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IATA Cautions FG on Airport Concession



  • IATA Cautions FG on Airport Concession

The International Air Transport Association (IATA) has advised the federal government to be careful in its plan to concession the nation’s airports, saying the objective of having modern infrastructure at the airports may not be realised if the facilities are given out to wrong investors and on wrong terms.

The Director General and CEO of IATA, Alexandra de Juniac, gave the warning in Seoul, South Korea, during the 75th Annual General Meeting of IATA.

He noted that many states in Africa and other parts of the world see privatisation or concession of airport infrastructure as solution to airport modernisation and management.

The federal government had since 2016 insisted that it would privatise the major airports in the country because it does not have the funds to continue to manage them. It had argued that ceding the airports to the private sector through concession would enable the investors to expand and modernise the facilities in agreement with the concession terms.

IATA has very strong interest in airport infrastructure because it is critical to the airlines and most of the airports under privatisation or concession usually attract huge charges to the airlines, as investors tend to charge highly to recoup the cost of their investment, the director general said.

IATA noted that such high charges paid by the airlines go to the tickets and increase airfares, which discourage many people from travelling by air.

“We tell governments to be cautious when they want to privatise their airports or manage their infrastructure. There are several ways of doing this, so they should be very careful and not rush into privatisation.

“We have several systems, including management contracts, concession contracts before selling the assets. So we urge government to consider all possibilities.

“If they choose some of the solutions that are provided by the market, like concession, we have a kind of guidelines to tell them how to proceed. Based on experience, we have seen so many bad airport privatisation and some good ones. That is why we have established a kind of guide for best practices,” De Juniac said.

He said IATA knows that due to economic squeeze in some countries, governments take the option of privatisation because they don’t have enough funds to invest in airport infrastructure but warned that these governments should be careful because “privatisation is not the magic solution.”

Also in a presentation on airport privatisation, IATA Senior Vice President on Airport, Passenger, Cargo and Security, Nick Careen, said that there are concerns about airport privatisation because it gives rise to lack of competition, ineffective economic regulation, short-term financial gains instead of best consumer and public interest.

“Primarily a major shortfall has been that governments have focused on short term financial gains from sale or concession and often it is simply the highest financial bidder that is selected for the privatisation, without the necessary focus on the quality of service to be provided.

“We also find there are inadequate economic regulatory safeguards in place to project airlines and consumers. Lastly, there is lack of overall consultation with users, during the privatization process, on the intended expectation and outcomes.

“To address these shortcomings, IATA, with Deloitte, launched a report on Airport Ownership and Regulation to provide necessary solutions and ensure better decision-making for the interests of efficient and sustainable aviation growth,” Careen said.

He said Ownership and Regulation report details how there is a broad range of ownership and operating models that can often meet government objectives for increased financing or service improvement, without the need for sale of assets and loss of strategic control of the airport.

“If a government does not decide to pursue privatization, we now see that the large majority of airport privatisation is based on concession. That is where the government retains ownership of the asset and brings in a private operator to finance, build and or operate the airport.

“There are many models of concession for airports, which typically represent a contractual relationship negotiated between the government as the asset owner and the private sector concessionaire.

“We have found there too many shortfalls in existing concession contracts—mainly because the negotiated provision tends to be more biased to the interest of the government or concessionaire as opposed to the interest of the users of the airport facility,” he added.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.

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Company News

Uber to Halt Services in Parts of Belgium




Uber will stop its ride-hailing service in most parts of Belgium tomorrow after a court ruling on Wednesday which extends an order given in 2015, banning its p2p (Peer to Peer) UberPop service to also cover professional drivers who provide its ride-hailing service.

Uber told TechCrunch that it is currently closely examining the details of the ruling, in order to arrive at a decision on whether or not to appeal the decision with the country’s Supreme Court.

This also follows a temporary decision to discontinue Uber’s service in Brussels, a decision which was referred to as “exceptional and unprecedented” by the tech giant. The company said that it was merely taking a step to complain about the lack of reform rules which forbid drivers from using smartphones.

After the ruling by the Brussels appeal court, private hire vehicle drivers have been obstructing a major tunnel in the capital of Belgium.

In a statement made concerning Friday’s impending shutdown, the chief of Uber in the country, Laurent Slitsagain criticized the government for not providing a reform which it has been soliciting for, stating that the decision was made depending on regulations which are now outdated as they were written before smartphones.

The company stated that the government has promised a reform but has failed to deliver said reforms for the last seven years.

