MANILA, Philippines--The Bangko Sentral ng Pilipinas (the Philippine central bank) has cleared a $400-million bridge financing, which the Manila International Airport Authority (MIAA) will use to compensate Philippine International Air Terminals Corp. (PIATCo) for the construction of the Ninoy Aquino International Airport Terminal 3 (NAIA 3).

BSP sources said the policy-making Monetary Board last Thursday approved the loan facility which the MIAA had sought from state lenders Land Bank of the Philippines and Development Bank of the Philippines.

Landbank and DBP will each contribute $200 million for the bridge loan to MIAA. The loan will carry a one-year term. It is set to be disbursed in the third quarter.

Landbank president Gilda Pico said the two government banks had decided to provide the facility so that MIAA could reimburse PIATCo for NAIA 3.

Implications
Sources said the central bank, which is mandated to screen all borrowings by the state, had considered the implications of the big loan facility, especially since the MIAA would borrow the amount in its peso equivalent.

But the BSP had concluded that the transaction would not have a substantial impact on domestic liquidity.

The Fraport-led PIATCo consortium had invested heavily in the construction of NAIA 3 before it was eased out of its contract with the government by the Supreme Court.

In its May 2003 ruling, the high court said that the PIATCo deal was "grossly disadvantageous" to the government.

PIATCo has since turned to international and local arbitration courts to recover its investments.

Contractor Takenaka Corp., which had built the terminal, said the PIATCo consortium had spent $290 million to put up NAIA 3. But PIATCo claimed that its expenses had amounted to $650 million.

Shortly after the Supreme Court ruling, a Pasay City court issued a writ of possession in favor of the government. However, it also ordered the government to make an initial payment of P3 billion to PIATCo.

NAIA 3, which was mothballed for six years, was supposed to serve around 13 million international passengers annually.

Proffered value
At present, the airport is partially operational. It only services domestic flights.

The MIAA now operates four terminals. The others are NAIA 1 and 2 (Centennial Terminal), and the Manila Domestic Terminal.

The government earlier paid PIATCo $62 million in "proffered value"--a term that describes the amount to which both parties in a court dispute are comfortable with at an initial stage. It is not an actual down payment.

PIATCo continues to seek compensation for the terminal's construction cost.

The NAIA 3 terminal recently opened its main hall--around 20 percent of the facility--which services eight local flights.

The load is expected to carry a daily passenger average of 500 to destinations like Caticlan, Tuguegarao, Laoag, San Jose in Mindoro and Naga.

The government had twice postponed the inauguration of the NAIA 3 terminal because of structural defects that were traced to the collapse of a gypsum board ceiling at the terminal's arrival area on March 27, 2006.

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