The burden of MMA2

Murtala Muhammed Airport Terminal Two (MMA2), Lagos, is a phenomenal project providing critical services to the aviation sector for which its operator – Bi-Courtney Aviation Services limited (BASL) – has either been on the receiving end of some criticisms or much accolades in almost a decade. The few criticisms notwithstanding, with sheer determination, BASL has continued to carry the financial burden of MMA2 with unparalleled sagacity, having lost over 50 per cent of its revenue to the bureaucracy and manipulation of its landlord.  In other climes, the landlord would be a compassionate ‘partner’ supporting the concessionaire to realise the objectives of the concession.

MMA2 is the first successful Design, Build, Operate and Transfer (DBOT) project of its kind in the country. It was designated as the only privately-managed airport terminal approved to process local passenger traffic out of Lagos State by the Federal Airports Authority of Nigeria (FAAN). However, despite the many booby-traps placed on its path by the same FAAN, BASL is displaying impressive managerial and operational skills on a par with any world class operator managing a terminal like MMA2.

It is noteworthy that BASL embraced the challenges fully and stands ready to do the needful in significant ways to ensure that change is brought to the aviation sector in Nigeria. The beauty of this is manifested in the fact that the company as a pioneer has been making progress in the management of MMA2 over the years, to the admiration of those who understand the intricacies of trying to run a business where regulated service delivery has traditionally been managed by stone-age civil service mentality, who will do everything within their power to frustrate the private investor. Retrogressive and unpatriotic officials, who clearly do not understand that the private sector is the engine room of growth in any economy and that government is only an enabler, have continued their repeated attempts to kill the dream of Public-Privatisation Participation (PPP) policy. Even the most ardent detractors must commend the never-say-die spirit and patriotic zeal of BASL, in an environment where many would have given up long ago, despite the huge investments already made.

At MMA2, Bi-Courtney has made an unimaginable sacrifice trying to provide the required services to the public and has only been able to achieve this through the tenacity of purpose and the steadfastness of the investor, who refuses to bow to the mediocrity and unwarranted injustice being perpetrated against his business concerns. The aggressors are those who should ordinarily join the investor in the dream to lift this country to greater heights by encouraging similar investments in various sectors of the economy, especially in a country with such severe infrastructure deficits as ours.

Conversely, it is a big shame that after several years, FAAN cannot boast of one terminal that provides comparable comfort and meets the expectations of passengers in Nigeria. Almost all its airport terminals are already near-derelict, despite the enormous resources expended and at the disposal of the agency. In stark contrast, those managing MMA2 over the past nine years have continued to prove that Nigeria is not all about negativity and that Nigerians too, especially in the private sector, can do things better.

Even with the hostile environment in which it is forced to operate, Bi-Courtney ensures that the facilities in the terminal constantly undergo timely maintenance and renewal. For instance, five escalators and nine elevators were upgraded recently, while uninterrupted power supply for nine years, clean environment, smooth passenger facilitation and security camera systems, among several others, are all the things that make MMA2 different from other terminals. This obviously comes with a huge price to Bi-Courtney. What this simply means, which is the fact, is that the operator has been ploughing back into the project all the revenues it realized over a decade. What BASL loses in profit and fulfilment of obligations to its creditors and to the provisions of the concession agreement, is what the aviation community in the country is enjoying in terms of a safe, secure and functional terminal facility. And by extension, BASL has unequivocally added value to the image of the country in the comity of nations in its own little way, and it is proud to contribute its quota to nation-building.

The huge loss in revenue, which is even worse today, is further accentuated by the desire of BASL to maintain the Nigerian Civil Aviation Authority/International Civil Aviation Organisation (NCAA/ICAO) standards and regulations, which require huge expenditure outlay regardless of the economic recession. This is made worse because FAAN bluntly refused to obey the terms and letters of the concession agreement it signed with Bi-Courtney on MMA2, despite subsisting court judgements. The agency has effectively divided revenues due to the concessionaire into two, thus creating unnecessary duplication of activities, leading to a situation where airlines are now immensely indebted to airport operators. What an anomaly when the regulator becomes the competitor and is doing everything to pull down a partner!

Dr. Wale Babalakin, chairman, BASL

Bi-Courtney has therefore had cumulative (actual) operating losses running into billons of naira from 2007 to 2010; and as a business, it is astonishing how the company continues to ensure that services are constantly provided. Also, losses since 2007 to date are colossal. The combined losses continue to dampen the firm’s spirit and have frustrated its attempts to service its huge loans borrowed from a consortium of banks and even to meet its concession obligations to FAAN. BASL is constantly frustrated that associated projects that would have enhanced its revenue base, such as the Hotel and Conference Centre, power plant and the mono rail, have not come to fruition, as FAAN continues to pile on the blockage.

Meanwhile, FAAN, though relentless in its bid to thwart the MMA2 concession, is nonetheless busy demanding for its concession fees. The agency keeps the cost of operations up in order to ensure that BASL is frustrated from rendering the required services to the public through MMA2. This is a calculated attempt on the part of the authority to show up the terminal enterprise as a failure. Ironically, over the last few years, while FAAN has refused to allow BASL to generate the required revenues, it has continued to thrive on the revenues it is illegally earning from the operations of the General Aviation Terminal (GAT) that is statutorily supposed to be part of the Bi-Courtney concession. Any wonder then why FAAN continues to ignore the court judgements in favour of Bi-Courtney, in blatant denial in a country under the rule of law.

The first three years of operation of MMA2 from May 2007 were the most critical and traumatic. During that time, Bi-Courtney spent billions of naira of its own money to provide additional facilities to ensure that the terminal remained open to the flying public. Were it not for this huge sacrifice, MMA2 would have been shut down as soon as it was inaugurated.

This has been the major dilemma of the terminal operator and may be the major challenge of the PPP initiative of this government, as those who are making spirited attempts to turn the success story of MMA2 to failure, those who are branding Bi-Courtney the devil, are still very much around to frustrate any private sector initiative in the country’s aviation sector. Unless and until something is done to change their mindset/attitude and convince prospective investors that they would be given free hand to operate, the proposed concession of four of the country’s airports may suffer the same hindrance that has beset MMA2.

***Omolale is the Head, Corporate Communications of BASL.