FAAN and its contractual obligations – Thisday
The Federal Airports Authority of Nigeria's perpetual dispute with it concessionaires is not good enough. The Federal Airports Authority of Nigeria (FAAN) is becoming increasingly notorious for entering into contracts it would at some point dishonour. Whatever may be the excuses for such developments, there must be something strange about the agreements FAAN enters into with its concessionaires for them to always end up in acrimony. Today, some of these concessions are in court waiting to be decided while others have been forcefully terminated. The implication is that it exposes our country to the charge of not respecting the sanctity of contracts.
We recall that in 1998 FAAN leased 11,654 hectares of land located at the E Wing of the international terminal of the Murtala Muhammed Airport, Lagos to AIC Nigeria Limited, to build a five-star hotel. But two years later, FAAN wanted to repudiate the agreement and the company went to court and later into arbitration with the agency. Over 10 years later, the matter is still unresolved. Again, some years ago, FAAN reached agreement with Pan Express to collect revenue from cargo operations at the Lagos airport. One day the workers through their labour union forced the company out from its operations, alleging that it was not paying the agreed monthly revenue to the coffers of FAAN. But following investigations it was discovered that FAAN actually owed the company which was nonetheless still forced out.
In December 2006 the Federal Government reached a concession agreement with Abuja Gateway Consortium on Build, Operate and Transfer (BOT) contract to take over the Nnamdi Azikiwe International Airport, Abuja for 25 years and to rebuild the runway, airport terminal, provide multi-level car park and a hotel. But few months later the concession was revoked after the company had paid some huge amount of money as non-refundable fees. In March last year, Maevis Limited was disengaged from providing Airport Operations Management System (AOMS) service, even when the company had signed a 15-year contract with FAAN.
While the list of contentious contracts by FAAN is long, the one that has remained on the front burner is that signed between the agency and Bi -Courtney over the domestic terminal at Lagos airport. The company had agreed with FAAN to build a domestic terminal (MMA2) which had been gutted by fire and to operate it for 36 years, but the federal government has refused to abide by the content of the agreement. FAAN and the Ministry of Aviation are now opposed to this deal but only after they had freely signed the contract.
There are many pertinent questions begging for answers: why is it that every concession FAAN goes into always end up in litigation? Is it that officials of their legal departments sleep when they go into these contracts such that they do not understand the implications of the clauses on which they append their signatures? Why must FAAN be expending hundreds of millions of Naira every year on court cases and do they care about their image? But beyond the foregoing is the general implication of the cynical manner with which FAAN treats its concession-obligations for the investment public and the sanctity of contracts in our country.
The problem with the concessions entered into by FAAN is that the protection of public interest is most often not the overriding consideration at conception and in instances where it is, those who represent the government do not pay attention to critical details. Yet it is absolutely essential that those entrusted with the duty to ensure that the government gets good bargain in any concession must be competent professionals with the requisite skills to understand the agreements they are entering into.
They must also examine all the possible problems that could arise in future. Obviously, these details are lost on the authorities at FAAN, hence their embarrassing penchant for signing contracts which they would later repudiate.