A white elephant in 50 years

You’ve heard the saying, Reader: The road to hell is paved with good intentions. Well, the Bulacan International Airport, aka New Manila International Airport, aka San Miguel Aerocity, may be a good example.

You remember when Ramon Ang, chief honcho of San Miguel, came out with an unsolicited proposal to build an airport on a build-operate-transfer basis (the government owns it after 50 years), and it all seemed very lighthearted: “I offered to build an airport in Bulacan and if they want it, we will build it, but if they don’t like it, it’s okay,” Ang is quoted as saying.

He is also quoted as saying that he would ask no government guarantees, or any subsidy. It was repeated by a Neda (National Economic and Development Authority) press release two years ago, which emphasized that a key feature of its concession agreement was that there was no subsidy in whatever form. Which of course is required of an unsolicited proposal by public-private partnership rules.

Good intentions, right? They build, operate it for profit, and after 50 years, they transfer it to the government, which hasn’t spent a single centavo on it. Benefits all around. What can be better?

The first thing that has gone awfully wrong with this project is that the government is, after all, going to subsidize it. Why? Because Congress passed a bill, which President Duterte conveniently allowed to lapse into law (Republic Act No. 11506) , that gives San Miguel Aerocity the following tax privileges: For 10 years, it is exempt from paying all direct and indirect taxes and fees related to the project, such as income taxes, value-added taxes, percentage taxes, excise taxes, documentary stamp taxes, customs duties and tariffs, as well as property taxes on land, buildings, and personal property.

Moreover: For the rest of the 50-year term, the company will remain exempt from paying income and real estate taxes until a “competent authority” declares that the company has “fully recovered its investment cost” on the project. Who that “competent authority” is, we have yet to be told. The point is that theoretically, the government, in all the 50 years, may not get a single centavo in taxes, let alone in the “profit-sharing scheme” that looks so good on paper where the government receives any windfall beyond the 12 percent annual rate of return allowed the Aerocity (again to be determined by unnamed competent authority).

Jesus, Mary, and Joseph. When it doesn’t collect those taxes and duties, isn’t the government essentially giving those amounts to the corporation? How can it not be “a subsidy in whatever form”?

You may say, “So what? After 50 years the government takes over the entire shebang anyway, and it will be making money hand over fist!”

Ah! But in 50 years, that airport may be underwater. As we speak, that airport location is sinking. In 50 years, it will have sunk below sea level. It’s simple arithmetic. According to a PowerPoint presentation of the Environmental Impact Assessment of the project, the location is susceptible to land subsidence (gradual caving in or sinking of land) of up to 8.3 centimeters per year, storm surges of 5 meters, and flooding; it is also susceptible to liquefaction, ground shaking, tsunami.

Let’s focus on the 8.3 cm part. If the land is sinking at 8.3 cm a year, that means that in 12 years, it will have sunk by 1 meter (8.3 cm x 12 = 99.6 cm). Therefore, in roughly 37 years it will have sunk by 3 meters and 7 centimeters. The airport will be built 3 meters above sea level. So, 13 years before government takes over the airport, it may already be underwater.

You may say that 8.3 cm is the maximum subsidence, so it will take longer than 37 years. I acknowledge that. On the other hand, this simple calculation “does not take into account the rate of sea level rise (SLR) in Manila Bay, which is projected to be higher than the global average of 29 cm by 2050. Nor does it take into account projections of a 14.4 percent increase in precipitation in the region, which will lead to more frequent and extreme flooding events that last for longer periods.”

All told, the government may have a white elephant in 50 years. And that isn’t all. In later columns, I will discuss the terrible toll this airport is going to take on the environment as well as some public safety issues that still haven’t been resolved.

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