Gov’t turns over Mactan airport to Megawide-led consortium

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Gov’t turns over Mactan airport to Megawide-led consortium
The transition paves way for the P17.5-billion expansion project of the international airport, but a business group asks the Supreme Court to stop it

MANILA, Philippines – The Department of Transportation and Communications (DOTC) has turned over on November 1 the operation and maintenance of the Mactan Cebu International Airport to the tandem of Filipino-owned Megawide Construction Corporation and Bangalore-based GMR Infrastructure.

The move paves the way for P17.5-billion ($388.85 million*) expansion project of the airport.

The 25-year concession agreement includes the construction of a new, international passenger terminal building (PTB), which construction is set next year and to open in 2018.

The consortium will also refurbish the current PTB for completion in 2019.

The Megawide-GMR consortium lined up enhancement programs over the next 3 months to shorten queuing time and maximize the use of airport space. It is also set to equip the immigration section with passport readers and computers and will relocate it to a larger area.

Other efforts include modernization of interior design improvements; imported new seats for the waiting areas; construction of an air-conditioned room to be located at the arrival area; and rehabilitation of comfort rooms.

Airlines led by national flag carrier Philippine Airlines Inc. (PAL) and budget airline Cebu Air Inc. (Cebu Pacific) are also mounting additional international and domestic flights from Cebu.

As such, passenger volume at the country’s second busiest international gateway is expected to increase to 12.5 million by 2018 form the current level of 4.5 million.

“These developments give us a peek into the dynamic future that the DOTC (Department of Transportation and Communications) is working on for Cebu. We believe that our airport modernization efforts will spur economic growth in the province and the region, especially through tourism and job creation,” DOTC secretary Joseph Emilio Abaya said.

In December 2013, the Megawide-GMR tandem submitted the highest bid of P14.40 billion ($320 million) for the project. (READ: Megawide-led consortium submits highest bid for Mactan airport)

In January, Filinvest-CAI Consortium – the second highest bidder, asked DOTC to disqualify the tandem for alleged conflict of interest involving GMR Infrastructure of India, First Philippine Airports Consortium, and the Malaysia Airports Holdings Berhad (MAHB).

In February, Senator Sergio “Serge” Osmeña III supported the disqualification by revealing GMR’s ties with Frankfurt Airport Services Worldwide (Fraport), the operator partner and majority beneficial owner of Piatco (Philippine International Air Terminals Company Incorporated), the consortium in the NAIA 3 debacle. (READ: Cebu airport winning bidder another Piatco?)

The Megawide-GMR tandem has repeatedly denied the alleged conflict of interest. The tandem has already earmarked at least P20 billion ($444.44 million) for the project in a bid to transform the airport into the world’s first resort-airport.

Business group asks Supreme Court to halt Mactan airport expansion

On Monday, November 3, the group Business for Progress Movement asked the Supreme Court to stop the rehabilitation and expansion of the Mactan-Cebu International Airport, saying that Megawide-GMR has no financial capability to undertake the project.

To back up their claim, the Business for Progress Movement said that the consortium has to implement an increase in the public service charge/terminal fees to fund the rehabilitation and expansion of the airport.

The Mactan-Cebu International Airport Authority (MCIAA) is proposing to raise the domestic passenger service charge or terminal fee to P300 ($6.67) per departing passenger from P200 ($4.44) and the international passenger service charge to P750 ($16.66) from P550 ($12.22).

Of the amount to be paid by domestic travelers, about P181 ($4.02) would go to consortium with the MCIAA getting P76.40 ($1.70).

For the proposed international terminal fee, P353 ($7.84) would be allotted for the consortium and P143.80 ($3.20) to the MCIA.

The petitioner likewise questioned the turnover of the operations of the MCIA to the consortium.

The Bangalore, India-based GMR Infrastructure is debt-ridden and financially unstable, the group added.

The petitioner also learned that the company has resorted to various means to raise funds, like asset sale and equity issuance to pay its corporate debt.

The group added that GMR’s revenues were badly affected when the Republic of Maldives cancelled the company’s $500 million contract to upgrade the Male Ibrahim Nasir International Airport.

The government of Maldives awarded the contract to GMR in 2012 but unilaterally terminated the agreement in the same year.

“… Since it has no financial capability to commence the rehabilitation of the MCIA, the DOTC and GMR-Megawide then came up with the scheme of imposing an increased rate of terminal fees to cover the expansion project and operating costs,” the petition signed by the group’s president, Medardo Deacosta Jr. –

($1 = P45.00)

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