Back to square one

The country’s premier gateway, the Ninoy Aquino International Airport (Naia), was designed to handle 31 million passengers a year. In 2019, nearly 48 million travelers passed through Naia. Such airport congestion has been the case for the past five years. By 2030, passenger volume is expected to reach 71.6 million. This is just too much to handle for the aging airport.

In February 2018, the Duterte administration received an unsolicited proposal from some of the country’s biggest conglomerates to modernize Naia. After negotiating for more than two years, however, the consortium of tycoons withdrew last July 7 its proposal after noting that the terms wanted by the government were impossible to meet given the impact of COVID-19 on aviation and tourism.

Enter Megawide Construction Corp., which said it was asked by the Department of Transportation (DOTr) to consider resubmitting its 2018 proposal to rehabilitate Naia after talks with the tycoons collapsed. Megawide claimed it responded to the national government’s insistence on contract terms that were stricter than those offered to the previous proponent through its P109-billion upgrade plan at no cost to the government.

Last week, hopes of finally rehabilitating Naia abruptly vanished, casting an uncertain future over the project and dealing a big blow to President Duterte’s flagship “Build, build, build” infrastructure program. The board of the Manila International Airport Authority (MIAA), an attached agency of the DOTr, revoked the original proponent status (OPS) of Megawide-GMR, without citing any reason. Megawide and its partner, GMR Infrastructure of In­dia, are behind the successful privatization of Cebu’s main gateway.

One possible ground may be gleaned from the statement of MIAA general manager Ed Monreal, who told a Senate committee hearing that the revocation of Megawide’s OPS came after a letter from the National Economic and Development Authority was sent to Transportation Secretary Arthur Tugade, citing findings that the firm’s equity position was not enough. “[Megawide’s] equity position of P18 billion based on its 2019 audited financial statement is insufficient to finance the P32.9 billion [equity requirement] for the project,” Monreal said, reading Neda’s letter. But Megawide insisted that it had complied with all government requirements.

As the government and Megawide were embroiled in the OPS revocation issue, an offer from conglomerate San Miguel Corp. was presented on the table: A 10-year concession agreement to operate and maintain the airport. The clincher that will make any government official take a more serious look is that under the proposal, all revenues from airport operations—including passenger fees and lease rentals—will go to MIAA. In short, San Miguel will not require a share in Naia revenues unlike all other previous proposals. Is it too good to be true? The country will find out only when the government accepts the offer and negotiations on the details begin.

San Miguel boss Ramon Ang said their proposal was “brought on only by the need to have [Naia] running effectively and safely for the Filipino people until our Bulacan airport project is up.” The conglomerate will start construction of its P735-billion New Manila International Airport in Bulacan province early next year. After 10 years, when the Bulacan gateway is completed, the government can decide to just close Naia and sell the complex, which spans 646 hectares, for up to P2 trillion.

A lot of questions remain unanswered. Was lack of equity the only reason for the revocation of Megawide’s OPS? Was the government swayed by a better offer that will give it all the revenues from Naia’s operations? Is the P2 trillion in potential revenue from the sale of the Naia complex 10 years down the road too good to refuse?

What is clear at this point is that the much-needed upgrading of Naia, the country’s main gateway to the outside world, will once again be delayed. Unhappily, it’s back to square one for this long-overdue project, and flip-flopping on the part of government agencies is not helping at all. The Duterte administration, with less than two years left in its term, has to decide firmly on Naia’s fate much sooner than later, or the project may end up falling through for good, becoming not only a despairingly unfulfilled project for the next administration to inherit but also an emblem of the failures of President Duterte’s signature “Build, build, build” program.