A strategic approach to the development of the Delta State economy: the Asaba international airport as the growth driver

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By Professor Sylvester Monye, MFR

SUN, MAY 28 2017-I am delighted with the opportunity to address this fledgling and yet a very important body.  I want to specially thank my senior brother Professor Epiphany Azinge, SAN, and the entire leadership of this body for inviting me to apprise the good people of Aniocha Oshimili of how the Okowa Administration is turning the fortunes of the Asaba International Airport for the good of our people. As a keen follower of vibrant debates on the group’s WhatsApp platform, I know that we are in for a robust discussion today.  To set the stage for the expected interaction, please permit me to speak to my prepared speech, and then conclude with an illustrative PowerPoint presentation.

SETTING THE CONTEXTS

At the onset of this Administration, Governor Ifeanyi Okowa inherited a debt profile that was both staggering and debilitating. Contractors debt and other liabilities were in excess of N500 billion.  The wage bill was equally humongousatabout N7.6 billion monthly. There was alsoa substantial pension payment arrears, debt service obligations, and other considerations that made governance ahuge challenge.  The situation was exacerbated by the collapse of the price of crude oil in the international market. So the initial problem was that the Budget inherited could not even be funded. As you are all well aware, there are essentially three ways a budget can be funded, namely:

(a)          FAAC monthly allocation;

                (b)          Internally Generated Revenue sources; and

                (c)           Borrowing.

These sources were all severely challenged – FAAC allocation had dropped from as high as N19 billion monthly to just about N3.5 billion.  The IGR, which was largely dependent on the performance of the oil companies, had also tumbled. The new Administration could not even borrow because the State was already over-geared.

Therefore, the first challenge was how to pay salary to the huge workforce.  To put it in context, the entire Federal Public service has about 83,000 workers while Delta State alone has 55,000 verified workers.  The neighbouring Stateof Edo has 19,000 workers.  What a mess? How can we talk about capital projects when you can’t even pay salary?  But with determination, maturity and experience, Governor Okowa was able to stabilize the badly drifting ship.  He did all that you would expect from a digital Administration – biometric, contracts reviews, debt payment re-scheduling, etc.   In the end, the government was able to pay salaries regularly.  Believe me, that was a major achievement then.

Having stabilized the ship, the next phase was now to put some markers on the ground.  Afterall, the government was not elected just to pay salary.  Consequently, with the various support schemes from the Federal Government, such as Budget Support and the Refund of the Paris Club over-deductions, the Governor was able to embark on massive infrastructure work in the State, particularly on schools rehabilitation, drainages, roads work and upgrade for medical facilities and centres.  It is noteworthy that between May 29, 2016 and May 2017, the Okowa Administration has constructed over 580 kilometres of roads, touching on every community in the State.  Aside from the general push for schoolsrenovations, three major technical colleges in Sapele, Ofagbe and Agbor, have been massively upgraded in line with the Administration’s focus on technical/vocational training.  In total, over N11 billion has been expended on the education sector.  In agriculture, the Administration has recorded a lot of successes in aqua-culture, cassava and rice production.  As an illustration, the State could only boast of just one functioning tractor at the start of the administration, buttoday, we have at least 66tractors workingacross the length and breadth of the State.  Our support for agriculture also includes a robust land bank programme.  On youth empowerment, the Administration has developed a number of vibrant entrepreneurship schemes such as the YAGEP and STEP with excellent results.In a nutshell, one can say that a lot is going on, despite the challenges.

THE STRATEGIC APPROACH TO THE DEVELOPMENT OF DELTA STATE

As laudable as these achievements are, the Governor considers them necessary but not sufficient dividends for his election as the governor of Delta State. The Administration is now focused on the next level of our forward march, focusing on the “big meal ticket” projects that will turnaround the fortunes of the State and create a solid and sustainable economy that will provide jobs for our people.  These ones require more time to come to fruition. Although these have been long in coming, I am pleased to inform you that detailed planning has been completed for the development of: The Delta International Commercial City, Asaba (A Smart City Initiative), Agro-Industrial Park in each of the three Senatorial Districts (The one for Delta North is located in Ogwashi-Uku, just by the Dam), Gas-Based Industrial Park in Kwale (for light industries), Restructuring and completion of the Delta Independent Power Project, Oghara, The Restructuring of the Warri Industrial and Business Park, The Development of a Steel Plant near the Koko Port (MOU already signed with a Chinese Investor), The concessioning of the massive Warri Water Works and The concessioning of the Asaba International Airport.

 

THE ASABA INTERNATIONAL AIRPORT

As the focus of my paper is on Asaba International Airport, let me now zero in on the role of the Airport as a growth-driver.Distinguished ladies and gentlemen, It should now be obvious that all the major initiatives being pursued by the Administration (particularly those located in the Delta North axis) cannot effectively take-off without a functional and sustainable airport platform for the in-bound and out-bound cargo traffic.  Hence the Strategic push by this Administration for the completion of the Asaba Airport to an acceptable international standard both in name and operation.

