DOTC awards controversial Mactan-Cebu airport contract to Megawide-GMR

MANILA, Philippines—An expanded “world-class” international airport for Cebu, one of the country’s busiest tourism and business hubs, may soon be under way after Department of Transportation and Communications finally awarded the coveted public private partnership contract late Friday.

The partnership of Megawide Construction Corp. and India’s GMR Infrastructure, the frontrunner in the bidding, was named the winner of the  government’s first PPP contract for an airport, after the DOTC resolved issues raised by the second-closest bidder that delayed the process by almost three months, transportation department spokesman Michael Sagcal confirmed late Friday.

Sagcal said a formal statement was expected to be issued Saturday and that Megawide was already informed Friday night.

The DOTC bids and awards committee made the decision Friday, a few days past a self-imposed deadline it had promised lawmakers, who sought an inquiry into the bidding process for the P17.5 billion project.

The award resolves allegations raised by No. 2 bidder Filinvest, a partner of Singapore’s Changi, over the financial capability of GMR, which operates airports in New Delhi and Hyderabad. Filinvest, which sought the disqualification of Megawide-GMR, also alleged there was a violation of the conflict-of-interest provision.

Megawide-GMR, which was expecting an award as early as Jan. 6 this year, has denied all allegations.

Developments at the Mactan-Cebu Airport, the country’s second-busiest, are being closely watched by investors given its potentially lucrative position as a key gateway to one of the biggest Philippine tourism and business hubs outside Metro Manila.

The PPP deal drew a total of seven bidders, which included the country’s biggest conglomerates, including San Miguel Corp., Ayala Corp., Metro Pacific Investments and JG Summit Holdings.

Despite being a much newer player, Megawide and GMR topped all other bids with a P14.4-billion offer, edging out even the proposal of the SM Group, controlled by the country’s richest man Henry Sy, owner of a minority stake in Megawide.

Filinvest-Changi’s offer came in second at about P14 billion.

All bids received by the DOTC last December were “premium” offers, meaning the money would go directly to the government and would come on top of the cost to develop the airport.

The award to Megawide-GMR may still be contested by its chief rival and even lawmakers.

Sen. Sergio Osmeña III, one of the most vocal critics of the Megawide-GMR partnership, had threatened to sue the Transportation Department if the contract was awarded to the Filipino-Indian group as he cited lapses in the bidding process.

It should be noted, however, that only a Supreme Court order can halt an infrastructure project such as the Cebu airport PPP.

The DOTC had previously stated that upgrading the Mactan-Cebu International Airport, which is running beyond normal capacity, would entail the construction of a new world-class international passenger terminal building with a capacity of about eight million passengers a year.

The facility has an annual capacity of 4.5 million passengers, but it handled close to seven million passengers in 2013.

The winner of the Mactan-Cebu International Airport PPP will operate the facility for 25 years.