Business News of 2014-08-01

Airports Company unveils big ambitions

The Ghana Airports Company Limited (GACL), on the back of posting an impressive GH¢19million profit in 2013, has set for itself ambitious targets in a three-year project to transform the aviation industry.

Central to this is the investment of US$600million over a three-year period to enhance and expand airport infrastructure and services in the country.

Ecobank Ghana is leading a syndicate of banks to provide the funds, of which the first tranche of US$200million is expected at the end of the year. The remaining US$400million will be received by the close of next year.

Charles Asare, Managing Director of GACL, said: “The board approved and we appointed Ecobank as the financial advisor with the mandate to raise the money for us. That money will be used to address our infrastructure needs. The first timeline is by the end of the year. We are expecting US$200million, and then the US$ 400million by end of next year.

Given a new lease of life following the promulgation of the Airport Tax Amendment Act in 2013 – which allows the GACL to retain 100 percent of its revenues – the company’s management has set up a special fund solely for airport infrastructure. It said 70 percent of the revenue from its Airport Passenger Service Charge (APSC) will be kept in the fund to service the loan.

Under the past arrangement, which had been in place since 2001, 60 percent of all airport taxes went directly to the Ghana Revenue Authority to support the national budget -- while GACL retained 40 percent.

“The arrangement has been concluded to enable GACL retain 100 percent of the APSC,” Mr. Asare said.

“About 15 percent will go to other stakeholders, mainly the Ghana Civil Aviation Authority (GCAA). Of our 85 percent, we have decided internally to keep 70 percent in a fund that will purposely be used for infrastructure development.

“Once we are able to show the banks that this fund is there, they will know that we have the cash flows. I am taking that information to the banks to raise US$600million against those future flows which will be used to service the loan.”

Part of the money will be used to finance ongoing developments at the Kotoka International Airport (KIA). These include expansion of the arrival hall, construction of a new terminal (Terminal Three), re-roofing of the entire terminal building, and installation of two more baggage carousels.

The resurfacing of the Kumasi runway, expansion of the terminal building at the facility, and installation of runway lights to enable night flights will also be financed from the syndicated loan.

Extension of the runway at the Tamale Airport to meet international standards and construction of ancillary facilities are the other projects to be undertaken.

The GACL, holding its second annual general meeting (AGM) in Accra, announced a net profit of GH¢19.1million, compared to a net loss of GH¢84.2 million in 2012.

Domestic passenger throughput during the 2013 financial year grew by 43.3 percent to 780,000 in 2013 from 540,000 in 2012.

International passenger traffic however dropped by 3.3 percent to 1.67million in 2013 compared with 1.72million in 2012.

Mr. Asare said “the growth in domestic passenger traffic is expected to continue and therefore will require additional investments in infrastructure.”

Source: B&FT
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