Good for the nation

The Ninoy Aquino International Airport Public-Private Partnership (NAIA PPP) has created a blueprint for future airport deals, not only in the Philippines but in Southeast Asia and other countries as well, with its robust risk mitigation strategies and the integration of social safeguards and sustainability measures, according to the Asian Development Bank (ADB).

In a case study on NAIA, the ADB, which served as the transaction advisor for the project, noted that the NAIA PPP is a flagship infrastructure project for the country that demonstrates how the government can mobilize private capital and maximize its receipts by structuring a bankable project.

It highlighted that through a competitive tender process that ensures transparency and adheres to best practices, the NAIA PPP has set a new standard for PPPs in the region.

As transaction advisor, ADB explained that its role extends beyond financial structuring to include the integration of environmental, social and governance safeguards into the project’s specifications. This includes climate adaptation measures such as flood protection and the integration of renewable energy solutions.

In the report, ADB emphasized that despite strong traffic and passenger growth, NAIA has long been plagued by underinvestment, resulting in overcrowded terminals, long queuing times, substandard facilities and a reputation – both local and international – as one of the world’s worst airports.

The airport, initially built to accommodate 33.2 million passengers per year, has been accommodating 15 million more than its capacity, reaching close to 48 million passengers in 2019. From 2009 to 2019, NAIA’s passenger traffic grew at a compounded annual growth rate of 5.6 percent.

But even with several expansions and the addition of two terminals in 1999 and 2008, these efforts have done little to alleviate the airport’s chronic congestion, the report noted.

The ADB report explained how the Department of Transportation launched the bid for the NAIA PPP in August 2023.

The project was designed to ensure that the capital expenditure investments needed to bring the airport to international standards are undertaken during the first six years of the 15-year concession period, and that operations and maintenance improvements would begin to be felt by passengers very soon after the concession period begins.

The planned capital expenditures include modernizing air traffic control systems, rehabilitating runways and taxiways, upgrading baggage handling systems, expanding terminals and implementing flood control measures.

These improvements, it said, are expected to increase aircraft movements from 42 to 48 per hour, expand passenger capacity to 62 million passengers, and simultaneously reduce delays while improving efficiency and overall passenger experience.

The NAIA PPP features a 15-year concession, which is renewable for another 10 years. It has optimized government receipts through a predetermined upfront payment of P30 billion paid at the commercial closure stage and P2 billion in annuity payments throughout the concession period, ADB explained.

In the competitive bidding process conducted by the Department of Transportation (DOTr) and the Manila International Airport Authority (MIAA) for the P170.6-billion project, four bids were submitted, including those from SMC-SAP & Company, Manila International Airport Consortium (MIAC), Asia Airport Consortium and GMR Airports Consortium.

After a thorough evaluation of both technical and financial proposals, the SMC-SAP consortium led by San Miguel Corp. was selected as the winning bidder.

SMC-SAP offered the highest revenue share to the government at 82.16 percent, compared to the second placer, GMR Consortium, which offered 33.3 percent; the third placer, MIAC, at 25.9 percent; and the shadow bid of 25 percent. The 82.16-percent government share translates to P831 billion, and when the P80 billion upfront payment and annuity are added, total government receipts amount to P911 billion.

GMR Consortium’s bid translates to P432.7 billion, including the upfront payment and annuity, while MIAC’s bid amounts to P403 billion.

MIAC’s earlier unsolicited proposal for the modernization, rehabilitation and operation of NAIA, which was rejected by the government, called for only a five-percent government share. When the upfront payment and annuity of P56.6 billion are included, this translates to only P88.99 billion for the government.

Imagine what P911 billion can do for the government and the Filipino people.

So, when a certain consumer group questioned the concession agreement before a Manila court as being anti-consumer, people couldn’t help but ask what the real motive of this group is and who is really behind this smear campaign.

After all, how can a project that is pro-Filipino be anti-consumer?

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