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Airport upgrade faces uncertainty


Airport upgrade faces uncertainty

By Arjay L. Balinbin, Reporter

THE government has revoked the original proponent status given to the consortium seeking to rehabilitate the Ninoy Aquino International Airport (NAIA), after rejecting the latter’s move to revise the project’s terms in light of the pandemic’s effect on the travel industry.

The consortium claimed it will have difficulty obtaining financing for the P102.12-billion NAIA rehabilitation project under the current approved terms and conditions, the Department of Transportation (DoTr) and the Manila International Airport Authority (MIAA) said in a statement late Wednesday, citing the group’s July 6 letter submitted to the National Economic and Development Authority (NEDA).

The DoTr and MIAA said the consortium expressed it could only proceed with the NAIA project if “such terms and conditions are revised in accordance with its proposal as contained in the letter.”

“In view of this, and upon the recommendation of the NAIA Government Negotiating Panel, the MIAA, on 7 July 2020, has terminated negotiations with the NAIA consortium and withdraws/revokes its original proponent status (OPS),” they said.

In a statement issued on July 7, the consortium said “far-reaching and long-lasting consequences of the coronavirus pandemic on airline travel, airline operations and airport passenger traffic necessitated a review of the assumptions and plans to ensure that the NAIA project will be viable in the new normal.”

The proposed changes to the project’s framework would ensure its bankability, the consortium said.

The NAIA consortium is composed of Aboitiz InfraCapital, Inc; AC Infrastructure Holdings Corp.; Alliance Global Group, Inc.; Asia’s Emerging Dragon Corp.; Filinvest Development Corp.; and JG Summit Holdings, Inc.

Antonio A. Ligon, law and business professor at De La Salle University, said the government should be willing to renegotiate the terms of the deal, considering how the pandemic wreaked havoc on the global tourism industry.

“The compelling reason must justify the discontinuance of the negotiations, because it will not be good for the image of the government,” Mr. Ligon said in a phone interview.

“Both parties should consider what’s going on right now. Negotiations should consider the challenges that the world is facing now. It should not be one-sided. The supervening event is global, so it should be easy for both parties to consider based on this supervening event.”

For UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion, the government should not be faulted for trying to get a “better” deal.

“At this juncture, the government has the right to whom it may choose to deal, and it should, of course, be within the set and fair rules. With the pandemic and its ill-impacts on government revenues and consequently its spending on infrastructure, the government will be on the lookout for smarter and better deals. This is now evidenced by new negotiations they are currently having,” he said in an e-mailed reply to a question on Thursday.

“With international travel saddled with many uncertainties, the government may also be thinking about other issues needing more attention at this point,” he added.

Despite the collapse of talks with the NAIA consortium, the government appears unfazed.

Finance Secretary Carlos G. Dominguez III on Wednesday said there are two other proponents interested in the project at the terms the government has indicated.

“We’re not worried about it… We have two other proponents who are very willing to step into the shoes of the consortium,” he said in a virtual briefing.

In September 2018, the NAIA consortium obtained the original proponent status from the DoTr to rehabilitate, upgrade, expand, operate and maintain the country’s main gateway for 15 years.

The original proposal submitted in February 2018 cost P350 billion and included the construction of an additional runway over a 35-year concession period, but this was reduced eventually per the DoTr’s request.

Metro Pacific Investments Corp. was originally part of the consortium, but withdrew from the project due in part to the unresolved issue of tax payments.

The rehabilitation of the NAIA, whose main terminal opened in 1981, is expected to increase its capacity to 47 million passengers a year in the first two years and further expand this to 65 million passengers after four years.

The NAIA, which has four terminals, has been operating beyond its 30.5 million annual passenger capacity. It recorded 45.3 million passengers in 2018.


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