According to Bloomberg, the shutdown will not be applicable to a small number of drivers who are licensed in the Flemish region of Belgium, and are therefore still permitted to use the application. Uber confirmed that the Appeal Court ruling only applies to drivers with Brussels licenses.

In another statement, Slits stated that the tech giant is hugely concerned about the 2,000 possessors of LVC licenses (rental car with driver licenses) who according to the country chief will lose their ability to generate earnings.

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Company News

Honeywell Flour Mills Refutes Ecobank Winding Up Proceeding Claims, Assures Investors of Total Transparency



Honeywell Flour Mill Factory - Investors King

Following media reports that Honeywell Flour Mills Plc (HFMP) is a subject of an ongoing winding up proceedings instituted by Ecobank Nigeria Limited in a suit no: FHC/L/CP/1571/2015, Honeywell Flour Mill Plc has now refuted the publication, insisting there is no winding-up petition against the embattled company.

The company disclosed in a statement signed by Yewande Giwa, Company Secretary and obtained by Investors King.

It said “It is pertinent to set the record straight that there is no Winding-up Petition currently pending or live against HFMP in any Court in Nigeria. There is also no pending Court Order restraining trading in the shares of HFMP or inhibiting HFMP or its owners from dealing in its assets. HFMP assures its investors, regulators and stakeholders that in all of its engagements with FMN, it received independent legal advice and asserts that the transaction is not in breach of any subsisting Order of Court. The issue as to whether HFMP is indebted to Ecobank is still before the Courts and the final decision remains the exclusive preserve of the Courts. It is also important to state that the Court of Appeal judgement being referred to in the reports did not declare HFMP to be indebted to Ecobank.”

This was in response to a publication titled “Ecobank Warns against Acquisition of Honeywell Flour Mills, Alleges Company Facing Winding Up Proceedings” that claimed Ecobank Nigeria Limited had issued a 7-day ultimatum to Flour Mills to desist from completing the acquisition of 71.69 percent stake in Honeywell Flour Mills Plc on the ground that the company was hugely indebted to Ecobank.

However, Honeywell claimed “The assertions lack merit, were written in bad faith and are a deliberate attempt to undermine a transaction that will result in substantial benefit to the Nigerian economy and entrench the collaboration of two publicly quoted companies. As a responsible corporate citizen, we have entered the transaction with FMN having taken all legal issues into consideration.

“All stakeholders are hereby assured that management of Honeywell Flour Mills Plc will continue to act in the best interests of all concerned and work diligently to preserve value for all its shareholders.

“We expect that from the proposed combination, stakeholders will benefit from the more than 85-year combined track record of FMN and HFMP and their shared goal of making affordable and nutritious food available to Nigeria’s population. The country and its food security agenda will benefit from both companies’ focus on developing Nigeria’s industrial capability, its agricultural value chain and specifically backward integration of the food industry.”

This whole drama started immediately Honeywell Flour Mills and Flour Mills of Nigeria, in a joint statement, announced FMN has agreed to acquire a 71.69 percent stake valued at N80 billion in Honeywell Flour Mills Plc. A deal that will automatically make Honeywell Flour Mills Plc Flour Mills of Nigeria’s asset.

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Merger and Acquisition

Flour Mills of Nigeria Acquires First Bank of Nigeria Limited’s 5.06 Percent Stake in Honeywell Flour Mills



Honeywell Flour Mill Factory - Investors King

Flour Mills of Nigeria Plc, Nigeria’s leading flour mill company, has acquired First Bank of Nigeria Limited’s 5.06 percent stake in Honeywell Flour Mills Plc.

The company disclosed in a statement signed by Umolu, Joseph A.O., Company Secretary/Director, Legal Services.

The acquisition was in addition to the 71.6 percent stake of Honeywell Flour Mills Plc (HFMP) FMN acquired on the same day. Therefore, Flour Mills of Nigeria Plc will now hold 76.75 percent equity interest in HFMP.

According to the company, the move will help build a resilient flour mills company that will ensure job continuity, deepen productivity and support national growth.

Commenting on the transaction, Omoboyede Olusanya, Group Managing Director of FMN, said “The proposed transaction is part of our global growth strategy, which is aligned with our vision to not only be an industry leader, but also a national champion for Nigeria in the Food and Agro-allied industries.”

“Given FMN’s parallel negotiations for both stakes culminating in the agreements being signed on the same date, the basis for arriving at key commercial terms including final equity price per share, will be the same. The price payable to FirstBank will be the same with Honeywell Group Limited.”F

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