittances of Internally Generated Revenue, IGR, to the government.

This move has ignited a fervent discussion among stakeholders, exposing stark differences of opinion within the industry.

With the aviation community grappling with these decisions, the implications for the sector and the government’s revenue streams hang in the balance.

For instance, FAAN generates revenue from aeronautical and non-aeronautical operations, however, whatever it generates, the federal government takes 40 percent from source through the TSA, while the remaining 60 percent income is utilised for salaries for both agencies.

But in recent times, the agencies are finding it increasingly difficult to carry out capital intensive projects like airport infrastructure rehabilitation, upgrading the terminals, providing airfield lighting, acquiring of security equipment among other infrastructure that are critical to the smooth running of airports in line with the stipulations of the International   Civil Aviation Organisation, ICAO.

40% revenue deduction  limiting projects

In a chat with the Managing Director, Nigeria Airspace Management Agency, NAMA, Mohammed Odunowo, sought liberation from TSA constraints to boost functionality.

He noted that the agency is self-sufficient, stressing that the 40 per cent revenue deduction is limiting major projects for operational efficiency.

He said: “Eliminating this deduction is crucial for our prosperity. We have issues of debt. Let me paint a picture for an hour in Ilorin. They do not have power and so we run on generators. That costs about N500,000 per hour given what it powers.”

Similarly, a retired Deputy Director, Finance Department, FAAN, Philip Emeto, stated that FAAN is a self funding agency of the federal government and has a workforce of over 8,000 staff. “Aviation is an industry of skilled technical personnel whose job requires constant training and retraining.

“The federal government had in October 2012 increased the compulsory contribution to the federation account by its revenue generating agencies to 40 per cent from 25 per cent.

“With this 40 per cent of the internally generated revenue, IGR, by government agencies, which is sent to the TSA, it is now for the federal government to execute projects. “This explains why some roads at the airports are in deplorable conditions and some major projects like erecting security and perimeter fencing at some airports under the management of FAAN are not being executed. There is an obvious paucity of funds.”

Stakeholders react

In reaction to the development, the Chief Executive Officer, Turtle Aviation, Daniel Young, stated that the reason why the federal government introduced TSA was to eliminate corruption.

“Yes, NAMA needs to be allowed to breathe, but again, how are the internal financial structures in NAMA applying a wide lens in their thinking to create new market spaces that will support the ever growing innovations in the industry.

“Former Minister of Aviation, Osita Chidoka, during his administration, a revenue review committee was set up to assess NAMA revenue performance, and what was discovered was very shameful. The current leadership of NAMA needs to review that document first and learn a thing or two from the recommendations.

“What is lacking here, as far as I can see, is the courage of leadership to abandon the ritual comfort of traditional revenue path and introduce unconventional thinking that would allow them to transfer the burden of key equipment requirements for business-to-business barter exchanges, which essentially would mean that the 40 per cent becomes a form of intangible revenue

“The remaining revenue, which represents operating capital, would be left for the government to deduct from. What NAMA needs is a quantum leap in valuable creation, not appeal for help.”

  Also,  a former Military Commandant at the Murtala Muhammed International Airport, MMIA, Group Capt. John Ojikutu, stated that the federal government must have knowledge of the financial needs on the facilities and infrastructure periodic  maintenance.

“Government must also know the need for manpower skills development, salaries and remuneration, the services and administrations, etc.

“First, what is the NAMA revenue earnings from the air annual traffic and the 23 per cent available to it from the 5 per cent collected on Ticket Sale Charge and Cargo Sale Charge TSC, CSC, and Chartered Flights Charges, CFC?

“Without knowing these, there would be no end to intervention funds for the periodic maintenance. Whatever percentage is taken should return to the agencies for development or upgrading of the Infrastructure only as recovery intervention funds.”