Off-track airport plans
The Naia Consortium, which groups the country’s biggest conglomerates in a project to address the serious congestion and infrastructure upgrade issues at the Ninoy Aquino International Airport, now risks dissolution with the announced withdrawal of businessman Manuel V. Pangilinan-led Metro Pacific Investments Corp. (MPIC) from the project.
Apart from MPIC, Naia Consortium’s members include Ayala Corp., Aboitiz Equity Ventures, Andrew Tan’s Alliance Global Group Inc., the Lucio Tan-led Asia Emerging Dragon Corp., the Gotianun family’s Filinvest Development Corp., and the Gokongweis’ JG Summit Holdings Inc. Their technical partner is Singapore’s Changi Airports International.
Not a few were surprised by this turn of events. Two years ago, Pangilinan was unequivocally committed to the project. His personal view was that Naia needed a third runway to serve demand once capacity hits the 65-million-passenger mark.
“The consortium believes we do have to build a third runway. The only viable option is to build a third runway, effectively a new airport,” Pangilinan said then.
That plan was what went into the consortium’s proposal. It had originally asked for a 35-year concession and proposed to initially double its design capacity to 65 million passengers in two years to meet medium-term demand. The second phase of the plan, estimated to cost P250 billion, was to build new passenger terminals and a third runway as part of the longer-term upgrade plan for the airport.
But with the eventual scaled-down scope of the project to just 15 years and an investment cost of P102 billion without a third runway, Pangilinan might have ended up doubting the viability of the Naia Consortium’s bid. Uncertainties in dealing with the government — not to mention the long period it takes to reach an agreement — may also be partly to blame. After two years, the Naia Consortium is still negotiating the terms of its proposed contract with the government, the most recent issue being the extent of expensive real property taxes to be paid to the local governments of Pasay and Parañaque.
An example of how exhausting it is to deal with the government was when the National Economic and Development Authority returned last year the P102-billion offer of the Naia Consortium and required another round of revisions. That was two months after Transportation Secretary Arthur Tugade said that the proposal was acceptable. Tugade said in May last year that he was targeting to award the project by August 2019. More than half a year since that target, and they are still negotiating.
Other people familiar with the negotiations also said the concession on offer for Naia seemed to carry unacceptably low returns and disproportionate risk for the private firms.
There are also those who believe that MPIC could have been very disappointed in its investment in Maynilad Water Services Inc., one of two service providers in the capital whose concession agreements drawn up decades ago were scuttled by the Duterte administration for alleged onerous provisions only recently uncovered. The frequent verbal attacks by President Duterte on the water concessionaires had already forced the Ayala family to cede majority control of Manila Water Co., the other service provider, to ports tycoon Enrique K. Razon, perceived to be more friendly to the administration.
The Naia Consortium’s proposal is among a number of airport projects, meant to ease congestion in Manila and nearby provinces, that have schedules in disarray. San Miguel Corp.’s proposed $15-billion international gateway in Bulacan province has likewise been delayed by issues raised by the government, despite the project being financed entirely by the private sector. In Cavite, the local government wants to build a $10-billion international airport in Sangley on reclaimed land with Chinese and Filipino partners. But the contract signing has been moved back because of the lockdown in China due to the spread of COVID-19.
Insofar as the much-needed construction of new airports or the rehabilitation of existing ones is concerned, it looks like the administration’s infrastructure program is way off target at this point.
