GAT Concession: Reps Averts Another Strike

General Aviation Terminal had turned into a theatre of war following its September transfer by the Federal government to Bi-Courtney under extended Public Private Partnership agreement of MM2 handled by the Attorney General of the Federation and the Ministers of Justice and Aviation. Speaking on the intervention of the House of Representatives, Friday Udoh, who spoke with our correspondent in Port Harcourt said that the decision is in the right direction, as their responsibility is not limited to protecting the economy, the law, Nigerians right and resources but the vulnerable group.
Mr. Udoh who is the South- South Co-ordinator, Institute of Chartered Economists of Nigeria, a Logistician and member Chartered Institute of Logistics and Transport (CILT) London, maintained that with the existence of Infrastructure Regulatory Commission, every matter bothering on Public Private Partnership contracts should have been directed through its office. He noted that where a regulatory authority does not exist, public agency such as FAAN or Federal Ministry of Aviation could oversee all aspects of the agreement, from maintenance to setting charges or toll rates while in most cases the private company pays the public agency an upfront fee for the contract, an in others the public and private partners share in the revenue generated by the facility. According to him contracts covering PPP agreement varied from country to country citing: Europe, to him their agreement provide annual payments with no upfront fee, in Australia biding on a particular project does not based on the size of the concession fee but on the lowest charges”.
The Co-ordinator insist that the facility under contention is by characteristics differs from MM2 therefore should form a fresh contract, again that for every concession there is always a trade-offs, that is between upfront versus ongoing lease revenues over the life of the agreement (1) current capital needs versus long term needs, and (2) a “sure thing” (upfront payment) versus some risks as to what future revenue may be.
He described concession contract as complex to which the execution of agreement is not usually an easy task, while the parties to the agreement must be willing to accept the reality of the agreement:- That is P3 contract could not be easily implemented through financial nor political capability alone, rather parties must be willing to adopt and accept practices that best suit to the situation where special advantage of the parties is taken care of, making sure that critical success relies on effective and efficient deployment of legal, political and financial resources, also the parties need not expect equal bargaining power equally needed a financial strategist that will sustain the execution of the agreement, which by every standard required expert ..
“we can expect a media war, and emergence of a formidable opposition, in most cases by the opposition parties, an action capable of weaning public confidence on contracts and such forces capable of hindering the formation of successful contract and smooth implementation, are politics, non transparent public contract procedures to scrutinize public tenders as regards private parties involvement, lack of understanding to political process and the complexity on public administration” He identified
Accordingly, the ICEN boss asked the government to be wary of the fact that were high risk is transferred or off-loaded to private entity, the cost of debt on equity increases, causing the envisage return to be high causing uneconomical charges on the users of the facility while advising the House members to scrutinised the agreement thoroughly and must admit inputs from Professionals not restricted to PPP experts, Economists, Lawyers and Antitrust Experts.