Tugade: Other investors ready to take place of Naia Consortium in airport upgrade plan

/ 06:58 PM July 08, 2020

Other investors are ready to step in as the Naia Consortium drops its P102 billion offer to modernize and operate Manila’s Ninoy Aquino International Airport (Naia), Transportation Secretary Arthur Tugade said on Wednesday (July 8).

Tugade confirmed there were other private sector groups keen on upgrading Naia with terms favorable to the government, although he declined to name the groups.


“Let the formalities of notice be done first. Then we can identify,” Tugade told the Inquirer in a text message.

Tugade was asked to confirm comments made by Finance Secretary Carlos Dominguez III, who told reporters at an online press conference also on Wednesday that the DOTr was in talks with “two more potential proponents for the Naia project.”


“We are not worried about it because we believe these two other proponents are willing to step up to the plate,” Dominguez said.

Dominguez said Naia Consortium indicated in its letter to the government that “they are not confident they can finance the project or they cannot push through with it.”

Naia Consortium, originally backed by seven of the country’s largest business groups, was established in 2018 to upgrade and operate Naia, which was suffering from worsening congestion. That offer would have a 15-year concession.

But since the start of 2020, the aviation sector has been drastically hit by the novel coronavirus pandemic, forcing the consortium to seek more relaxed terms, which it did not detail.

Naia Consoritum said on July 7 that talks with the government reached a stalemate.

“Unfortunately, the government indicated that it is not willing to accept most of the consortium’s proposed options and the consortium can only move forward with the Naia project under the options it has proposed,” Naia Consortium said this week.

On Wednesday, Tugade said Naia Consortium had withdrawn its offer, ending negotiations that dragged on for years due to strict requirements imposed by the Duterte administration, which sought to minimize the government’s risks.


Earlier disagreements centred on conditions that would trigger what officials described as material adverse government action (MAGA).

This entailed support or compensation in case a national government act has a significant negative impact on the concession.

Unlike similar projects in past administrations, the government did not want to guarantee the impact of any change in future laws. This significantly increases the private sector’s risk in the project.

That stance was strengthened in 2019 after a venture, led by JG Summit Holdings and Filinvest Development Corp., accepted similar terms in winning the 25-year contract to operate the Clark International Airport in Pampanga province.

Since then, the government asked all other private sector proponents to adopt terms similar to the Clark Airport contract, which would serve as a template.

On Wednesday, Dominguez said the two unnamed proponents were willing to accept terms “very similar to the agreement between the project proponents in Clark Airbase” and the government.

Aside from this, Naia Consortium also had disagreements on the so-called people mover requirement that will link the airport’s passenger terminals, the retention of employees and the payment of billions of pesos in real property taxes.

Last March 9, infrastructure giant Metro Pacific Investments Corp. announced its withdrawal from Naia Consortium, weakening the venture.

Naia Consortium’s remaining members are Ayala Corp., Aboitiz Equity Ventures, Andrew Tan’s Alliance Global Group Inc. and Lucio Tan-led Asia Emerging Dragon Corp.

Members also included 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.

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TAGS: airport upgrade, business groups, consortium, Dominguez, DOTr, NAIA, terms, Tugade, Tycoons, withdrawal
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