Again, FAAN seeks suspension of its 25% revenue contribution to federation account
…insists on implementation of ICAO’s SARPS on airport infrastructure
The Federal Airports Authority of Nigeria (FAAN) has, for the umpteenth time, asked the federal government to suspend its 25 percent revenue contribution to the federation account in order to address the infrastructural deficit at the nation’s airports.
The Managing Director of FAAN, Captain Rabiu Yadudu, made the appeal on Saturday in Lagos, during an oversight visit of the senate and house of reps committees on aviation.
Yadudu explained that the airports were in dire need of infrastructural development, and the authority was cash-strapped due to the exigencies of Covid-19 and unrecovered debts.
To overturn the deficit, Yadudu said government support was highly needed in order to bridge the infrastructure gap at the airports, and one way to render such support is by suspending its revenue contribution to the federation account.
According to him, this is in compliance with the International Standards and Recommended Practices (SARPS) Doc 9562 on airport revenue generation put forward by the International Civil Aviation Organisation (ICAO).
He explained that the document provides that revenue generated by airports should be transparently re-invested wholly in operating and developing airport facilities.
“The Industry has infrastructural deficit which has to be bridged. Therefore, Government Support in this area is needed. This can be achieved by suspending the contributions to the Federation Account in compliance with ICAO Standards and Recommended Practices (SARPs) Doc 9562 on Airport Generation, which provides that: revenue generated by airports should be transparently re-invested wholly in operating and developing airport facilities,” Yadudu said.
He added that revenue generation in the industry was still low due to travel restrictions as a result of the pandemic but the authority was able to remit N16.7 billion to the federation account in December 2021, as a contribution to the Consolidated Revenue Fund.
“It is worthy to mention that even though FAAN does not have an operating surplus, we had to remit N16.7Billion to the Federation Account as a contribution to the Consolidated Revenue Fund as at the end of December 2021, for the year 2021 alone, in spite of the effect of the pandemic during this period,” he said.
Yadudu also said the authority has been able to execute some capital projects in the face of financial constraints in the last 3 years.
Some of the projects, according to him, include the building of new airport terminals in Lagos, Port Harcourt, Abuja, and Kano, among other projects.
Yadudu, however, said most of the key Projects listed under the authority’s 2021 Internally Generated Revenue (IGR) budget were still ongoing at various levels of completion.
These, according to him, include the expansion of the GAT (General Aviation Terminal) building in Lagos, procurement and installation of Disabled Aircraft Equipment Recovery System, construction of car park and landscaping at Enugu Airport, among others.
On financial projections in 2022 going forward, Yadudu said the authority was proposing a budget of N188 billion as against the N125.4 billion approved for the year 2021.
“The Authority is proposing a Revenue Budget of N188Bill for the year 2022 as against N125.4Billion approved for the year 2021, this gives an increase of 50.4%. This projection was arrived at with the hope that the effect of the pandemic would have been over thereby leading to an increase in passenger traffic, as well as a boost in the non-aeronautical revenue base of the Authority as already highlighted in the 2021 Budget performance,” said Yadudu.
He called on the committees to help recover outstanding debts owed by some airlines with a view to actualizing its financial projections.
“The Authority is still faced with some challenges on debt recovery most especially on debts owed by ARIK Air which constitutes a significant portion of the Authority’s debt portfolio.
“We commend the effort of the Committees on Aviation with respect to intervention so far in the recovery of ARIK debts inherited by the Asset Management Corporation of Nigeria (AMCON). However, we need further assistance to bring the issue to a logical conclusion as the huge debts are still outstanding,” said Yadudu.
