After three decades, the Department of Transportation (DOTr) on Friday finally awarded the P171 billion contract to rehabilitate, operate and maintain the Ninoy Aquino International Airport (NAIA) to the group of San Miguel Corp.
“Today [Feb. 16] we are pleased to announce we will award this [NAIA modernization] project to the winning bidder—the SMC-SAP Group,” Transportation Secretary Jaime Bautista said in a press briefing.
Bautista added that the DOTr issued the notice of award to the SMC SAP Company Consortium.
The DOTr said the NAIA privatization is three decades and six administrations in the making, starting from the PIATCO-Fraport attempt to put NAIA under a public-private partnership (PPP), which started during the Ramos administration.
This move marks the beginning of a 25-year transformation for one of the Philippines’ busiest airports, aiming to generate a staggering P900 billion in revenues for the country throughout the concession period.
The SMC SAP Group, which is formed by San Miguel Holdings Corp., RMM Asian Logistics, Inc., RLW Aviation Development, Inc. and Incheon International Airport Corp. had offered a highest bid of 82.16 percent revenue share to the government at the opening of financial proposals for NAIA.
Under the terms of reference, the percentage revenue share to the government is the main bid parameter for the auction. This means the higher proposed revenue share to the government is better.
The winning bidder will also pay P30 billion upfront cost and annual annuity payment of P2 billion to the government.
Transportation Undersecretary and chairman of the Pre-qualification Bids and Awards Committee (PBAC) Timothy John Batan said the San Miguel Group is mobilizing at least P88 billion in capital investments within its first six years and at least P122.3 billion in capital investments for its entire 25-year concession period.
In comparison, Batan said total capital outlay for NAIA from the budget of Manila International Airport Authority (MIAA) from 2010 to 2023 is only P27.09 billion.
Batan said the NAIA project is expected to generate P900 billion in national government revenues in the course of its entire 25-year concession period, inclusive of the P30 billion upfront payment, P2 billion annual payment and 82 percent government revenue share.
In a statement, San Miguel said its proposal is designed not only to elevate NAIA to world-class standard, but also to ensure that the government benefits from the most advantageous revenue-sharing agreement.
“This aims to secure a favorable outcome for our shareholders while prioritizing fairness and long-term sustainability,” San Miguel said.
Bautista also said that the agency already informed the other two bidders about the awarding of the contract to San Miguel Group.
“Before we made the award, we notified the two other bidders and their acceptance is okay when I talked to them,” he added.
The other two bidders that submitted financial bids were Manila International Airport Consortium, which is composed of Aboitiz InfraCapital, Ayala’s AC Infrastructure Holdings Corp., Alliance Global-Infracorp, Filinvest and JG Summit Holdings (25.91 percent), and GMR Airports International B.V., Cavitex Holdings, Inc. and House of Investments, Inc. of GMR Airports Consortium (33.3 percent).
Asian Airport Consortium was disqualified to join the bidding process by the PBAC because it failed to comply with the technical proposals for NAIA.
Asian Airport Consortium, is composed of Asian Infrastructure and Management Corp., Cosco Capital Inc., Philippine Skylanders Inc. and PT Angkasa Pura II.
The winning bidder will have until March 6 to submit the post-award requirements.
The DOTr expects to sign the concession agreement with the winning bidder on March 15, with the turnover of the facility likely in September this year.
It will serve as co-grantors for the project with MIAA, which would have a 15-year concession period and an option for a 10-year extension.
The NAIA project involves capital investment to improve the airport’s facilities to comply with the International Civil Aviation Organization (ICAO) and other internationally accepted standards.This means modernizing the terminals, optimizing and enhancing the capacity of the airport to 62 million passengers a year, enhancing asset quality and passenger experience, improving the information and technology systems infrastructure and ensuring reliable operations over the period of the concession.
The concessionaire will be responsible for both landside and airside operations of the NAIA.
It will be required to undertake works to enhance the compliance, safety and security of the airport, optimize and boost airport capacity to cater to the increasing air traffic, in accordance with objective parameters to be provided in detail in the concession agreement.