SMC’s Ang plans to close Naia 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 that the land on which it sits will be sold. to raise billions of pesos to pay off government debts.

Ang, whose SMC plans 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 that it would be better to eventually shut down Naia operations and sell or remodel the airport complex, which is about 2.5 times the size of Bonifacio Global City in Taguig.

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

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

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

SMC and PAGSS will have their chance if the government formally rejects the offer from the consortium of Megawide Construction Corp. and its partner GMR Infrastructure, the Philippine-Indian company that rebuilt Mactan Cebu International Airport (MCIA) and Clark International Airport.

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

The influential MIAA implementing agency board did not cite any reasons, raising questions about the lack of transparency in the process.

But at Thursday’s hearing led by Sen. Grace Poe, Transportation Secretary Arthur Tugade clarified that he was not closing the door on Megawide-GMR.

“The project has not been completed permanently,” Tugade said, adding that the government’s own programs to improve Naia will continue regardless of privatization efforts.

There were no immediate details on the different proposals from SMC or PAGSS.

Ang said the offer was for an O&M contract only.
This means that there will be no significant investments at the airport compared to other proposals on the table.

Ang also acknowledged that any decision on Naia would depend on a future administration.

If this happens, SMC’s international gateway in Bulacan, which was due to begin construction on a revised schedule in 2021, will receive a powerful boost.

On the other hand, PAGSS is an aviation ground services company that serves the main airlines in the country.

In 2018, PAGSS joined the consortium of JG Summit Holdings, Filinvest Development Corp. and a unit from Changi Airport to win the 25-year contract to operate and maintain Clark International Airport in the 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 controversial Naia Terminal 3 project.

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

Tugade clarified Thursday that the previous board decision to revoke Megawide-GMR’s OPS has yet to be “confirmed.”

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

The state gives the holder a crucial advantage: the right to match the best offer of the competitors during the mandatory Swiss Challenge and win the project.

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

An expert in Public Private Partnerships (PPP) explained that the government’s vague stance was characteristic of the discretionary powers of the executing agency when it comes to unsolicited projects.

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

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

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

At the Senate hearing, Megawide president and CEO Edgar Saavedra said that 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 recession in aviation caused by the COVID-19 pandemic.

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

Saavedra said that a motion for reconsideration will be presented to the government, probably to the MIAA board.

The board is led by Tugade as president and Monreal as vice president along with members that include the Secretary of Justice, Menardo Guevarra, the Secretary of Finance, Carlos Domínguez III, and the Secretary of Tourism, Bernadette Romulo-Puyat.

Megawide-GMR received an OPS last July after the Naia Consortium, the group of tycoons that first launched Naia’s rehabilitation in 2018, withdrew when the global health crisis hit the aviation sector.

Megawide has come under attack in recent months for its financial capacity and alleged violations of the antidummy law for operations at MCIA, which it won six years ago.

On November 20, Megawide said it met the government’s requirements in terms of financial capacity after GMR, a leading airport operator, took a 40 percent stake in the company.

TSB

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