Tycoons’ Naia rehab plan hits a snag
The consortium of business tycoons seeking to upgrade and operate Manila’s Ninoy Aquino International Airport (Naia) is hoping to strike a deal with the government over expensive real property taxes as the deadline to complete negotiations looms.
The property taxes on the sprawling 625-hectare Naia complex will be “huge” and will affect the viability of their proposal, said Jose Ma. K. Lim, president of infrastructure giant Metro Pacific Investments Corp.,one of the members of Naia Consortium.
“The impact on the return is significant,” Lim said as he explained that the taxes would eat up about half of the consortium’s expected returns over the 15-year concession.
The Naia complex is currently being operated by the state-run Manila International Airport Authority (MIAA), which the Supreme Court said was exempt from paying real property taxes. This is a levy imposed by the local government, which considers land values and improvements on such passenger terminals and aircraft hangars.
The SC issued separate decisions in 2006 and 2009 to resolve MIAA’s property tax delinquency cases amounting to about P1.6 billion in the cities of Parañaque and Pasay where Naia is located. The High Court also noted that property leased to the private sector is subject to property taxes.
Lim said they were open to paying the real property tax but up to a certain amount.
“We are not saying the private sector should not shoulder it. We are saying it has to be a reasonable amount because an airport is huge,” he said.
The discussions come as Naia Consortium works to beat the deadline this January to complete negotiations with MIAA.
The deadline was earlier set by Transportation Secretary Arthur Tugade, who also threatened to give the project to other willing bidders should talks with Naia Consortium fall through.
Naia Consortium’s P102-billion proposal to transform Naia, the country’s main air gateway that suffers from worsening congestion, into a world-class gateway has been under review or negotiations over the past two years.
It obtained the approval of the board of the National Economic and Development Authority on Nov. 29, 2019. The consortium remains keen on the project even as the government imposed provisions that lowered its risk while increasing that of the private sector.
Lim reiterated the group’s interest when asked whether Metro Pacific would consider pulling out should an acceptable agreement on property taxes fail to materialize.
“We are trying to remain as committed as we can. The airport needs work, that’s why we are there [but] it has to be something that we can justify to our own shareholders,” Lim said.
Once negotiations are finished, a Swiss or competitive challenge can finally proceed and upgrades on the airport can begin as early as the middle of 2020.
Apart from Metro Pacific, Naia Consortium’s members include Ayala Corp.,Aboitiz Equity Ventures, Alliance Global Group Inc., Asia Emerging Dragon, Filinvest Development Corp. and JG Summit Holdings Inc. Its technical partner is Singapore’s Changi Airports International.
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