DOTr mulls option for longer concession period for privatized NAIA

The Department of Transportation (DOTr) is considering including a provision that would extend by another 10 years the concession period in its solicited proposal to privatize the operations of the Ninoy Aquino International Airport (NAIA).

The government’s P141-billion solicited privatization bid seeks a 15-year concession period to operate the NAIA.

Last month, the DOTr and the Manila International Airport Authority (MIAA) submitted a joint proposal for the NAIA Public Private Partnership (PPP) project for approval by the NEDA Board.

In a chance interview on the sidelines of Converge ICT’s free Wifi launch at NAIA Terminal 4 on Tuesday, Transportation Undersecretary for Aviation Roberto Lim said that a 15-year concession for the airport’s private operator is “the better option.”

“We believe 15 [years] is the more appropriate term that gives us flexibility,” Lim said.

“We have to consider that our strategy in the department is to have a multi-airport strategy for the GCR (Greater Capital Region),” the DOTr official said, noting that the NAIA will be operating alongside the under-construction New Manila International Airport in Bulacan and the proposed Sangley Point International Airport in Cavite.

“At this point, we believe that [15-year period] is the better option, but you know we are also incorporating in our proposal an option to extend it by another 10 years in the event circumstances warrant,” he said.

The Transportation official said that the 10-year extension option could be triggered if the completion and start of operations of the two new airports are delayed.

“Let’s say medyo delayed ang mga project and we need to already to service the forecasted demand earlier then the government should have its flexibility to make decisions needed to serve the riding public,” Lim said.

“NAIA, as we envisage it, may have a theoretical limit of 62 million passengers per annum so if we are already hitting 70 [million] and we need to invest more in NAIA because the two other airports are behind schedule then we should trigger that,” he added.

The Transportation Department is targeting to start the call for interested firms to bid for the operations, maintenance, and upgrading of NAIA in September this year. 

“That is the working date we are using. If we can move it earlier, why not,” Lim said.

Unsolicited proposal

The DOTr’s solicited bid to privatize NAIA overlaps with the unsolicited proposal of the Manila International Airport Consortium (MIAC), which seeks a 25-year concession period to operate the airport to have more time to recover its investments.

The MIAC—composed of Aboitiz InfraCapital Inc., AC Infrastructure Holdings Corp., Asia’s Emerging Dragon Corp., Alliance Global-Infracorp Development Inc., Filinvest Development Corp., JG Summit Infrastructure Holdings Corp., and US-based Global Infrastructure Partners (GIP)—has submitted a P267-billion unsolicited proposal to rehabilitate and develop the NAIA into a modernized gateway.

“Right now, with respect to the unsolicited proposal, it is under evaluation by DOTr. We met with them several times and in fact we are meeting with them this week,” Lim said.

“There are still clarifications that have been raised by both sides. Issues like real property taxes and other issues. Another meeting will take place this week,” he added.

Lim said that both the solicited and the unsolicited proposals for NAIA’s privatization “are proceeding on separate tracks.”

He said the NEDA Board will decide “the best route to take” regarding NAIA’s privatization.

“I think within this month we will have more clarity on the path we should pursue because the overriding objective is we want the PPP to happen as soon as possible,” he said.

NAIA recently experienced several power outages, with the Labor Day outage affecting some 9,000 passengers, while the New Year’s Day outage affected 56,000 passengers.

The Management Association of the Philippines (MAP), a group of top management and business executives, expressed support for the privatization of NAIA as it underscored the need to place the rehabilitation and operations of the airport under private sector management, “given its demonstrated capability and extensive resources in undertaking big-ticket, complex public infrastructure projects.” — BM, GMA Integrated News