Grand plans for NAIA on hold

Before the pandemic, I was a frequent Manila-Cebu-Manila traveler, and during the trips I made in the past six years or so, I was continually impressed by the spanking new look and efficient service rendered at the Mactan-Cebu International Airport (MCIA). The rehabilitation and transformation of the airport complex was made possible by Megawide Construction Corporation, one of the leading and most innovative infrastructure and engineering companies in the Philippines.

Since the handover of MCIA’s operations in November 2014, the airport has received 11 local and international awards, including the Airport of the Year 2018 from leading aviation think-tank CAPA –Center for Aviation and the Completed Buildings-Transport Category of the World Architectural Festival. The transformed MCIA, according to Megawide officials, “is an example of innovative and distinctive Filipino design delivered by the Megawide-GMR partnership with best-class processes, producers and technologies, benefiting Cebu, Visayas and the entire Philippines.”

Louie Ferrer, Megawide managing director for transport, said that through the company’s strategic marketing efforts, passenger traffic rose from just 8 million in 2015 (the company’s first full year of operations) to 12.7 million in 2019; flight frequencies at the MCIA rose by more than 200 percent, with domestic destinations rising from just seven at handover in November 2014 to 35 at its peak; and international destinations from just 23 at handover to 30 at its peak.

When news stories came out about Megawide’s choice by the Department of Transportation to rehabilitate the Ninoy Aquino International Airport (NAIA) in Pasay City, I assumed the general public was elated about the facility’s finally shedding its embarrassing reputation as one of the worst airports in the world. The project will renovate the four terminals – the oldest, Terminal 1; PAL’s T-2; the newest, Terminal 3 and the local Terminal 4.

According to Megawide, the company has grand plans for NAIA and is investing P17.998 billion to make the country’s principal gateway “another symbol of Filipino pride.” In its first year, airside capacity will be expanded to solve runway congestion once and for all. Full-length parallel taxiways for both runways will be built along with additional Rapid-Exit Taxiways (RETs) for the primary runway. The second runway will be extended as well. With this, peak hour capacity will increase by 50 percent from 40 to 60 movements per hour.

Simultaneously, visible improvements will be done to the terminals on Year One. Within 24 months, Megawide will rehabilitate and expand the existing terminals for which the total area will be doubled to approximately 700,000 square meters. When completed, both the airside facilities and the terminals will be able to handle 65 million passengers a year, two times its current capacity.

All these will be accompanied by massive beautification works. Megawide is determined to transform NAIA into one of the best airports in the world. This will come to full fruition by 2026, according to a company official.

These plans, however, may have to stay on hold. Transportation Secretary Arthur Tugade was asked why he gave special treatment to Megawide which, critics claim, does not have the financial capability to do the NAIA expansion project. Secretary Tugade denied giving the construction company special treatment. His office consequently issued a statement advising the public to disregard the “misinformed reports” circulating regarding the NAIA project.

As to Megawide’s financial capability, critics question the falling short of Megawide’s equity of P17.998 billion in the P107-billion project, saying that it should meet the 30 percent minimum equity required by NEDA-ICC (National Economic and Development Authority-Investment Coordination Committee). ICC reviews and approves proposed major capital projects of the government.

According to an economist, “Nowhere in the law does it say that the project proponent must show equity of no less than 30 percent of the entire project cost. What the law says is that the proponent must have adequate financial capacity to sustain the project through its various phases when they become due.”

The economist says NEDA’s equity requirement of 30 percent of project cost as imposed by the technical working group of NEDA-ICC is “a drastic departure” from the usual minimum equity requirement of previous airport developments, as that of Iloilo, Laguindingan, Puerto Princesa, Bacolod and Davao. In these projects, the minimum equity requirement was based only on the project phases and pegged only at some 20 percent of the phase cost.

My source is convinced Megawide will be able to meet the full financial requirement of the project. “If Megawide proves incapable of financing certain phases of the project, the entire NAIA complex, complete with improvements, will revert back to the government. Government bears no risk.” Surely, from my stand, Megawide will not renege on its promise to produce a transport facility that makes the Philippines proud.

Critics also circulate the story that the company will terminate all of NAIA’s existing employees when it takes over the facility.

Megawide chair and CEO Edgar Saavedra said Megawide will follow the proper process with the Manila International Airport Authority (MIAA) as they did with the Mactan-Cebu International Airport Authority under their proposal to absorb all NAIA employees into their organization. “We actually made an offer to 100 percent of the employees listed by the MIAA not only to adhere to government regulations but because we saw value in their talent and inherent knowledge of the airport.”

“We enthusiastically support President Duterte’s desire to deliver better infrastructure and we know in these days of economic uncertainty, infrastructure development is key towards economic recovery and providing jobs for our fellow Filipinos,” Saavedra said. “We look forward to an opportunity to bring this to all NAIA stakeholders. We are hopeful this can be done not by tearing each other down but by coming together to support our company, Megawide, being the only Filipino company with real experience in world-class airport delivery in the country.”

In the meantime, the Megawide NAIA project stays on hold, pending the evaluation of NEDA-ICC.

What a pity if the dream plan offered by the construction company does not push through – possibly because of conflicting business interests.

In the meantime, should the NAIA be left to deteriorate?

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