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Business News of Monday, 11 March 2013

Source: B&FT

GACL to retain taxes

The Ghana Airports Company Limited (GACL) is to retain all revenue it generates through taxes for the development and maintenance of airport infrastructure in the country, Mr. Seth Terkper, the Minister of Finance and Economic Planning, has said.

“The Kotoka International Airport is not only serving as a hub for the West Africa region, but in addition the number of passengers and airlines are increasing -- putting the facilities in use at the airport under pressure. It is the intention of Government to upgrade the facilities to higher standards.

“Currently, revenue raised from the Airport tax is shared between the GRA and the Ghana Airport Company. I am proposing that the Ghana Airport Company be allowed to retain all Airport tax collections,” he said.

This was contained in the budget statement presented and approved by Parliament last Tuesday. Over the past two months there have been rallying calls for government to rethink the use of airport taxes, as pressure on the country’s aviation infrastructure intensifies.

Under the current arrangement, which has been in place since 2001, 60 percent of all airport taxes go directly to Government to support the national budget, while 40 percent is left for the supervising entity, the Ghana Airports Company Limited (GACL), for maintenance, renovation and development of aviation infrastructure.

About GH¢37million and GH¢47million realised in airport taxes in 2010 and 2011 respectively went to support the national budget.

Stakeholders contend that in light of the rapid growth of the aviation sub-sector over the last few years, the arrangement has deprived the GACL of the much-needed funds for the maintenance of infrastructure.

Mr. Twumasi Ankrah Selby, Chief Director of the Ministry of Transport, told the B&FT in an interview that the new proposal by the Minister “will set-off the development of aviation infrastructure in the country.

“The GACL will now be able to undertake the development and maintenance of airport facilities in the country. Because of limited funds, that is why the regional airports like Kumasi are in their current state. They [GACL] will now have enough money to maintain, upgrade, and do periodic maintenance.”

The International Civil Aviation Organisation’s (ICAO) regulations postulate that “airports may produce sufficient revenues to exceed all direct and indirect operating costs (including general administration, etc.) and so provide for a reasonable return on assets at a sufficient level to secure financing on favourable terms in capital markets for the purpose of investing in new or expanded airport infrastructure and, where relevant, to remunerate adequately holders of airport equity.”

The increase in flight frequencies of 33 scheduled airlines servicing the Kotoka International Airport (KIA) and an increase in international passenger throughput to 1.3 million (September 2012 estimate) have necessitated the renovation of the only international airport in the country.

While passengers have bemoaned the general facilities within the country’s airports, domestic operators have cited the non-availability of runway lights at the Kumasi and Tamale domestic airports for their inability to operate late-night flights to those destinations.

The GACL last month indicated that it was seeking to raise US$730million from public and private sources to develop facilities at the five airports in the country.

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