We’ll review all agreements skewed against public interest– Uriesi, MD, FAAN
George Esezobor Uriesi, the managing director/chief executive of the Federal Airports Authority of Nigeria (FAAN) is best described as a man of many parts. He is a seasoned airport manager, a business and development coach with great entrepreneurial drive.
He prides himself as one whose specialities are in Leadership, Mentoring, Team Building, Organizational Development, and it is with these attributes he mounted the saddle as the incumbent Managing Director of FAAN. Having spent a good number of his working career overseas, he was itching to share his wealth of experience, hence he accepted an offer to return home to become the Director of Airport Operations of FAAN.
While working in that capacity for about 17 months, he appreciated the shortcomings of FAAN, which ranged from poor orientation of staff to decrepit infrastructure. The above aside, he saw that working in Nigeria has its own peculiar challenges, aside the general challenges in any work place.
He was greeted by heavy politics and incredible bureaucracy and, according to him, FAAN as a service provider was not living up to its bidding.
So, when he became the new boss of the authority, he needed no coaching to know what to do.
Among other things, he discovered that FAAN was entangled in sub-optimal concession deals, saying such skewed concessions would be reviewed as they are against FAAN and public interest. Uriesi told Daily Sun in an exclusive interview, that the new management evolved a three-prong approach – infrastructure, the organization itself, and finance.
He urged Nigerians to exercise patience, saying programmes and projects meant to enhance passenger comfort are in the oven and will soon be rolled out for consumption.
In this interview, he speaks about the authority and more.
What I met on ground
Well, you know I had been the Director of Airport Operations for 17 months or so and I felt that I had seen a little bit of the organization. I wasn’t very pleased about a lot of things because I knew quite well that a lot of things were not the way they should be. Things were not normal, so the first challenge for me was to begin by normalizing the organization. I had a sense that the organization had forgotten the reason why it existed and, in essence, my job is to focus the organization on why it exists.
There are three keys of our strategy to turn it around. It really needed to be turned around. It was struggling to pay its salaries. It was unable to meet its maintenance expenses and requirements. And these are two most important things and, of course, all the other obligations it needed to meet, and people were suffering. Of the three key areas I mentioned, the first was infrastructure. As an airport authority, the vehicle through which we deliver our services is infrastructure. And as you know, for more than 30 years, FAAN had not built, upgraded or renewed its terminals. They were all in obsolescent position. They were derelict and decrepit and generally looking very poor. So, in my view, it had become an emergency.
Luckily, the Minister who appointed me, Princess Stella Oduah, felt as much as I did…the urgent need to turn the airports around. She was particularly very angry about the state of the airports because she’s a regular flyer, and complained bitterly to me about the state of the airports. And now that she’s been made a minister, there was nothing she wanted than to address the rot.
The second is about the organization of FAAN. The way it works internally; the orientation of staff; the culture in the organization. All that needed to be changed because it was generally moving in the opposite direction of world-class airports. So, if you’re going to change through our remodelling programme into modern airports; if you just leave those modern airports to the current crop of staff or organization of FAAN, the remodelling will not be sustained. You need to turn the organization into one that is capable of running world-class airports. So, we are focusing on the organization; we’re restructuring it…and all that. We’re also remodelling the organization, changing the way it works; the practices inside; the structure of it and all that, and doing the right kind of training and development to be able to run these airports when we finally turn them around and carry on from there.
And the third element is our finances. When I came in, I discovered that our finances were in poor shape, I mean very poor shape. But now, we’re doing a lot we needed to be doing, like having management account on a monthly basis; like having accounts audited at the end of the financial year etc. We were just running on the if-there’s-cash-let’s-spend-it culture. And we needed to overhaul the finances, and there were many areas there. First, the money we were making.
We were collecting a fraction of it and, secondly, the money we should have been making, we were not making.
So, instead of us to be making a N100 and collecting N30, we should have been making N500 instead and collecting N499. So, we are moving in that direction now. One of the things that was slowing us down is that we had a lot of lopsided concession agreements. The terms of some of them, in my view, are incredible. One of them was Maevis and, as you’re aware, they are no more at the airports (Lagos and Abuja). I say to my staff that Maevis is a 600-pound gorilla on our shoulders. If you’re carrying a 600-pound gorilla, you can’t walk. So, we took the 600-pound gorilla, with all its hairy structure and what not, off our shoulders.
