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San Miguel-led consortium bags NAIA privatization project

The group led by diversified conglomerate San Miguel Corp. (SMC) bagged the privatization project of the Ninoy Aquino International Airport's (NAIA) operations and maintenance.

At a press briefing, Transportation Secretary Jaime Bautista announced that the SMC-SAP & Company Consortium is the winning bidder of the P170.6-billion NAIA Public-Private Partnership (PPP) project after it offered the highest share of its future revenues from operating the airport to the government.

“Today, we are pleased to announce we will award this project to the winning bidder —the SMC-SAP Group,” Bautista said.

The winning group is made up of San Miguel Holdings Corp., RMM Asian Logistics Inc., RLW Aviation Development Inc., and Incheon International Airport Corp.

During the opening of the financial proposals of the three qualified bidders last week, the SMC-SAP & Company Consortium offered the highest percentage share of its future gross revenues to the government at 82.16%.

The other qualified bidders, namely the GMR Airports Consortium and the Manila International Airport Consortium, offered 33.30% and 25.9%, respectively. 

The Department of Transportation (DOTr) earlier said the bidder that offers the biggest share of their revenue from managing NAIA would win the project.

Transportation Undersecretary for Planning and Project Development Timothy John Batan said the agency’s Pre-qualification Bids and Awards Committee (PBAC) completed its evaluation of the proposals and approved the award of the NAIAA PPP project to SMC-SAP group.

Based on the timeline for the NAIA PPP project, the DOTr is targeting turning over the operations of the country’s main airport to the winning private sector group on September 11, 2024.

SMC-SAP & Company Consortium was awarded the 15-year Rehabilitate-Operate-Expand-Transfer concession contract of the NAIA, with an option for a 10-year extension.

Following the awarding, the winning group would need to make an upfront payment of P30 billion to the government and another P2 billion in annual payments for the duration of the contract.

This is on top of the over 82% of its gross revenues it committed to remit to the government.

For his part, Transportation Undersecretary for Aviation Roberto Lim said the share of gross revenues the consortium offered to the government excluded passenger service.

Batan said SMC-SAP group is committing at least P122.3 billion in capital investments for the entire 25-year concession period or about P4.89 billion per year.

“In comparison, the total capital outlay for NAIA from MIAA (Manila International Airport Authority) Corporate Operating Budget from 2010 to 2023 is onlyP27.09 billion,” Batan said.

The DOTr undersecretary added that the government is expecting to generate P900 billion in revenues from the NAIA PPP project, inclusive of the upfront payment, annual payments, and the committed government revenue share. 

Expect improvements

Following the turnover of NAIA to the winning bidder, Batan said “quick gains” can be expected by the air traveling public within the first year of assuming operations.

Batan said passengers can expect “greater availability of parking; shorter and more predictable waiting times from check-in to immigration to security; availability of seats in the pre-departure gate; baggage coming out of the belly of the plane up to the conveyor belt in a predictable amount of time; reliable operating elevators, escalators, passenger boarding bridges, reliable lighting…”

Bautista also said that no jobs will be lost when SMC-SAP group take over NAIA as “employees will be absorbed” and some will be absorbed by MIAA, which will retain its role as regulator of the airport.

Moreover, MIAA General Manager Eric Ines said passenger terminal fee is expected to go up and increases in rentals, aviation charges are likewise expected.

Bautista also said changing the name of NAIA is not being discussed at the moment.

In a separate statement, SMC-SAP group said it is “honored to spearhead the long-awaited rehabilitation of the Ninoy Aquino International Airport (NAIA).”

“Our proposal is designed not only to elevate NAIA to world-class standards 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 over immediate profits,” SMC-SAP group said.

“Recognizing the weight of the responsibility entrusted to us, we are committed to collaborating closely with the government and our various stakeholders, harnessing every resource available to us, to transform NAIA into a modern international gateway that Filipinos will be proud of.” 

Senator Grace Poe, who chairs the Senate Committee on Public Service, welcomed the development and “wish[ed] the consortium the best of luck.”

“The winning bidder faces a herculean task of giving the decades-old structure the crucial expansion and modernization so it could graduate from the list of the world's most infamous airports. We trust that the DOTr will continue to ensure efficiency and transparency every step of the way in this monumental development project,” Poe said in a statement.

“The success of this rehabilitation will not only give the Filipinos safety and convenience, but pride in welcoming the world with a world-class gateway,” she added. —KBK, GMA Integrated News