Rip Van Winkles on the airport project

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Tuesday, December 31, 2013

IT'S ridiculous, this chorus of voices suddenly questioning the privatization of the Mactan Cebu International Airport. It is not as if the project was suddenly sprung upon surprised Cebuanos. It has been the subject of open and public discussion long ago although it was only recently that the bids for the multi-billion-peso airport project were finally opened. And now they–local officials and a congressman--are belatedly saying that the project is unwise.

We can’t allow these modern-day Rip Van Winkles to torpedo a project that promises to make the Mactan airport at par with the best in the world. The need for it is inarguable, given Cebu’s position as gateway to central and southern Philippines.

If it is the possibility that the privatization could be onerous or at least disadvantageous to the government that worries us, surely we can address that without having to kill the project. That would be like cutting one’s arm to save a finger.

There are other reliefs available.

We can start by looking into the capability and background of the bidders. For starters, let’s inquire into the history of the bidder that submitted the highest offer of P14.404 billion to operate the Mactan airport.

Sometime last week, the consortium of Megawide-GMR Group came out with a statement clarifying GMR’s expulsion from the Male International Airport by the Maldives government.

“The new Maldives Government unilaterally decided to cancel the concession agreement of GMIAL by declaring the same void ab initio. Prior to such illegal action, GMIAL was operating the MIA airport terminal and building a new airport terminal in accordance with the terms and conditions of its concession agreement with the Maldives Government. It had not been cited for any violation in its operations and was ahead of schedule in building the new Maldives International Airport Terminal,” the consortium said.

The GMIAL (GMR Male International Airport Limited) is a subsidiary of GMR, the Bangladore (India)-based partner of the Filipino construction giant, Megawide Construction Corporation. International newspaper reports said GMIAL’s contract became controversial because of the $25 Airport Development Charge that the concessionaire tried to collect.

I’m glad that the Megawide-GMR consortium has given its side on the Maldives airport issue but I wished it had also addressed the controversy involving another GMR airport project, the Gandhi International Airport in New Delhi.

The Indian Express, an Indian English language newspaper, reported in its Aug. 18, 2012 edition that the Comptroller and Auditor General of India “slammed” the Indian government for allegedly granting undue favors to a GMR subsidiary.

The CAG report, according to the newspaper, criticized the collection of a Development Fee from both outgoing and incoming domestic and international passengers at the Delhi airport.

Allowing the private company to collect the Development Fee “violated the sanctity of the bidding process” and led to undue benefit to the private firm, GMR, the Express reported. Wikipedia says the alleged undue benefit amounted to $617 million.

Note that in both the Maldives and Delhi airport controversies, a common element was the collection of an airport development charge or fee by GMR. Is it possible that, if the operation of the Mactan airport is awarded to the GMR-led consortium, it will also charge a similar development fee?

This is one of the things that our government should be in the lookout for not only in drafting the contract but also in evaluating the fitness of the contractor. This is also where our focus should be, rather than whether or not we should proceed with the privatization project.


Published in the Sun.Star Cebu newspaper on December 31, 2013.


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