Now, we can walk tall.
One of our legacies is that we have some skewed concessions, so much that when I read them, I’m shocked. These concessions are mainly from 2007 downwards. At times, I want to ask those that signed contract what prompted them into it? But again, you have to move forward and you can’t continually dwell on the past. If you dwell on the past, you give yourself a lot of angst; a lot of distress. So, I’ve decided to look forward and look at the concessions that are very bad; the ones that are preventing us from moving forward, with a view to dismantling them and setting a platform for doing it correctly in the future.
But that FAAN is preventing the concessionaires from doing their work is difficult for me to comment on. What I can reveal right now is the changes we’re making in the organization. The way we put together these kinds of opportunities would make it different because we’re moving away from the concessioning model. In my view, it has failed. Even when you have a very good idea you want to concession, it is susceptible to hijack by very powerful and influential interests, and then you end up with concession agreements like that of Maevis, which are skewed to the disadvantage of FAAN, and we don’t want that. So, we’re going into real joint venture models, which is the real Public-Private-Partnership (PPP).
By the way the Maevis deal is a concession and not a PPP, as it was being positioned. We’re now going into the realm of joint ventures and PPP. So, if there’s an opportunity, rather than concession it to somebody we go into joint venture where FAAN and the person share the cost and the profit. So, the better the business is doing, the more money FAAN is making. So, it’s of mutual interest and benefit. So, we’ll not be quarrelling with you anymore. If you want to be making N1 billion daily please do so, because it’ll also pay us too.
Review of concessions
Yes! We have done a massive review of our concessions. In fact, the minister did FAAN’s concession review by a set of lawyers and they came up with a lot of issues. Most of them are not big concessions, so we can easily go to them and say look, we have new hurdles; we are set now and we want to review this. But there are big ones like Maevis. There are two 600-pound gorillas and we’ve taken one off, we have one more to go. Outside these two, there are other gorillas of 500 pounds, 400, 300 and all that.
Guidelines for private investment
We’re putting together, under the auspices of the minister, an investment road show. So, we’ll be doing an investment summit in Lagos for local investors. We’re putting together an investment platform in Lagos, Port Harcourt, Abuja and Kano. It’ll show the proper land use plan of the land side of the airport in the airport city model. There, we’ll say that we have designated this and this for these purposes and we’re asking for people to invest. Some of it we’ll go into joint venture with people and some of it, we’ll allow people to invest by themselves. But that’s how the picture will look like. We’ll make the process as quick and smooth as possible, as it’s supposed to be in a normal and organized setting. It’s not going to be buried in bureaucracy and all that. And that is why, to us, the joint venture model counts. If we use that, it’s in FAAN’s mutual interest, like everybody else who’s coming to invest, to make it work.
So, at some point, FAAN should be able to look back and say that yeah, my money is working for me. Or my captive business environment is working for me because if you see a hotel, a car park etc., it’s all a joint venture. People are making money, FAAN is making money but people are running it on a private sector basis that allows it to be maximized so that FAAN can benefit. So, I won’t be quarrelling if you’re making N3 billion because if you are making more money, FAAN is also making more money. But right now, you can’t be making N3 billion and FAAN is making zero, which is the issue right now.
The battle with Maevis
They came with a regular AOMS system. But, they couched it in Nigeria as a revenue collection concession for which they will take an unreasonable amount of money. It’s global precedent. It has never happened anywhere and it can never happen anywhere in the world because such a thing is lunacy. And they expected to perpetuate it for 10 years. In a nutshell, FAAN made every approach to Maevis to say we have to reconsider and renegotiate this because it is skewed. We can’t pay salaries, we can’t maintain the airports, our cash flow is poor and so on and yet you’re taking so much. It’s unfair, let’s renegotiate.
