Funding for Mactan airport project OKd
MANILA-based Asian Development Bank (ADB), the region’s biggest aid provider, has thrown its support behind the upgrading of the Mactan Cebu International Airport (MCIA), enforcing the legitimacy of the project that was hounded by controversies early on.
In a statement, ADB said it had approved a $75-million loan for the expansion and renovation of MCIA to boost passenger traffic at the country’s second-largest airport.
The project is expected to support inclusive growth in the Visayas region, the ADB said. Upgrades for MCIA is the first large scale public-private partnership (PPP) project awarded by the Aquino administration.
The financing for the project also includes debt of P20 billion ($450 million) from a consortium of Philippine banks composed of BDO Unibank Inc.; Bank of the Philippine Islands; Development Bank of the Philippines; Land Bank of the Philippines; Metropolitan Bank & Trust Co. and Philippine National Bank.
“ADB’s involvement demonstrates its commitment to assist the (Philippine) government in developing critical infrastructure, the lack of which has been hampering new investments in the country,” said Christine Genalin Uy, investment specialist in ADB’s Private Sector Operations Department.
“The project will increase tourism, and support industry and agricultural activity, thus creating employment opportunities in the province of Cebu and its neighboring provinces,” she said.
Cebu is among the fastest growing regions in the Philippines and a major contributor to the country’s economy. It is the gateway to the Visayas but the existing airport in Mactan can no longer cope with the surge in passenger numbers.
Mactan Cebu Airport, which opened in the 1960s, was designed to serve up to 4.5 million passengers a year but in 2014 it served more than 7 million.
The project—which aims to deliver high-quality airport terminal operations in line with international standards—will include the construction of a new passenger terminal and renovation of the existing one, as well as providing new commercial facilities.
Passenger capacities at the new terminal and upgraded one will reach 12.5 million each year. The project will be developed under a 25-year concession agreement for the operation of both terminals and commercial outlets.
The loan from ADB and cofinancing from the consortium of private banks will be provided to GMR Megawide Cebu Airport Corporation, a consortium of India’s GMR Infrastructure Ltd and Philippine construction firm, Megawide Construction Corp., which won the bidding for the expansion and upgrade of the airport.
India’s GMR Infrastructure is the fourth largest private airport operator in the world, while Megawide is recognized as a local leader in the use of cutting edge construction technology.
The chief rival bidder for the project, local property giant Filinvest Development Corp., earlier sought Megawide’s disqualification. One of GMR’s board of directors also held a post with another company involved in the bidding process, said Filinvest, which had partnered with the developer of Singapore’s Changi airport to pursue the Cebu contract.
Filinvest submitted the second-highest bid for the project, behind Megawide.
