The Federal Government has announced its plan to generate over $4 billion in revenue through the concession of two major airports in Nigeria—the Nnamdi Azikiwe International Airport in Abuja and the Mallam Aminu International Airport in Kano State.
According to Oluseyi Odutayo, Head of Press and Public Affairs at the Federal Ministry of Aviation, the projected nominal revenues from the combined concession of the international airports in Abuja and Kano are expected to exceed $4 billion over the concession period.
With more than 70 percent of the projected revenues payable to the Federal Airports Authority of Nigeria (FAAN), the government aims to benefit from a significant revenue stream that can be utilized for various developmental projects.
The involvement of private sector investment through the successful bidder, Corporacion America Airport Consortium, will provide financial benefits and enable much-needed upgrades to airport infrastructure, technology, and services.
The consortium, a New York Stock Exchange Company, has pledged an upfront payment of $8.5 million for the Abuja and Kano international airports.
Under the concession agreement, the consortium has committed to upfront payments of $7 million for Nnamdi Azikiwe International Airport and $1.5 million for Mallam Aminu Kano International Airport.
These immediate payments demonstrate their commitment to investing in the development and enhancement of the airports.
The government is urging all stakeholders to support this transformative process and work together to achieve a shared vision of a thriving aviation sector that benefits all Nigerians.
By embracing the Nigeria Airport Concession Programme (NACP), they aim to create an aviation industry that drives economic growth, enhances connectivity, and provides world-class services to travelers.
Recall, Nigeria’s Aviation Minister, Hadi Sirika revealed in October 2022 that Corporation America Airports Consortium also emerged as the preferred bidder for both airports
What Concession Means
In this context of airports, concession refers to a contractual agreement between the Nigerian government and Corporacion America Airport Consortium. The agreement grants the company the right to operate and manage the airport for a specific period of time, usually several years.
Corporacion America Airport Consortium, the concessionaire, will assume responsibility for the day-to-day operations, maintenance, and development of the two international airports. This includes managing the terminal facilities, runways, parking lots, retail spaces, and other related services.
In return for taking on these responsibilities, the concessionaire typically pays a fee or makes regular payments to Nigerian government. The American Consortium already mde an upfront payment of $8.5 million for the Abuja and Kano international airports.
How Nigeria Benefits
The benefits of airport concession include leveraging private sector expertise, technology, and financial resources to enhance the efficiency and quality of services provided at the airport.
The private company often brings in investments for infrastructure development and upgrades, which can lead to improved passenger experience, increased capacity, and overall growth of the airport.
In the case of Abuja and Kano airports, the statement suggests that the concession of these airports is expected to generate over $4 billion in revenue.
This revenue could come from a combination of upfront payments made by the concessionaires, as well as ongoing fees and a share of the revenue generated by the airports during the concession period.
