The rehabilitation of Manila’s Ninoy Aquino International Airport (Naia) abruptly stalled, casting an uncertain future over the project and a major component of President Duterte’s flagship “Build Build Build” infrastructure program during the administration’s remaining 17 months.
The latest effort to upgrade and expand the aging Naia, the Philippines’s main gateway,was shot down by the government this week.
This came months after inviting another private group, Megawide Construction Corp.and GMR Infrastructure of India—the same venture behind the successful privatization of Cebu’s main gateway—to fill the void after the Filipino billionaires behind Naia Consortium withdrew last July.
But on Tuesday, the board of the Manila International Airport Authority (MIAA), an attached agency of the Department of Transportation, dropped the frontrunner status of Megawide GMR, otherwise known as an original proponent status (OPS), without citing any reason.
“It’s a stepback,” Eduardo Francisco, president of BDO Capital Investment Corp., told the Inquirer on Wednesday. “It means one less infrastructure accomplishment for the Duterte administration.”
Francisco said lenders were prepared to back the project given the need for improvements at the main gateway.“ Megawide GMR has the credentials so it would be nice if this was resolved immediately,” he said.
At P109 billion, the upgrade and expansion of Naia was the second largest unsolicited proposal among the government’s priority infrastructure projects—eclipsed only by conglomerate San Miguel Corp.’s(SMC) P735-billion New Manila International Airport in Bulacan province.
Naia’s terminals and runways were badly congested before the COVID19 pandemic arrived, causing air travel to collapse this year. Flight delays were rampant as passenger traffic breached its annual design capacity of 31 million passengers by more than 50percent.
Megawide, an engineering and construction firm that ventured into infrastructure during the previous administration, and GMR agreed to the government’s strict conditions despite the pandemic, earning it an OPS last July 15.
Megawide GMR said in a statement the revocation of the OPS, which acts as official government recognition for an unsolicited proposal, was a “ devastating blow against progress. ”
It said their offer was ultimately a victim of“ vested and corrupt interests who have spent millions in trying to bring down the only capable and qualified player,” referencing the recent attacks on its track record.“
There are no justifiable grounds to deny the Filipino people a transformed Naia,” Megawide said, adding the consortium would immediately file an appeal and ask the government to reconsider.
But even this process is proving challenging as no reason was given for the removal of its OPS.
An industry source explained government bodies hold more discretionary powers during an unsolicited proposal.“
I don’t know of any rule that they should give their reasons. But it’s more for transparency and due process, ”the individual, who is familiar with bidding for these types of projects, told the Inquirer.
Moreover, the person pointed to the long negotiation period with Naia Consortium, which was submitted in February 2018 and whose offer was revised several times before ultimately falling through last July 7 as COVID19 cases were still rising fast.
When issues were raised against Megawide’s financial capacity, principally by Pwersang Bayaning Atleta Rep.Jericho Nograles, Megawide convinced GMR to take a 40 percent equity stake in the project.
The company said it complied with all government requirements by Nov.20.
A source close to Megawide said company officials were “kept in the dark” after a MIAA board meeting last Dec.4 when substitutes to the sitting board members that include Transportation Secretary Arthur Tugade voted to revoke the consortium’s OPS.
The decision was ratified by the board members on Dec.15.
Tugade and other Department of Transportation officials did not immediately respond to requests for comment on Wednesday.
Megawide-GMR’s proposal, similar to the terms offered to Naia Consortium, involved added capacity and flights to Naia via a 25 year concession. The venture was also to build the first-ever elevated railway linking Naia’s passenger terminals.
The failure to significantly upgrade Naia leaves the gateway vulnerable to changes in government policy under a future administration.
This includes eventually closing down Naia for a new gateway with more expansion options outside Metro Manila.
This was a view shared by Tugade himself when he told Naia Consortium in 2018 to revise its offer and cut the original 35 year concession to just 15 years.
The concession period was bumped up to 25 years to allow the private sector time to recover their investment given the impact of COVID-19.
The same day Megawide GMR’s OPS was revoked, SMC said its airport project would begin in the first quarter of 2021 instead of end 2020.
The project aims to one day become the Philippines’ main gateway.
SMC also awarded a unit of Dutch firm Royal Boskalis Westminster N.V .a $1.73-billion contract to prepare the land ahead of the airport’s construction.
Still, private sector interest remains strong in upgrading Naia.
Cosette Canilao, CEO of former Naia Consortium member Aboitiz Infra Capital, said they remained keen on investing in the gateway.
“[We’re] always interested,” Canilao told the Inquirer on Wednesday INQ