The federal government is in the final stages of negotiations with Aero Alliance Consortium to concession the Akanu Ibiam International Airport (AIIA) in Enugu for an 80-year period.
As reported by Daily Sun, a draft of the contract reveals the specifics of this Public-Private Partnership (PPP) agreement, which includes provisions for airport upgrades, management of existing Federal Airports Authority of Nigeria (FAAN) personnel, and revenue-sharing arrangements, among other details.
Clause 5.1 of the 64-page document, as analysed by Daily Sun, addresses the critical issue of current FAAN employees at the airport. According to the agreement, all existing airport staff will be transferred to Aero Alliance with their full benefits for an initial duration of 24 months. There will be no forced redundancies, and any staff member deemed redundant after restructuring will be reabsorbed by the federal government, which will continue to be responsible for their pension and gratuity payments. The concession will commence with an initial term of 80 years upon the “Effective Date,” with an optional extension of 20 years based on performance. There are also provisions for early termination in cases of non-compliance.
“The concession period (the ‘Concession Term’) shall be eighty (80) years, commencing on the Effective Date and ending on the Eightieth (80th) anniversary (subject to any extension in accordance with this Agreement) or, if earlier, until this Agreement is terminated in accordance with this Agreement,” the document states.
Clauses 2.1.4 and 2.2.2 outline the revenue-sharing formula between the government and Aero Alliance. A significant provision in the agreement stipulates that 1% of the net income will be remitted to the Infrastructure Concession Regulatory Commission (ICRC). Furthermore, Aero Alliance will have full control over non-aeronautical revenue streams, such as ground handling, cargo fees, rentals, parking, and VIP lounge fees, without needing government approval, provided they adhere to legal limits. However, aeronautical tariffs, including landing fees and passenger service charges, must be submitted for government approval.
The agreement specifies that collected tariffs must fund operations, maintenance, debt repayment, capital investments, and statutory taxes. Clauses 15 and 14.7 require the concessionaire to submit quarterly financial reports to the grantor, who retains audit rights over revenue and expenses.
Clause 16.7 delineates the cost-sharing procedure in the event of force majeure occurrences. For non-political events such as natural disasters, each party will bear its own costs. In cases of indirect political events, like strikes and civil unrest, the concessionaire will cover costs up to the insurance claims, with any remaining costs shared equally with the grantor. In instances of political events such as expropriation or discriminatory laws, the grantor will fully reimburse the concessionaire. Clause 18 discusses termination compensation; if the termination results from the grantor’s default, the grantor is obliged to pay outstanding loans, third-party liabilities, equity investments, and projected returns.
The concessionaire is mandated to undertake specific upgrades and improvements as outlined in Clause 2.2. These include runway rehabilitation, addressing existing deficiencies, and ensuring compliance with ICAO standards. Additionally, the concessionaire will carry out terminal expansion, and installation of updated navigation and communication technologies.
Upgrades to the baggage handling systems must meet IATA standards, while VIP lounges, retail spaces, car parks, firefighting equipment, lighting, and emergency systems must comply with NCAA regulations. Clause 8 mandates preventive maintenance to avert service degradation, with facilities required to meet “optimum” IATA service levels upon transfer back to the grantor. The concessionaire may also undertake discretionary improvements, including commercial real estate projects, selection of technology vendors, optional amenities, and marketing or branding initiatives.
Should the concessionaire fail to perform runway or terminal upgrades as per Clause 2.2.1.1, the grantor reserves the right to terminate the contract and seize any assets, as stated in Clause 19.5. If safety systems maintenance is neglected (Clause 8), the NCAA has the authority to impose fines on the concessionaire according to Clause 2.3.
Clause 18.6 stipulates that if a change in the law necessitates additional upgrades, the concessionaire shall bear 100% of the costs if deemed commercially reasonable; otherwise, costs will be shared equally between the grantor and the concessionaire in case of substantial impact.
A five-member team, comprising three representatives from the grantor and two from the concessionaire, will monitor compliance to ensure adherence to the contract. Should any decisions become deadlocked, the matter will be escalated to the ICRC, which will enforce a binding resolution within five business days. Clause 13.4 mandates quarterly reporting, requiring operational and financial performance data, including maintenance logs and upgrade progress against KPIs.
The agreement will take effect once both parties provide written confirmation that all conditions have been met, as per Clauses 4.1.1–4.1.2. Approval from the Federal Executive Council is necessary, and the ICRC must issue a Certificate of Compliance. Additionally, the concessionaire must demonstrate proof of financing. If all conditions are not satisfied within 180 days (extendable to 270 days), either party may terminate the agreement.
