Market News

...Concessnaire to invest N28bn

By Okungbowa Aiwerie, Asaba

The Delta State government, Wednesday, signed a N28 billion concession deal with First Investment/ Menzies (FIDC-MENZIES) Consortium to develop the Asaba Airport for a 30-year period following an initial deposit of N1billion.

Secretary to the State Government, Chiedu Evie and Director-General, Delta State Investment Development Agency signed on behalf of Delta State government.

The event which took place in Asaba, the Delta State Capital attracted aviation experts.

Under the agreement, the investors, Asaba Airport Company, are to invest a N28 billion into the development of Asaba International Airport.

Gov Ifeanyi Okowa, at the occasion, stressed that the development would enhance economic growth and employment.

He explained that the concession would run for an initial period of thirty years after the Delta State Executive Council and the Delta State House of Assembly and the consortium reached terms that will improve the development of the airport.

The approved terms, according to the governor, are; “Naming of the Airport: The name of the Airport shall remain Asaba International Airport. However, the Concessionaire, upon discussion with the State, can include tagline to the existing Airport name for the purpose of branding.

“Competing Airport: There shall not be any publicly or privately-owned new airport, whether greenfield developments or expansions in Delta North Senatorial District of Delta State, during the concession period.

“Employment of Deltans: The Concessionaire shall at all times be under an obligation to maintain an employment ratio of twenty percent (20%) of its staff for the operation of the Airport comprising indigenes of Delta State.

“Mandatory Capital Projects; The Concessionaire shall undertake the development of Mandatory Capital Projects, and they shall be completed within a period of three (3) years from the effective date of the transaction.

“The Mandatory Capital Projects include Airport/Terminal Facility, Cargo Facility, Maintenance, Repair and Operations (MRO) Facility, Tank Farm Facility, Industrial Park and Office Facility, and Hotel and Conference Facility.

“Concessionaire Obligation: The Concessionaire shall be responsible for the management, operation and maintenance of the airport, keeping it in good operating repair and condition throughout the concession period at its own cost and risk, and in accordance with Prudent Industry Practice and the provisions of the Agreement.

“Exemption of Payment of Tax: The Concessionaire shall be exempted from the payment of some specific taxes to the State for a period of five (5) years, to enable it concentrate on the development of the mandatory capital projects as listed above;

“Rights of Inspection of the Airport Facilities: The State and its representatives, with a written notice to the Concessionaire, no less than seven (7) days prior to visit, can undertake the inspection of the airport facilities to ascertain compliance with the terms of agreement.

“Project Delivery Oversight Committee (PDOC): A Project Delivery Oversight Committee comprising representatives of the State and the Concessionaire shall be constituted to ensure the implementation of the terms of the agreement.

“Terms of the Concession: The assets and all infrastructure constructed by the Concessionaire, together with all related investments in, and upgrades to the assets, shall be handed back to the State at the end of the concession period.”

Other terms are; “Insurance Policy: The Concessionaire shall purchase and maintain in full force and effect any and all of the insurances required for the operation of the airport.

“Royalty Fee: The Concessionaire shall pay to the State a royalty fee of 2.5% of the annual Earnings Before Interest, Taxes, Depreciation, and Amortization.

“Annual Fee: The Concessionaire shall pay to the State an annual fee of One hundred-million-naira (N100,000,000.00) each year during the concession period, with 10% escalation every five (5) years of the concession period.

“Upfront Fee: The Concessionaire shall pay to the State an upfront fee of N1b only on or before close of business on the 15th day following the signing of this agreement.

“My good people of Delta State, with over N28b expected to be pumped into the airport development by the Consortium over the concession period, the benefits to the State in terms of employment generation, economic growth, urban renewal, and tourism potentials are enormous.

“I thank the Project Steering Committee and the Committee that analysed the bids, for a job well done. My deep appreciation also goes to the Transaction Advisers for their patience and commitment to guide us through the entire process. I also express my profound gratitude to the First Investment/Menzes Consortium for believing in this project, which is the first Brownfield Airport Concession in Nigeria, and possibly Africa.”