MANILA, Philippines — An alliance of billionaires backing the rehabilitation of Manila’s Ninoy Aquino International Airport (Naia) is threatening to unravel with the sudden pullout of businessman Manuel V. Pangilinan-led Metro Pacific Investments Corp.
Metro Pacific, one of the country’s biggest infrastructure companies, said in a stock exchange filing on Monday it had informed its partners and members of the Naia Consortium “of our intent to withdraw from this project.”
Metro Pacific’s aborted participation in the consortium, which is offering to expand and operate Naia through a 15-year concession, appears the latest casualty in an era when appetites are souring over investments linked to long contracts with the government.
“[Metro Pacific’s] share price has been battered by investor doubts surrounding returns on regulated investments recently,” a source close to the company told the Inquirer on Monday.
Metro Pacific is also a major shareholder of Maynilad Water Services Inc. Along with Manila Water Co Inc., it was targeted in a Duterte administration-led crackdown on the capital district’s water concessionaires over provisions in their decades-old contracts that are now viewed as unfair to the government.
“The concession on offer for Naia seems to carry the risk of unacceptably low returns and disproportionate risk,” the source added.
Metro Pacific’s withdrawal, the process of which remains unclear, deals a blow to Naia Consortium, which expects to invest about P102 billion to significantly increase passenger capacity and air traffic in Naia.
A member of the consortium, however, said the ambitious proposal could still proceed although he did not elaborate.
The group came together two years ago with the common goal of upgrading and expanding Naia, which suffered from congestion before the new coronavirus (COVID-19) outbreak weakened air travel demand in the country and around the world.
But years later, its terms remain under negotiation, more recently, over the extent of expensive real property taxes, another source told the Inquirer.
Jose Ma. Lim, CEO of Metro Pacific, earlier warned that property taxes for the sprawling Naia complex in Pasay and Parañaque would account for over half of the expected investment return over the life of the contract.
In an interview last month, Department of Transportation undersecretary for planning Ruben Reinoso said safety issues on a proposed Naia bus rapid transit system and the layoff of airport workers were also on the negotiating table.
Naia Consortium’s proposal is among a slew of airport projects meant to ease congestion in Manila and nearby provinces.
San Miguel Corp. had also proposed a $15 billion international gateway in Bulacan province, northwest of Manila. Near the mouth of Manila Bay, the Cavite government wants to build a brand-new $10 billion international air hub on reclaimed land with Chinese and Filipino partners.
The SMC project is delayed while the Cavite government’s contract signing was pushed back because of the lockdown in China due to the spread of COVID-19.
Apart from Metro Pacific, Naia Consortium’s members include Ayala Corp., Aboitiz Equity Ventures, Andrew Tan’s Alliance Global Group Inc., and Lucio Tan-led Asia Emerging Dragon Corp.
Members also include the Gotianun family’s Filinvest Development Corp. and the Gokongwei group’s JG Summit Holdings Inc. Their technical partner is Singapore’s Changi Airports International.