And then the man said am not renegotiating. Is this not your signature and all that. He went on like that until we got tired of asking him. Our former board led by Chief Ebitimi Banigo called him for a meeting twice and asked for renegotiation and he refused, saying he has invested. Eventually, the unions became restive. We got into an era of labour unrest in 2010 and 2011. The unions were simply fed up that somebody was holding the authority to ransom and yet he has refused to renegotiate. Staff cannot be paid and all that. They approached the National Assembly, the Senate Committee on Aviation conducted a public hearing and heard from both sides but concluded that we should dispense of concession agreement. But for some reason, FAAN couldn’t take that action at that time. The unions went to the Aviation Minister and she intervened and set up a committee to review the agreement and the company refused to show up and participate.
The minister said she wanted to use KPMG to audit Maevis transactions but they refused. They said they didn’t want KPMG nor any other auditing firm. They were just obstinate. Later, the case went to Mr President, and he said okay, the Ministers of Labour and Productivity, Aviation and Justice should look into the matter and deal with it. The three ministers met, listened to all the parties and instructed then FAAN to terminate the concession in terms of the concession agreement. So, stemming from that instruction, we issued Maevis with a 2-month termination notice on March 24, 2011, which elapsed on May 23, 2011. Effectively, Maevis was no longer a concessionaire of FAAN on paper. So, from then till now, we were held captive by this 600-pound gorilla. On Friday, we removed it.
Contrary to what Maevis claimed that we came with knives and cudgels and broken bottles and all that, it’s all a lie. We’re not thugs. He was the one who had four armed mobile policemen in front of his office. He also had one armed plain clothes security man and other contracted security personnel to provide him with security. This by the way was a breach of airport security by bringing in armed policemen without informing us into a restricted area. Nevertheless, our people came and politely told his security team that this is a Federal Government building that is owned by a Federal Government agency and so we’re about to evict a tenant of ours, so could you please step aside because you are also Federal Government personnel. In fairness to them, they cooperated and watched passively as the whole thing went. If there was any breakdown of law and order, they would have been compelled to act.
They also told the Maevis staff to hand over their On-duty cards and step out of the building. They also cooperated. So, I don’t know where they got this news that we destroyed their equipment which is our equipment. They are supposed to handover to us anyway. In fact, we were trying to safeguard the equipment so that they won’t be destroyed before we got there. The equipment were treated like eggs. We needed it. It’s off but at some point we’ll need it after we settle all the issues.
Security concerns of changing over from Maevis to SITA
There’s no such thing as security threat and lapses and all that. They’re just lying. United and Delta Airlines were the first to be on the SITA system. Anyway, it’s not true. While it takes 4-6 weeks to set up the Common User Terminal Equipment (CUTE) system and the Airport Operations Management System (AOMS), we did very careful planning for this one. We gave a 96-hour window for full cut off and cut over. We were way ahead of the curve and the major international carriers and others have fully come on stream on SITA system. On the first day, United and Delta were on the system. The next day BA, Iberia, Virgin Atlantic and others hooked on.
Advantage of SITA over Maevis
SITA is the top global service provider of ICT. They’re everywhere you go; in Atlanta Georgia Airport, USA and many others, they’re there. In Africa, they run the airport in Johannesburg, Nairobi, Cairo, Casablanca, Accra etc. SITA is at the cutting edge of the provision of this service. Now, all the things that were provided by Maevis, were not provided. Let me give you one example, one of their key things is the Flight Information Display System (FIDS). If you go to many airports, you’ll see massive FIDS, that’s SITA. Maevis has this small television screens that you can’t even see what it’s written on them and they call that the FIDS for the MMIA. You’ll see now the kind of service that will come up in MMA when SITA’s operations is in full steam. That’s what SITA does everywhere and they’ll be giving a service that is times 10 of Maevis at a cost that is less than a minute fraction of what Maevis was taking from FAAN for that non service. SITA will collect a commission of one dollar 40 cents per passenger travelling and that’s it. No enhancement fee and all what not.
The controversial enhancement fee
The concession agreement is for 2007-2017. Maevis comes and says that for what you’re earning in 2007, I’ll collect it for you and take 2 percent. Anything on top of that will be enhanced revenue that I’ve brought and so I’ll take 35 percent of that.
