Private sector players seeking to operate existing airports through the unsolicited means should be prepared to absorb more risks under a new policy from the Department of Transportation (DOTr).
Transportation Secretary Arthur Tugade told reporters last week that the DOTr required unsolicited airport offers to conform to the standards set by the successful bidding of Clark International Airport last December. Their refusal meant their proposals will be rejected.
The policy prompted another round of revisions for at least nine unsolicited proposals for key provincial air gateways such as Davao International Airport and Bohol Airport.
“We did this so that the position that is good for the government becomes constant,” said Tugade, adding that having a template would cut the long negotiation period.
The government considers the Clark Airport contract— which was bagged by JG Summit Holdings, Filinvest Development Corp. and Changi Airports Philippines—as a good template partly due to the risks that were assigned to the private sector.
One of its features was the condition that would trigger compensation or support for the private concessionaire, otherwise known as a material adverse government action (Maga).
For Clark Airport, the Maga will cover only executive orders and not the impact of any change in future laws. For companies accustomed to doing business in the Philippines, this was deemed a major risk.
Nevertheless, private sector players relented.
In May, the Naia Consortium, which offered to upgrade and operate Manila’s Ninoy Aquino International Airport in 2018, adjusted its offer to meet the DOTr’s requirements. It was approved by the DOTr and is now being evaluated by the National Economic and Development Authority.
Tugade last week said the template would extend to all other unsolicited offers for provincial airports.
“All they have to do is change the financial numbers because airports have different sizes,” Tugade said. An industry player said they would likely conform with the requirement but cautioned that the higher risk could affect the planned level of investment.
Since the start of the Duterte administration, five business groups have made unsolicited bids for nine existing provincial air gateways.
Aboitiz Group earlier made separate offers for the New Bohol International Airport (P25.45 billion) and Laguindingan Airport (P42.7 billion).
Companies controlled by businessmen Dennis A. Uy have made bids for Davao International Airport (P48.8 billion), Bacolod-Silay Airport and the Busuanga Airport. Former Sen. Manuel Villar Jr.’s group, meanwhile, is seeking to operate and develop Iloilo International Airport and Puerto Princesa International Airport.