2. Domestic terminal of Muritala Muhammed Airport, Lagos
Nigeria TYPE OF PPP CONCESSION: BUILD, OPERATE AND TRANSFER
(BOT)
3. The project was to design, construct and operate a new
domestic terminal and ancillary facilities as a result of the
destruction of the domestic terminal by fire in 2000. The new
terminal, Murtala Muhammed Airport Two (MMA2), has a land area of
20,000m2 and comprises a terminal building, a multi-storey car
park, and an apron.
4. The PPP procurement in Nigeria is regulated by the following
legislations The Infrastructure Concession Regulatory Commission
(ICRC) Act 2005 The Public Procurement Act 2007 . Legal
Framework
5. Value for money analysis The VFM method adopted was simply
comparing the estimated cost of implementing the PPP under Public
Procurement with that of the private sector
6. In 2003, the Federal Ministry of Aviation advertised for
bids for the project, and after an evaluation process, Royal
Sanderton Ventures Limited emerged as the preferred bidder, while
Bi Courtney Limited was the reserved bidder. Royal Sanderton was
awarded the contract. Six months into the implementation phase,
there was no significant construction activities on ground, the
government decided to revoke the contract signed with Sanderton.
After necessary negotiations, the contract was awarded to Bi
Courtney, the reserved bidder. The contract duration was initially
for 12 years, and subsequently extended to 36 years through an
addendum signed between the Federal Airports Authority of Nigeria
(FAAN) and Bi Courtney. Bid Preparation
7. Allocation of Risks The plan completely transferred all
development and operating risks to Bi Courtney Ltd . The federal
Government was to provide security at the airport terminal Bi
Courtney was given the guarantee of first right of consideration,
if FAAN and the federal government elect to build a new domestic
terminal in Lagos state
8. PROCUREMENT AGENCY: Federal Airport Authority of Nigeria
BIDDERS: Royal Sandeson Ventures Ltd. Bi- Courtney Ltd. SELECTED
BIDDER: Bi- Courtney Limited DURATION OF CONTRACT: 36 years
ESTIMATED COST OF PROJECT: US 200M
9. The Project was Part-financed by a Consortium of six banks:
Oceanic Bank International Plc, Zenith Bank Plc, GT Bank Plc, First
Bank Plc, First City Monument Bank Plc and Access Bank Plc to the
tune of $150m,in addition to equity of the owner/proprietor.
10. The concessionaire regains his investment through charges
for the services provided in the terminal: Payment by airlines for
terminal services Payment for car park services Payment for
advertisement in the terminal Payment by shops and restaurants
Payment Mechanism
11. MMA2 was the first major BOT infrastructure project to be
completed by a Nigerian company without ext ernal finance The
project had been successfully completed The project boasts of the
first and the largest Multi storey car pack in Lagos The terminal
also boasts of a fully equipped clinic that is open to all terminal
users, and handles over 50 flights daily
12. There was initial paucity of fund had ,the company had to
start construction without a long-term financing agreement in
place. In March 2007 secured a US$150m part-financing from a
consortium of six banks for the completion of MMA2 Some airlines
were reluctant to move from the international terminal. FAAN
reopened the old terminal General Aviation Terminal (GAT) for some
airlines because the apron at MMA2 was not able to accommodate the
growth in domestic services; There were disputes by the parties and
claims of breach of contractual right
13. The importance of having an agreed financial model and long
term financing in place at the outset of the project; The initial
bidding process also points to the importance of managing
politicians expectations and setting realistic goals regarding
timelines; Revoking a contract and re-awarding it to a different
company not only delayed the project but also triggered doubts in
private participants minds about whether such changes were spurred
by political rather than economic issues;
14. The difficulty of enforcing contractual agreements (e.g.
while the contract has a clause assuring that all scheduled
domestic flights in and out of FAANs airports in Lagos shall
operate from the new terminal during the concession period, FAAN
continues to operate the old domestic terminal, Any conflict of
interest faced by the Government puts significant pressures on the
ability of the private sponsor to recover its investments and thus
placed the financial viability of the project at risk.
15. ICRC PPP Toolkit Invest On line . Com Airport technology
.com World Bank PPIAF Reference Guide Bi Courtney Aviation Services
Ltd http://www.mma2.com.ng/about Framework Note PPP Nigeria
www.tremolet.com Legal Framework of PPP Nigeria
www.dejure.up.ac.za/. References
