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Davao int’l airport may be cut from list of PPP projects

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Davao int’l airport may be cut from list of PPP projects

The Department of Transportation (DOTr) is mulling over the removal of the most coveted airport among the regional air gateways being put up for auction under the Public-Private Partnership scheme, worrying potential bidders.

Transportation Secretary Arthur Tugade told reporters Thursday the department was considering the removal of the Davao International Airport, one of five regional airports listed as part of the PPP pipeline.
The PPP auction involved maintenance and development contracts for airports in Davao, Bacolod, Iloilo, Laguindingan, and New Bohol as well as various expansion projects, valued at a combined P108 billion.
It was launched under the Aquino administration.
Because these were mostly smaller-scale airports, Davao Airport, the third-busiest in the Philippines, was easily the most prized.
The DOTr said the Davao gateway handled 2.8 million passengers in 2012—a figure that has likely swelled.
Tugade said the Davao Airport was included in the PPP under different economic conditions, and prior to the election of President Duterte, previously the long-time mayor of Davao City.
“It might be better if the government first [develops] Davao Airport. It is a different economic scenario now,” Tugade said.
He said no formal decision had been made yet. However, he said talks were leading toward the removal of the Davao Airport from the PPP scheme.
He cited the current administration’s stance toward a so-called hybrid PPP scheme, which would be combined with other financing options such as overseas development assistance loans.
Duterte’s economic managers have openly stated a preference for government to first build the projects, and bid out the operations and maintenance contracts to the private sector. They argued this would lower the cost of public services since there would be no heavy investments for the private sector to recover.

This was a departure from the previous PPP policy wherein private sector handled both the development cost as well as O&M aspects.

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The DOTr recently pushed back the auction timeline, saying the qualification deadline would fall on June 15, 2017 instead of May 11.

This also comes on the heels of the government’s decision to “unbundle” the regional airports PPP, meaning each airport would be bid out separately instead of in bundles or packages of multiple airports.

Would-be bidders interviewed by the Inquirer said the unbundling and the removal of the Davao Airport made the PPP less viable as a whole.

Five groups were pre-qualified during the original process. These were Metro Pacific Investments Corp., San Miguel Corp. with South Korea’s Incheon Airport; Aboitiz Equity Ventures with VINCI Airports; Megawide Construction Corp. and India’s GMR Infrastructure; and the Filinvest Group with Japan’s Sojitz and Jatco.

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TAGS: Business, Davao International Airport, News, PPP
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