Nigeria loses $90.5m annually to shoddy aviation concession deals

The House of Representatives says Nigeria is losing $90.5 million annually to shoddy concession deals in the aviation sector.
The Chairman, Ad-hoc Committee investigating the governing lease of Federal Government-owned assets, Daniel Asuoqo (PDP-Cross River), made this known at the committee’s inaugural meeting on Tuesday in Abuja.
The committee also said that on average, the Nigerian economy has lost over $5.7 billion from unfavourable and non-transparent Federal Government concession and lease agreements.
“Regrettably, the Federal Government is losing over $90.5 million annually due to the shoddy agreements between the Federal Airports Authority of Nigeria (FAAN) and its concessionaire at both local and international wings of the Murtala Muhammed Airport (MMA) Lagos,’’ Asuoqo said.
He recalled that there was an official 2021 report on the refusal of concessionaires to honour their agreements on land lease shop rents, concessions and on Built Operate and Transfer (BOT) arrangements.
According to him, some of the agreements with the concessionaires made up of traders, vendors and tenants at the airports have elapsed for more than five years without renewal.
“In effect, the concessionaires have either not been paying rates or have been paying rates below the current going rates in airports across the world.
“A similar situation obtains in the maritime sector where the Nigerian Government has concession 26 ports to private companies.
“The tenures of the NPA concession agreements range from 15 to 25 years and the revenue to government from the concessions is estimated at over $6.54 billion over the period.
“However, JV companies have allegedly only realised $3 billion since 2005.
“The story and picture of the scenario are the same in almost all Federal Government agencies where concession agreements were entered into with private companies.
“On average, the Nigerian economy has lost over $5.7 billion from unfavourable and non-transparent Federal Government concession and lease agreements since its inception.
“All these concession and lease agreements were entered into to ensure infrastructure development and promote economic growth.
“But this intention has been hampered by shady and unfavourable concession/lease arrangements.
This is in spite of the existence of different applicable legislations such as Infrastructure Concession Regulatory Commission Act, 2005, Public Procurement Act, 2007 and Privatisation and Commercialisation Act, 1999,’’ he said.
The chairman said that the committee would ascertain if due process was followed in the concession agreements and ensure that subsequent concession agreements that will be entered into by the Federal Government follow due process.
He added that the committee would look at the market value when the agreements were made vis-a-vis the present market value.
According to him, the committee will track payments into the concession account to make sure that the Federal Government is not short-changed under the agreements.
He said that the committee would also find out if the concessionaires were fulfilling their own obligations in the agreements, especially as it concerned servicing and maintenance of assets.
“We shall examine the duration and status of lease/concession agreements with a view to ensuring the agreements that have elapsed, are renewal.
“We shall also find out if the concessions were awarded to companies that have the technical, financial and managerial capacity to do so.’’