Naia may be privatized by Q1 of 2024; P141B in investment needed – DOTr
MANILA, Philippines — The Department of Transportation (DOTr) on Wednesday said the Ninoy Aquino International Airport (Naia) may be privatized as early as the first quarter of 2024, depending on the process of awarding the contract to the government’s chosen concessionaire.
To recall, the DOTr and the Manila International Airport Authority (MIAA) submitted their joint proposal for the NAIA solicited Public Private Partnership (PPP) Project to the National Economic and Development Authority on Friday, June 2.
“That is a very tough and tight schedule, maybe we can say that the first quarter of next year , it is doable, that there will be a conclusion, meaning to say, an award that could possibly be proclaimed by the government,” said Transportation Undersecretary for aviation and airports Roberto Lim in an interview with ANC when asked when the DOTr was expecting to privatize Naia.
According to Lim, the process of privatization would still have to undergo ocular inspection of facilities by bidders or potential private concessionaires, along with negotiations on terms and agreements — which would take time.
“If there are more than one participant we would have to talk to all of them in the process so it will take time,” said Lim.
P141B in investment needed
Lim, in the same interview, also said the concessionaire would have to commit to investing P141 billion in Naia facilities, along with an upfront payment of P30 billion, annuity payments of P2 billion, and a share of Naia’s total revenue generated from its commercial and non-commercial operations which is expected to reach billions.
“The upfront payment is also part of the deal, we also expect the winning bidder to make a commitment to invest in facilities,” said Lim.
“The total project cost is P141 billion, so that is the investment that is required to upgrade, rehabilitate and expand NAIA, so the winning bidder needs to pay cash and make an investment commitment for the duration of the concession period,” he added.
Lim explained that one of the reasons why the government took on Naia’s privatization is to roll out infrastructures without the need for government borrowing.
“So in other words, we’re creating more funds available for other critical sectors the government needs to address. Since we know that the private sector is interested in investing in the airport sector we might as well use PPP as the mechanism,” said Lim.
He then clarified that Naia’s assets would continue to be owned by the Philippine government, adding that it was not being sold but instead, being offered to the private sector to rehabilitate, manage and operate under a concession.
“So it’s like a franchise that you are granting with terms and conditions for operating the public facility,” said Lim.
It can be recalled that the DOTr previously said that the PPP project aims to increase the capacity of Naia.
Under the said privatization project, a private concessionaire will have 15 years to operate the airport and recover its investment.
Currently, Naia is operated by the national government, completely managed by the MIAA as an attached agency of the DOTr.