FAAN Concession Disputes: Why Airport PPPs Cost Nigeria Billions in Legal Losses

The Federal Airports Authority of Nigeria (FAAN) faces a mounting crisis. A series of controversial concession agreements has led to decades of legal battles. These disputes have cost the Nigerian government billions in liabilities, claims, and compensations. The ongoing litigation threatens to stall critical airport modernization efforts across the country.

The Cost of Contractual Conflict

FAAN is currently managing over 60 active cases in Nigerian courts. These lawsuits stem from alleged aviation contract breaches with private concessionaires. The total financial exposure is significant. Experts estimate the losses run into the tens of billions of Naira annually.

One major liability is the case involving Akande International Corporation (AIC) Limited. An arbitration panel awarded AIC $48 million in damages in 2010. This was for the breach of a 50-year lease agreement at Murtala Muhammed International Airport (MMIA), Lagos. The land was originally for a flight-path hotel and resort complex. FAAN sought to reclaim the land for its master plan. The dispute has since escalated to the Supreme Court of Nigeria. The UK Court of Appeal, in November 2020, affirmed AIC's right to enforce the $48 million award with interest. This legal liability alone is estimated to be nearly N70 billion at current official exchange rates.

The Tollgate and AOMS Controversies

Another high-profile case involves Integrated Intelligent Imaging West Africa Limited (I-Cube). The company managed the MMIA access gate (tollgate) for over a decade. In February 2020, aviation unions violently seized control of the tollgate. They claimed the concession contract had expired and FAAN was losing revenue. I-Cube's Managing Director, Moyosore Niran, stated the company was forcefully ejected. This happened without formal notice or respect for the agreement's renewal clause. The company was remitting N40 million monthly to FAAN until its forced removal.

Similarly, the Airport Operations Management System (AOMS) concession with Maevis Nigeria Limited ended poorly. FAAN terminated the 10-year agreement in 2012. The agency cited a directive from the Aviation Ministry. The goal was to improve FAAN's revenue profile. Maevis CEO Tunde Fagbemi insists his company fulfilled all obligations. He claims public servants frustrated their efforts. A Lagos High Court in 2013 awarded N5 billion in damages to Maevis. This was against FAAN and a subsequent contractor, SITA. The case remains pending, with damages accruing interest.

The Intractable MMA2 Concession Crisis

The domestic terminal two (MMA2) concession is another seemingly endless dispute. Bi-Courtney Aviation Services Limited (BASL) operates MMA2. The core disagreement is the concession's tenure. BASL insists the Build, Operate and Transfer (BOT) agreement is for 36 years. FAAN maintains the contract was for 12 years. This MMA2 concession crisis has led to the neglect of a hotel and conference center project. A court awarded N132 billion to BASL against FAAN. This was for operating the General Aviation Terminal (GAT), which BASL claims was part of the MMA2 concession.

Expert View and Government Response

Aviation analysts point to weak contracts and a failure to respect agreements. Dr. Alex Nwuba noted that a properly drafted contract should not lead to decades of dispute. Dr. Kingsley Nwokoma urged FAAN to reorient its legal team. He stressed the need for world-standard agreements to prevent future loopholes. The current state of litigation is impairing airport development. For example, the AIC land dispute has restricted the expansion of aircraft parking at MMIA.

Minister of Aviation and Aerospace Development, Festus Keyamo, SAN, has vowed to address these legacy issues. The government is moving forward with new concession plans for terminals like Port Harcourt International Airport. Keyamo has promised transparency and engagement with aviation unions. He also issued a directive barring the sale of FAAN properties. This is to ensure strategic assets remain for aviation use. The Minister's legal background is seen as an asset in resolving these complex, long-standing disputes.