What are the facts of the Kotoka International Airport ‘sale’ brouhaha?
- Background
In April 2019, a cabinet memo indicated that a private company was being considered for an agreement which would have the Aviation Ministry to cede the management of terminals of Kotoka International Airport. That company was Tav Airport Holding Company limited.
Under the proposed terminal management contract, terminals within the airport were to be managed by the airlines while the ownership of the airport and its operations remained the responsibility of the state.
“The concessionaires assume most of the risk for potential downturns in the airport revenues but also receive a greater reward if there is an unexpected increase in airline passenger traffic,”
However, the draft proposal pointed out that the “ownership of the airport and its operations are the responsibility of the State. The State recovers from the terminal manager its allocable operating and maintenance expenses according to the guidelines of the terminal lease. The terminal manager will pay all other operating and maintenance expenses and in turn recover all the costs and expenses, in addition to management fee, from the airlines through quarterly user charges.” EXCRPTS OF MEMO ATTACHED
(https://starrfm.com.gh/2019/04/private-firm-to-run-kotoka-international-airport-leaked-cabinet-memo/)
The aviation minister in a statement acknowledged that Government was considering an offer to partner the Ghana Airports Company Limited “to provide management services to manage the financial and operational functions for the development of the GACL” but denied suggestions that there were plans underway to privatize the Kotoka International airport.
In media interviews, Minister Joseph Kofi Adda added that even though there are no immediate plans to privatise the facility, he was open to discussions that will help enhance the value of the airports in order to enable them pay dividend to government.
“The only question I will ask those putting this out there is that how many times has the airport paid dividend to the nation? The last five years have we paid dividend to the nation? If there is any arrangement that is going to enhance the value of the airport and enable us pay dividend to the nation we will be happy to look at it,”
(https://starrfm.com.gh/2019/04/govt-not-privatising-kotoka-int-airport-kofi-adda/)
The Staff subsequently petitioned the President over the matter, accusing the aviation minister of attempting to privatize the management of airports in the country.
In July 2020, the matter was reignited after another memo (find attached) was sighted indicating the President had granted executive approval for the ministry of aviation “to facilitate engagement of TAV-SUMMA Consortium as strategic partners of the Ghana airports company limited for the improvement of service delivery and expansion of infrastructure at the Kotoka International airport”
Workers of the company went on demonstration, once again accusing government of attempting to hand over management of the airports to a Turkish company.
The ministry once again denied this.
- Claims
- The nature of the agreement
WORKERS; The workers claim ‘the use of the words sale and privatization have been out rightly ruled out as the real description of the intentions behind government policy. Rather ‘strategic partnership and Public Private Partnership PPP have been the preferred choice of words. It is indeed a fact that the airport has not yet been ‘sold’ or privatized. But we are yet to know what type of strategic partnership or PPP arrangement would be opted for.
During the demonstration of the workers on July 7, 2020, some workers did however allege there were attempts to out rightly cede management of the airport i.e. privatization.
CUE:
AGREEMENT DETAILS;
Per the agreement sighted by StarrFMFactChecker, Tav-Summa Consortium has proposed to develop and manage the Kotoka International Airport ‘for a duration, which will be established by the new company under an appropriate PPE structure’
Also, Under the PPE structure, a new company will be created to ‘have management and operation rights’ while the assets of the airport will belong to the Ghana Airports company limited
- Ownership
WORKERS; in a news conference addressed by the General Secretary for the Public Services Workers Union of TUC Bernard Adjei claimed that ‘this PPP arrangement, they are proposing 33% 33% for themselves which will be 66% and then GACL as we know now having 34% in it.’ Whenever we see the word PPP or strategic partnership we go into the details and see the shareholding arrangement. Once we see that the shareholding arrangement gives a higher percentage to the strategic partner what it means is that you really want to sell it, and in fact when you look at the proposal, it is also been proposed that there is a change of name and indeed when there is a change of name and where they have the highest percentage what I means is that they control the company, that Is actually the fear.’
AGREEMENT DETAILS;
Per the agreement sighted by StarrFMFactChecker Tav-Summa Consortium has proposed the formation of a new company which will take over the operations of the existing company per the terms of engagement. ‘The assets will belong to the GACL but the new company will have management and operation rights. The new company scope will include airport functions at KIA including airport city and excluding air navigation services and government functions’ ‘Tav and Summa will each have 33% shareholding in the company while GACL will have 34%’
‘The new Company will take over the debts of the GACL (up to 300 USD) and refinance the debt in new terms’
- Jobs
Workers of the GACL fear massive job losses should the agreement be signed in its proposal form.
CUE:
AGREEMENT DETAILS;
Tav-Summa Consortium says ‘current employees at KIA will be retained. Job creation during investment periods as well as additional employment in the region will be induced by the growth in airport traffic.’
The proposal further states that the new company ‘will be managed with a mind-set to maximize revenues and minimize expenses; whilst current employees of the GACL at KIA (except employees that GACL or the ministry of aviation would like to retain) will be retained by the new company.
- Follow ups
Emails have been sent to both Tav Construction and Summa requesting further details.
Unfortunately, there has been no response.
Rating: Pending Verdict