Weighing the airport remodeling N174bn debt

The much orchestrated airport remodeling project carried out by the immediate past minister of aviation, Princess Stella Oduah, seem to be crashing under accusations from the National Assembly of fraud and avoidable indebtedness. In two different occasions this week, the Senate committee on aviation and their House of Representatives counterpart came down heavily on the ministry of aviation and the various agencies over issues of debts (about N174 billion) owed to contractors and large scale fraud believed to have been committed under the airport remodeling programme. While the Senate Committee threatens to leave the contractors being owed to their fate, the lawmakers from the House of Reps have ordered the ministry to return the famous bullet proof cars purchased at the cost of N255 million, with threat to conduct a public hearing over what they suspect to be unwholesome practices among elements in First Bank of Nigeria Plc, the ministry of aviation and the agencies of the ministry. CHIBISI OHAKAH writes

In January 2013, the former minister of aviation, Princess Atella Oduah announced the federal government plan to remodel 11 airports in Nigeria as the first phase of a comprehensive exercise to bring the Nigerian aviation system to internationals standard.
The former minster went further to explain that the remodeling exercise will foster the nation’s Gross Domestic Product (GDP) as they would stimulate economic activities and encourage travelling. She projected that by 2015 total domestic and international passenger movement in Nigeria would rise from the present 12 million to 16 million, adding that with better facilities and commercial offerings at the airports, travellers would be increasing by at least 10% annually.

The plan elicited so much enthusiasm among Nigerians, especially when, over time, the remodeled airports were being commissioned one after the other by President Goodluck Jonathan. But it appears that the joy of having the airport glow with globally rated facilities seem to have been punctured by shocking revelations from the National Assembly.
While on an oversight activity early this week at the general aviation terminal and the international wing of the Murtala Muhammed Airport, Lagos, chairman of the Senate committee on aviation, Senator Hope Uzodinma observed that there were some lapses in the contracts, specifically querying an indebtedness of N174 billion said to have been incurred by the ex-minister.
“It is on record that the present administration, more than any other before it, has budgeted for and spent so much on the aviation industry. I have gone through the records and I have not seen any,” he said.

N174 billion debts
Senator Hope Uzodinma confirmed that his team discovered at the ministry of aviation that under phase three of the remodeling programme, the Federal Aviation Authority of Nigeria  (FAAN) and the ministry are indebted to the tune of over N174 billion. “This is not within the budget; they did not carry us along and that is why it is not in the budget. We queried how they over-committed government without prior approval,” he stated.

He said however his committee is not disposed to abandoning the projects (debts), but another plan that would give all the parties involves a kind of soft landing. Suggested that a committee will be set by the aviation ministry to look at those projects and then re-prioritize them. He accused the former minster, Princess Stella Oduah and the ministry of aviation of not “allowing the National Assembly to play its own role.”

$500 million loan from China
On July 10, 2013, the federal government of Nigeria signed a $500 million infrastructure loan agreement with the Chinese government for the construction of four new international airport terminals in Abuja, Lagos, Port Harcourt and Kano.
The agreement was actually one of many other agreements and MoU’s signed in Beijing by President Goodluck Jonathan while he was on a 2-day visit to China. The commencement of construction work on the terminals had been on hold pending the formal signing of the loan deal which was to be financed by the Chinese EXIM Bank.

But the Senators expressed shock that despite the existence of the loan, the ministry still went ahead to incur huge debts. “The federal government through the ministry of aviation also had a counterpart funding responsibility of $100 million. That I am aware of and all the projects have no reason not to be completed within the record time,” Senator Uzodinma stated.

Aviation professionals warn against abandoning projects
The lawmakers’ threat of abandoning the aviation remodeling projects is not being taken kindly by aviation professional. Coordinator of Congress of Aviation Unions and Professionals Association (CAUPA), Mr. Sheri Kyari, said the N174 billion debts incurred in the airport remodeling programme should not be used as an excuse to abandon projects that are at various stages of completion.
Speaking in Lagos, Kyari, who was reacting to the Senate committee on aviation’s revelation that the ministry of aviation and the Federal Airports Authority of Nigeria (FAAN) incurred debts of N174 billion said the enormous work done at the airports “is expected to gulp a huge amount of money.”

He argued that should the projects be abandoned, the airports would be worse than the condition they were before modernization programme was initiated.
Kyari, however, called on the committee to breakdown the debts owed to contractors handling the projects in order to know how they were incurred.
“The projects are visible. The debts should be identified with each project. Though the debt is huge, it is relatively less than debts incurred by the government in projects in other sectors.
“We are talking about 14 perishable cargo terminals where agriculture produce will be processed and exported overseas by our farmers. Two terminals at the old general aviation terminal (GAT) in Lagos have been completed; a new GAT for private jet operators has almost been completed in Lagos.

“Work is going on at the Hajj Camp in Lagos as well as the cargo terminal. Expansion project is going on at the international terminal of the Murtala Muhammed International Airport. These are big projects in Lagos alone.
“There are 12 passenger terminals under construction. Some terminals have been completed and unveiled like the ones at Benin, Kano, and Enugu airports, while others like the ones in Ilorin, Owerri, Yola, Sokoto have been completed and put into use but yet to be officially unveiled. I also know that from 2011, as mentioned by the senate, other projects like the hajj terminals in Kano and Kaduna have been completed and are operational. So the projects are huge,” Kyari said.