Now, the industry is perpetual growth industry. Good example, in 2007, there was no Arik and Arik is 51 per cent of our traffic now. Also there was no Dana, no FirstNation and so on. More so, there were no much international airlines as we have now and some have even increased their frequencies and all that. All these have nothing to do with Maevis. Yet, in 2007, we were doing about N700 million a month of revenue. In our budget of 2012, we are doing about N3.7 billion in revenue. So, of N700m of that N3.7bn, Maevis will take 2 percent. And of the N3bn, it’ll take 35 percent and they want to take that all the way to 2017. That’s just the simple picture. It’s a global precedent. It has never happened anywhere in the world and it’ll never happen. It was ‘awoof’. It was jackpot or lottery.
Airport infrastructural rot
The airlines can’t just accuse of us of infrastructural rot when they don’t pay for services rendered. Nevertheless, there’s a lot of infrastructure backlog in FAAN. It’s impossible to do everything at once. What is important is to have a plan; you prioritize and do the things that are most important first and in that order. We’re doing it. The truth is, we’ve to live with some deficiency for a while as we can’t handle everything at the same time. We’re focusing our resources on MMIA, Abuja, Port Harcourt and Kano.
We’re doing a lot of remodelling works in other airports too. But there are issues like airfield lights, perimeter fences etc. All these can’t just be done at once. It’s a gradual but steady process. By the end of this year, there’ll be a change in passengers’ terminal experience at the airports. It’ll be a huge change and thereafter, there’ll be the issue of addressing all the other things little by little. They’re invisible; they only become visible when there is a problem like the lighting issues etc.
But the one the passengers are not for the most is how they suffer in the terminal building and that’s what we’re addressing now. We’re remodelling 11 airports simultaneously. Ministerial directive to handover airfield lights and bird hazard control to NAMA When you get a ministerial directive, you don’t waste on it but act. The operations are not those you handover and walk away. You have to work together for sometime before you fully let go because it’s something we’ve been doing for a long time and they were not doing. We’re working in tandem till when we’ll let go fully so we’re in handover mood.
Magic wand in revamping FAAN
There’s no magic wand. It’s just a re-focusing on something that is important. Something had to give way for some other important things to take priority. So, because the payment of salaries and maintenance of the airports have become the priorities, it looks like there’s a magic wand. Sometimes, I feel we have forgotten what we’re here for. Now, we’re trying to remember what we’re here for. So, if you focus on those as priorities, then the other things that used to take the money, suffer a little bit. So one just has to deal with the pressure of the consequences of changing the focus. But we’re going to have some relief now, having taking off Maevis even as we build the business going forward because our cash flow is enhanced already because chunks of it are not going anywhere.
In the circumstances, we’ve done very well in enhancing security at the airports. We coordinate better now with all the security agencies than we used to. We used to have monthly security meetings but now they’re weekly. We review every situation every week and develop remedies and new strategies for whatever peculiar threat they are facing at each airport. We’re more in contact. I get the report, I circulate them. Everybody learns from everybody. Of course, we’re going into a new era where we’re going to be buying some sophisticated equipment. We simply have to respond to the threats we face. We have to be able to screen vehicles, screen people for explosives and all that. So we need to get these equipment.
The government is going to expend a lot of money to get all these hi-tech equipment. To even get these hi-tech gadgets, you need to upgrade the level of your people. So, there’s going to be a new approach to the training of our security personnel. A new approach to the intake, retention and retraining and all aspects around our security apparatus in the next few months. We’ll talk about them as we roll them out but right now, they’re in the oven, baking.
From the progress being made, I dare say that the first one will be Kano which will be ready in the next few months. Thereafter, may be the GAT phase 1. In short, monthly, we’ll be commissioning something and sometimes two things in a month over the next three months.
We’ll have four fresh or brand new terminals in Lagos, Abuja, Port Harcourt and Kano. Those fresh terminals will form part of our investment road show. It’ll sort of help us seal up the kinds of joint venture deals that will fund those terminals. They’ll be really beautiful terminals that’ll help us showcase the best of our country. We’re hoping that government itself will not have to fund it fully, but with joint venture hopefully at that stage. But the model is unfolding and let’s see how it goes. It’ll be any of a few options. But at this stage, we’re open. Are we going to build them?, yes, we are. As soon as we finish what we’re doing in MMIA, we start building the new terminal.
FAAN has the potential to be many times bigger than it is currently and I’m working towards putting it on the success track. We just have to make sure FAAN is upward bound just like its counterparts overseas despite our own peculiar environment.