As we are all well aware, the Asaba International Airport was initiated by the Administration of Dr. Emmanuel Uduaghan in May 2008, to provide a safe, fast, and reliable means of transportation, linking Asaba to other commercial and political centres across the country and beyond.  Other reasons for the development of the airport include: Provide a better mode of transportation that is safe, functional and cost effective to the people and business community in the State and its environs, Provide employment opportunities for both the skilled and unskilled labour, (from the construction stage to the commencement of operations),Take advantage of the commercial and industrial cities like Onitsha, Nnewi, etc.

Contract for the construction of the Airport was initially awarded to Messrs ULO Consultants Ltd on the 3rd of February, 2008 for a total sum of N6.4 billion.  It is to be noted that the scope of work and contract value has changed significantly over time.  Secondly, other contractors have also been working at the Airport.  To date, the State has spent about N39 billion to the various contractors involved in the development of the Airport.  The Airport which commenced commercial flight operation on the 13th of July, 2011, has handled over 10,000 passengers, with an average of 260 flights per month.

Although considerable progress has been recorded, the Airport is far from realizing its full potential.  In order to get it to the level required for commercial viability and sustainability, substantial resources still need to be put into the Airport.  In fact, our latest estimate is that we would require an additional investment of about N45 billion to achieve our stated vision for the airport.Unfortunately, the State is not in any position to make any further investment in that project.  Consequently, Governor Okowa needed to articulate a new strategic approach that is realistic, achievable and self-funding. This approach is anchored on our realization that the Asaba International Airport will be the critical “growth–driver” for the economy of the State, as all the big meal ticket projects would rely on the success of this brownfield asset.

The beautiful location of the Asaba International Airport makes it the fulcrum for the development of the Delta – South East Economic Corridor.  The Onitsha market represents the largest concentration of economic and commercial activities in West Africa.  It has also been empirically proven that most of the goods sold in this market originate from China, Malaysia, India, Taiwan, Thailand and other far Eastern countries, through the Lagos airport, with the attendant cost implications, security and logistics challenges.  It should therefore, not bea surprise for anyone to hear that over 40% of the passengers who travel on Emirates, Ethiopian, and Kenya Airways are Igbo traders. It is noteworthy that during our initial interaction with the Onitsha Traders Association, their members overwhelmingly expressed preference for the use of the Asaba International Airport for their in-bound Cargo when it is ready, for so many reasons.

It is therefore obvious that the direction and focus of our State development agenda makes it imperative that we sought professional support for its planning and execution.  It is against this background that Senator Dr. Ifeanyi Okowa approved the appointment of the Halcrow Infrastructure Consortium, after a vigorous selection process, to act as Transaction Advisers to the Government, to midwife the concessioning of Asaba International Airport, as a way to upgrade itin order to ensure that it realizes its full potential.  The Halcrow Infrastructure Group is a global advisory firm with excellent antecedents in similar transactions elsewhere.  For example, the firm was the transaction adviser for the development of both Abu Dhabi International Airport and Toronto Airport (the home base of Air Canada) and many more.

The terms of reference for the Transaction Advisers include: Completion of project preparation, PPP options Analysis and PP transaction structuring, Market sounding to confirm decision or determine scope, structure and timing of the proposed concession, Financial Analysis modelling, Designing and managing the procurement and evaluation process, inclusive of information memorandum, supporting documentation to be made available to potential bidders and tender documentation and Review of enabling legal and regulatory Framework.

It is my honour to inform this august gathering that our Transaction Advisers have gone through the processes and have now produced an Outline Business Case (OBC) that showcases the design of the Aerotropolis, Viability Report and Financial Requirements from prospective investors as well as the payback period.  I am happy to say that a review of the Airport Master Plan and the Outline Business Case shows that it is a compelling investment opportunity for the discerning investors.

The Expected Role for the Njiko Aniocha Oshimili As  We Move Forward.

Distinguished ladies and gentlemen, I would like to conclude this presentation by saying that I have seen the energy and commitment of our people to the development of the Aniocha Oshimili economy.  This is manifestly obvious to the followers of the Njiko Aniocha Oshimili WhatsApp platform. The development of the Asaba Aerotropolis has now presented our people the opportunity to transit from just showing interest and commitment to ACTION.  This project is Deltan – it isour OWN.  Everyone has a role to play in the actualization of this vision.

Those who are not sufficiently resourced to invest in this project can still be involved in the all-important advocacy work. Let us commit to the marketing of the Asaba Aerotropolis. Let us create a positive buzz around it.  It helps investor confidence.  Let us go out of this Summit and tell Nigerians with conviction that the Okowa Administration is really really working!!

For those of us who have the resources to invest, I say to you that the value of your investment can be immeasurable and indeed catalytic for the international investors. The old adage that charity begins at home, suffices here.

Together, we can achieve this vision to transform our economy.theG&BJuornal-2017

A Paper Presented By Professor Sylvester Monye, MFR, At The Economic Summit Organized By The Njiko Aniocha Oshimili In Asaba last week Thursday

DCSL 90X780

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