Meanwhile, the President of the International Civil Aviation Organisation (ICAO) Council, Dr. Bernard Aliu has acknowledged the infrastructural upgrade at the airports saying the expansion and remodelling are needed in order to prepare the airports for the increase in air traffic.
Aliu said every member state of ICAO should improve its airports for the expected growth in air traffic, adding that the growth is a significant contribution to the economic and social development of the country.

“The growth is a positive thing because it ensures the contribution to economic and social development, but it is also a challenge. The implication is that you need more infrastructure for airport operations, for air traffic management in order to accommodate that capacity. So every member state is supposed to invest in order to accommodate the traffic growth,” he said.

Reps accuse First Bank of fraud over Odua’s bullet proof cars
Shortly after the revelations from the Senate committee on aviation, their counterparts from the House of Representatives, led by their chairman, Mrs. Nkeiruka Onyejeocha, is threatening to conduct a public hearing on the relationship between First Bank of Nigeria Plc and the aviation agencies.

Speaking after she and members of her committee inspected ongoing projects at the general aviation terminal and international wing of the Murtala Muhammed Airport, Lagos, Onyejeocha said the committee had mandated the Nigerian Civil Aviation Authority (NCAA), to return the controversial bulletproof cars, under-written by FBN to its supplier.

She said that NCAA had no business  keeping the cars stressing that the contract terms between NCAA and Cosharis Motors should be terminated and recover the paid sum from the supplier.

The lawmaker, reiterated the House resolution on the scandal, maintained that due process was not followed before the purchase of the bulletproof armoured cars
Speaking earlier during the tour, Benedict Adeliyela, acting NCAA Director General disclosed that the controversial bulletproof cars were parked at the NCAA’s office in Abuja.

Onyejeocha said the house was not satisfied with the relationship between First Bank that facilitated the purchase of the cars and aviation agencies. She described as fraudulent the agreement on automation between the bank and Avitech on the one hand and the Nigerian Civil Aviation Authority (NCAA) Federal Airports Authority of Nigeria (FAAN), Nigerian Airspace Management Agency (NAMA) on the other saying the bank should not be in charge of automation.

She said the deal between the FBN and Avitech and the aviation agencies “is worse than what transpired during the FAAN-Maevis agreement and should not be allowed to continue as it will seem that FBN is reaping while FAAN is losing money.”
Avitech is software provided by FBN for the aviation agencies including the NCAA, FAAN and Nigerian Airspace Management Agency (NAMA) for the automation and revenue collection. But the committee insisted that the agencies could collect the revenue by themselves.
Before the coming of Avitech, all the revenues accruing to the parastatals were collected manually which resulted in huge losses through leakages inherent in the manual procedure.

Avitech is a single payment platform providing streamlined revenue collection and workflow process between the government, airlines, aviation personnel and air travelers collectively with the aim of reducing internal leakages and fraud relating to over invoicing and ghost vendors.

Oduah denies incurring N174 billion debt
While the lawmakers gravitate with the hangman rope towards the neck of the former minster, officials of the agencies, the financiers and the contractors handling the remodeling programme, the camps of the former minister has denied any wrongdoing, and any knowledge of the N174 billion debt.
In a statement issued midweek by her special assistant to the former minister, Dr. Daniel Tarka, the minister described the allegation as anything “further from the truth,” advising that the current managers of the sector should “exploit these well-laid foundations that were left behind by the former minister and her team” to optimise the revenue generation potential of the sector.
According to him, the agenda of the aviation master plan pursued by the former minister was for the transformation of the aviation sector such that the industry would be self-sustaining by 2016; and begin to yield additional revenue for government through improved Internally Generated Revenue (IGR).
The minster’s aide said it was in the bid to achieve the goal that the minister, during her tenure, embarked on the upgrade and rehabilitation of the 22 federal airports across the country under the Airport Remodelling Programme (ARP).
“As part of measures to effectively implement the Master Plan, several sources of funding were identified. These include, (i) annual budgetary allocations; (ii) IGR, including airport development levy and security surcharge, (iii) Bilateral Air Services Agreement (BASA) funds, (iv) low interest loans, among others.

“Besides the statutory approvals, the ministry designed the projects with in-built capacities to generate funds without having to place any further financial burden on the federal government within the period,” stressing that: “These projects were not designed to start and end in 2013, and so, were not tied to the 2013 budget alone.”
Tarka explained that since the Master Plan was conceptualised to be implemented as a process and not a destination, its projection of revenue streams within its life span was such that all projects would be adequately financed from budgetary allocations and the identified revenue sources; with the high possibility of surpluses that can subsequently be deployed for the repayment of the loans on maturity after the period of moratorium.

Remodeling project: a liability?
The minister’s aide said the question of the programme being a liability to Nigeria does not arise. Rather, “We are convinced that an efficient and effective implementation of the master plan would guarantee the realisation of these revenue projections, facilitate the seamless implementation of the projects and ensure the rapid development of the sector into a net revenue earner for the government within the next three years.”