Under rehab plan, NAIA may be in private sector's hands for 25 years

MANILA, Philippines – The plan of the Department of Transportation (DOTr) to rehabilitate the Ninoy Aquino International Airport (NAIA) through a solicited proposal may now see the country’s main gateway handed over to the private sector for up to 25 years.

In the DOTr’s original solicited proposal, a private concessionaire would take charge of rehabilitating and upgrading the airport, and in return, it would have 15 years to run the airport and make a profit.

Now, the DOTr is considering including an option for the airport’s private operator to extend its 15-year concession period by a decade.

“We are also incorporating in our proposal an option to extend it by another 10 years in the event circumstances warrant [it]. That’s how we are approaching it – so 15 with an option to extend it to 10,” said Transportation Undersecretary for Aviation Roberto Lim on Tuesday, July 4.

Raising the concession period for the DOTr’s solicited proposal to 25 years would match the concession period proposed by the Manila International Airport Consortium (MIAC) in its own unsolicited proposal.

What would trigger this 10-year extension? Lim pointed to possible delays in the construction of the Bulacan and Sangley airports coupled with rising passenger demand.

“Let’s say medyo delayed ang mga project (the projects are a bit delayed), and we need to already service the forecasted demand earlier, then the government should have its flexibility to make decisions needed to serve the riding public,” Lim said, speaking on the sidelines of the launch of Converge ICT’s free Wi-Fi at NAIA Terminal 4.

“NAIA, as we envisage it, maybe has a theoretical limit of 62 million passengers per annum, give or take. So if we’re 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. (READ: Even after NAIA rehab, Manila will need another airport to ‘catch up’ – MIAC exec)

The DOTr is also setting September as the “working date” for the start of bidding for the solicited proposal, although it could also be moved earlier.

What about MIAC’s unsolicited proposal?

Aside from the DOTr’s solicited proposal, there’s also another privatization plan on the table: MIAC’s P267-billion unsolicited proposal.

The consortium, made up of the Philippine’s biggest conglomerates, intends to invest P267 billion to rehabilitate the airport. In return, it wants 25 years to operate the airport. MIAC justified its concession period – which was longer than the DOTr’s 15-year plan at the time – by saying it was necessary to recover its investment and implement a “comprehensive and extensive rehabilitation.”

Lim said the DOTr has met with the consortium “several times” to clarify issues raised by both sides, including whether MIAC could possibly lower its concession period to 15 years.

“We’ll see if they are prepared to do that. Siyempre kailangan din nila pag-aralan ‘yun (Of course, they also have to study it) because their business model envisages 25 years. We’ll see how they compute their business case if that becomes 15 and whether it is acceptable to them and their [consortium] members,” Lim said.

In the meantime, the undersecretary said that both the solicited and unsolicited proposals are proceeding “on separate tracks.” Ultimately, he said, the National Economic and Development Authority would make the final decision whether to proceed with a solicited or unsolicited proposal.

“I think within this month we’ll have more clarity on the path that we should pursue because the overriding objective is we want the PPP (public-private partnership) to happen as soon as possible so that we can make the investments needed,” Lim said.