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DOTr to OK tycoons’ proposal to rehab, expand Naia

MANILA, Philippines — The Department of Transportation is poised to approve a massive private sector proposal to rehabilitate, expand and operate Manila’s Ninoy Aquino International Airport (Naia), the country’s congested main air gateway.

This will allow the P102 billion unsolicited offer—pitched early last year by seven of the country’s largest conglomerates who joined forces via the Naia Consortium—to undergo the approval process of the National Economic and Development Authority.

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The DOTr’s acceptance of the offer, first revealed during a CNN Philippines’ interview with Transportation secretary Arthur Tugade, settled months of negotiations with the proponents, who were wary about certain project risks.

Moreover, a timely approval puts the proposal on track for a competitive challenge in a few months and for the actual upgrades and expansion of Naia to start within the fourth quarter of 2019.

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Tugade said in a text message to the Inquirer Wednesday that the DOTr is targeting to launch a Swiss Challenge and award the project within 90 days.

“Please observe that as in other projects I set tight deadlines to finish as fast without sacrificing quality of work, within budgets approved and timelines set,” Tugade said.

Reuben Reinoso, DOTr undersecretary for planning, said there were a few more “minor corrections” in the latest submission made Monday afternoon that need to be confirmed with Naia Consortium.

“But there is no need to resubmit the entire draft agreement,” he said.

The “line by line” review conducted by the DOTr over the last few days was meant to ensure that Naia Consortium’s offer was aligned with the recent concession signed for Clark International Airport in Pampanga province.

The Inquirer earlier reported that a key area involved the conditions that would trigger a material adverse government action (MAGA). This entails support or compensation in case a national government act has a significant negative impact on the concession.

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Unlike previous regimes, sources said the government did not want to guarantee the impact of any change in future laws, which would greatly increase the risk profile of the project. It would only allow a MAGA on executive orders.

It was not immediately clear how the Naia Consortium addressed the risks associated with a change in laws in its latest offer.

But because other private sector groups such as San Miguel Corp. in its Bulacan Airport proposal and JG Summit Holdings-Filinvest Development in Clark Airport accepted such conditions, the DOTr wanted similar provisions for all other similar contracts.

Naia Consortium’s project, which involves a 15-year concession period, will ensure that Naia remains the country’s main gateway in the foreseeable future.

It proposed to connect all passenger terminals by a “people mover” and increase capacity to support 65 million passengers annually versus Naia’s design capacity of 31 million passengers per year. Moreover, hourly takeoff and landing movements will rise to 52 movements, up by a third.

Naia currently serves about 45 million passengers per year.

Naia Consortium’s members include Ayala Corp., Alliance Global Group Inc.,  Aboitiz Equity Ventures, Asia Emerging Dragon, Filinvest Development Corp, JG Summit Holdings Inc. and Metro Pacific Investments Corp. Its technical partner is Singapore’s Changi Airports International.

Apart from developing Naia, the DOTr allowed a Swiss challenge for SMC’s P736 billion Bulacan Airport proposal and has set competitive bid submissions by June 23 this year. It is also expanding Clark Airport, which currently serves as an alternative to Naia. /je

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TAGS: Business, DOTr, expansion, NAIA, NAIA Consortium, rehabilitation, transportation, Tugade, tycoon
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