SMC’s Ang sees Naia closure in 10 years, sale of airport land

MANILA, Philippines—Tycoon Ramon S. Ang, president of conglomerate San Miguel Corp. (SMC), said he sees the closure of Ninoy Aquino International Airport (Naia) after 10 years and the land on which it sits being sold to raise trillions of pesos to pay off government debts.

Ang, whose SMC is planning to build an even larger P735 billion “airport city” northwest of Manila in Bulacan province, told the Inquirer that SMC was seeking a 10-year concession to operate and maintain Naia.

But he added it would be best to eventually wind down Naia’s operations and sell or redevelop the airport complex, which is roughly 2.5 times the size of Bonifacio Global City in Taguig.

“Sell the land, 646 hectares for P2 trillion and pay for government debts,” Ang said in a text message on Thursday (Dec. 17). It was not immediately clear how the billionaire arrived at the valuation.

SMC, whose interest in Naia was first reported by another paper, is not alone in its bid to control the crown jewel of Philippine gateways.

At a Senate hearing on Thursday, Manila International Airport Authority (MIAA) general manager Eddie Monreal said another company, Philippine Airport Ground Support Solutions Inc. (PAGSS), submitted an offer for Naia.

SMC and PAGSS will get their chance should the government formally reject the offer of the consortium of Megawide Construction Corp. and partner GMR Infrastructure, the Filipino-Indian venture that redeveloped Mactan Cebu International Airport (MCIA) and Clark International Airport.

Just days before, Megawide was stripped of its original proponent status (OPS) to rehabilitate Naia to the tune of P109 billion at no cost to the government.

No reason was cited by the influential board of implementing agency MIAA, raising questions over the lack of transparency in the process.

But at the Thursday hearing led by Sen. Grace Poe, Transportation Secretary Arthur Tugade clarified he was not shutting the door to Megawide-GMR.

“The project hasn’t been terminated permanently,” Tugade said, adding that the government’s own programs to improve Naia will continue independently from privatization efforts.

There were no immediate details on SMC or PAGSS’s different proposals.

Ang said the offer was only for an operations and maintenance contract.
This means there will be no significant investments on the airport against other proposals on the table.

Ang also acknowledged that any decision on Naia would be up to a future administration.

If this happens, SMC’s international gateway in Bulacan, which was to start construction in a revised schedule in 2021, will get a powerful boost.

On the other hand, PAGSS is an aviation ground services firm that caters to the country’s major airlines.

In 2018, PAGSS joined the consortium of JG Summit Holdings, Filinvest Development Corp. and a unit of Changi Airport to win the 25-year contract to operate and maintain the Clark International Airport in Pampanga province.

PAGSS is led by businessman Jefferson Cheng, who was also part of the Philippine International Airport Terminal Co. Inc. (Piatco) consortium that built the controversy-riddled Naia Terminal 3 project.

All eyes are on the next MIAA board meeting, potentially before the end of 2020.

Tugade clarified on Thursday that the earlier board decision to revoke Megawide-GMR’s OPS still needs to be “confirmed.”

An OPS serves as government recognition for an unsolicited offer, which typically comes from the private sector and is allowed under the Build Operate Transfer law.

The status grants the holder a crucial advantage—the right to match the best offer from competitors during the mandated Swiss Challenge and win the project.

At the hearing, Monreal said the revocation of Megawide-GMR’s OPS stands unless the MIAA board decides otherwise.

A Public Private Partnership (PPP) expert explained the vague stance of government was characteristic of the implementing agency’s discretionary powers when it comes to unsolicited projects.

But the process, at times, comes at the cost of transparency, especially in luring a wide range of investors.

It was for this reason that the previous Aquino administration shunned unsolicited proposals, preferring instead an open bidding process under its PPP Program.

The redevelopment of Naia itself was among the PPP projects carried over from the past administration but was scrapped under President Rodrigo Duterte.

At the Senate hearing, Megawide chair and CEO Edgar Saavedra said the consortium planned to pursue its proposal, which will double Naia’s capacity to 65 million passengers per year and end congestion.

“This is a good time for us to fix Naia,” Saavedra said, citing the temporary downturn in aviation caused by the COVID-19 pandemic.

“We have proven [ourselves] in Mactan Cebu International Airport and we can duplicate that in Naia,” he said.

Saavedra said a motion for reconsideration will be submitted to the government, likely the MIAA board.

The board is led by Tugade as chair and Monreal as vice chair along with members including Justice Secretary Menardo Guevarra, Finance Secretary Carlos Dominguez III, and Tourism Secretary Bernadette Romulo-Puyat.

Megawide-GMR was given an OPS last July after Naia Consortium, the group of tycoons that first pitched the rehabilitation of Naia in 2018, withdrew as the global health crisis pummelled the aviation sector.

Megawide has been on the receiving end of attacks in recent months over its financial capabilities and alleged anti-dummy law violations for operations at MCIA, which it won six years ago.

Last Nov. 20, Megawide said it complied with government requirements in terms of financial capacity after GMR, a leading airport operator, took a 40 percent stake in the venture.

TSB