Senate raises alarm over FAAN’s insolvency




The Senate on Thursday raised alarm over the financial status of the Federal Airports Authority of Nigeria (FAAN), saying if the agency is allowed to continue the way is going, it may collapse like the defunct national carrier, Nigeria Airways Limited (NAL).


This is coming on the heels of the Federal Government’s revalidation of the Air Operators’ Licence of Aviation Development Company (ADC) Airlines, four years after a fatal crash of one of its airplanes in Abuja killed all 104 people on board. Government has also approved the remodeling and building of new terminals of major airports across the country to meet international standards. Harold Demuren, director general, Nigerian Civil Aviation Authority (NCAA), announced this in Lagos yesterday. “We have returned their license”, Demuren said.


Speaking at a one day investigative hearing on the power outage at the Murtala Muhammed International Airport (MMIA), Lagos, held yesterday in Abuja at the instance of the Senate, Anyim Udeh, chairman, committee on aviation, said FAAN is on the verge of collapsing under the weight of huge debt from its concessionaires – private and government agencies. The fire incident occurred on May 9, this year. The debt, according to him, is over N17.9 billion, apart from those that are yet to be accounted for. Fidelia Njeze, aviation minister told the gathering that her ministry is awaiting release of funds for the remodeling and building of new terminal buildings in major airports in the country.


Udeh, who pointed out that 10 top debtors of the agency owe N9.085 billion wondered why FAAN has been unable to collect the debt to shore up its revenue and save the system from collapse. “The obvious questions are who are these debtors; why are they not paying and why is FAAN unable to collect these debts? The debt issue is virtually crippling FAAN’s operations. Because of the huge debt, FAAN as a service provider is unable to adequately provide services and rehabilitate the infrastructural facilities at our airports, including MMIA constructed over 30 years ago. But our focus here is to assist FAAN collect this huge debt. To do otherwise is to allow FAAN collapse like Nigeria Airways under the weight of debt and mismanagement”, he said.


Pointing out that passengers are groaning under bad conditions of the airports, he said the situation inside the terminal building is almost always chaotic, as takes as long as two hours for luggage to crawl out of the slow-moving conveyor belts with the departure and arrival halls’ cooling system out of commission while the toilets are overstretched by the volume of passengers using the few ones available. Udeh urged the debtors to immediately reconcile their accounts for the agency to get back on track financially. FAAN’s pfoile of debtors, he said, include airlines N9.266 billion; management concessionaires N4.747 billion; handling agencies N1.757 billion; government agencies N562 million; oil marketers N433million while others that were not mentioned owe N1.172 billion.


Altogether, operational domestic and international airlines owe the agency N4.18 billion and N5.083 billion respectively. Similarly, dormant domestic and international airlines owe N363.2 million and N2.261 million respectively. Airlines accounted for 52 percent of the total debt, he added. Udeh said that FAAN lacked executive capacity, had poor record keeping with staff and management poorly trained. He also accused some of the staff of fraudulently contributing to the rot in the agency, adding that they had in the past issued credit notes to customers without management approval. “They destroy copies of invoices issued to customers and negotiate reduced payment terms with customers without management approval in return for kick-backs,” the senator alleged.


He also alleged that interference with management and those he described as highly placed government officials had contributed to the rot of the agency saddled with the responsibility of maintaining airport facilities.But Tunde Fagbemi, managing director of Maevis Nigeria, the concessionaire responsible for automation of FAAN’s revenue collection system, told the hearing that the solution to FAAN’s challenges lies in professionalizing the agency and the automation of airport operations.


Maevis had since 2007 began the Airport Operations Management System (AOMS) at Lagos and Abuja airports, a project Fagbemi said had generated over N18 billion to FAAN from only Aero and non-Aeronautical services.Fagbemi concluded that as long as FAAN refuses to change from the old ways of transacting business and embrace new technological approach to generating revenue, its situation would worsen.






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