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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.


Dangote Cement Refutes Claim it Sells Cement High in Nigeria



economic woes

Dangote Cement Plc has refuted the widely propagated story that the company sells cement at a significantly higher price in Nigeria compared to other African nations like Zambia and Ghana.

The management of the leading manufacturing company said it sells a bag at N2,450 in Obajana and Gboko, and N2,510 in Ibese, the amounts stated include VAT.

Devakumar Edwin, Dangote’s Group Executive Director, Strategy, Portfolio Development & Capital Projects, who spoke with journalists in Lagos, said the company sells for an equivalent of $5.1, including VAT in Nigeria, it sells for $7.2 in Ghana and $5.95 in Zambia ex-factory, inclusive of all taxes.

Devakumar, therefore, described the allegation as false, misleading, and unfounded, and challenged the media to conduct independent investigation into the price of cement in some other African countries, including Cameroun, Ghana, Sierra Leone, Zambia.

To ensure that we meet local demand, we had to suspend exports from our recently commissioned export terminals, thereby foregoing dollar earnings.

“We also had to reactivate our 4.5m ton capacity Gboko Plant which was closed 4 years ago and run it at a higher cost all in a bid to guarantee that we meet demand and keep the price of Cement within control in the country.”

“Over the past 15 months, our production costs have gone up significantly. About 50% of our costs are linked to USD so the cost of critical components like: gas, gypsum, bags, and spare parts; has increased significantly due to devaluation of the Naira and VAT increase.

“Despite this, DCP has not increased ex-factory prices since December 2019 till date while prices of most other building materials have gone up significantly.

“We have only adjusted our transport rates to account for higher costs of diesel, spare parts, tyres, and truck replacement. Still, we charge our customers only N300 – 350 per bag for deliveries within a 1,200km radius.

“We have been responsible enough not to even attempt to cash in on the recent rise in demand to increase prices so far,” Devakumar said.

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Samsung, Vision Care Begin Fresh CSR Activities, Earmark 12,000 Masks for Nigeria



Samsung Heavy Industries Nigeria Limited (SHIN) and Vision Care, an international relief organization dedicated to the prevention of blindness, have launched fresh Corporate Social Responsibility (CSR) initiative to help Nigeria mitigate the impact of COVID-19 pandemic.

Vision Care is a member of the International Agency for the Prevention of Blindness (IAPB), and participant of ‘VISION 2020’, a global initiative of the IAPB and the World Health Organisation (WHO).

Vision Care has since conducted more than 25 Vision Eye Camps yearly and has grown into an international non-profit organisation serving 38 countries throughout Asia, Africa and Central-South America.

Since 2015, SHIN has worked with Vision Care in the yearly Eye Camp as part of its Corporate Social Responsibility (CSR) to provide free cataract surgeries to Nigerians who cannot afford the payment. SHIN has been sponsoring the eye surgeries of Nigerians on a yearly basis.

In 2019, SHIN sponsored the eye surgeries of at least 115 Nigerian patients and 224 outward patients as part of its CSR in Nigeria.

Since it started the programme, SHIN has sponsored the eye surgeries of 572 Nigerian patients, 1,593 outward patients and has also donated glasses to 99 patients.

Due to outbreak of the COVID-19 Pandemic, the yearly Eye Camp for 2021 had been called off to adhere to Federal Government’s measures in response to the virus.

Consequently, SHIN and Vision Care came up with a fresh CSR initiative this year to donate 496 bags of rice (25kg) and 12,000 reusable face masks to three states in the country to fulfill their commitment of contributing to the society.

The items will be delivered later this month.

The three states that will benefit from the donation are Lagos, Kano and Bayelsa states.

Out of the 496 bags of rice, and 12,000 facemasks, Lagos will receive 96 bags of rice and 200 masks.

SHIN also stated that Kano State will receive 200 bags of rice and 5,000 masks, while Bayelsa State will get 200 bags and 5,000 masks.

“This is an additional CSR activity from SHI in addition to SHIN’s donation of 5,000 COVID-19 test kits from Korea. The washable masks that the head office has purchased from Korea are certified to retain its effectiveness against COVID-19 transmission for up to 50 washes,” SHIN said in a statement.

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Senate Summons NICON, AIICO, Others Over N17.4bn Pension Remittances



pension fund

The Senate Public Accounts Committee has summoned the management of the NICON Insurance Plc, AIICO Insurance and other insurance companies over their alleged failure to remit N17.4bn pension fund to the Pension Transitional Arrangement Directorate.

The Senate hinged the summon on the 2016 report of the Auditor-General for the Federation which unraveled the alleged non-remittance of N17.4bn pension fund to PTAD.

Appearing before the panel on Monday, the Executive Secretary of PTAD, Dr Chioma Ejikeme, informed the lawmakers that PTAD took over the assets and liabilities of the defunct pension offices without a formal handing over.

She said, “On taking over, the directorate wrote all underwriters to make returns and remit whatever amount that was in their custody into a CBN dedicated account.

“Some of the underwriters responded to the request while some did not.

“The bank certificate of balances, accounting statements, three years financial statements and policy files requested by the federal auditor were not handed over to PTAD at the time of consolidation.

“It is worthy to note that we discovered that N17.4bn which comprised of cash, securities and properties from the nine insurance underwriters was unremitted as a result of the letter PTAD sent to them.

“These figures represent the claims by the underwriters with regards to their indebtedness.

“In order to ascertain the true position of legacy funds in custody of underwriters, the directorate appointed a consultant in 2018 who carried out forensic audit of nine out the 12 insurance underwriters and produced a final report on the recovery of the legacy funds and assets for PTAD.”

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