SAN Miguel Corp. (SMC)-led consortium clinched the bid for the P170.6 billion Ninoy Aquino International Airport (Naia) rehabilitation project, Transport Secretary Jaime Bautista announced on Friday, Feb. 16, 2024.
“Today, we are pleased to announce that we will award this project to the winning bidder, the SMC-SAP group,” Bautista said in a press briefing that was also streamed live via the agency’s Facebook Page.
The Notice of Award was sent to SMC on Friday. This will be followed by the contract signing for the big-ticket infrastructure project scheduled next month.
SMC-SAP will now serve as the operator of the Naia for the next 15 years, with a possible extension of 10 years.
PPP
Under the 15-year Naia PPP concession agreement, the SMC-SAP will rehabilitate the airport’s passenger terminals and airside facilities; develop commercial assets and utility systems; provide surface access facilities that enables intermodal transfer at the airport, inter-terminal passenger transfer facilities and services; connection from the Metro Manila Subway station to Naia Terminal 3; overall upliftment and beautification of the airport; and incorporate climate change and climate adaptation measures for airfield resilience and overall sustainability of the airport.
The company is also expected to improve and modernize the Communications, Navigation & Surveillnce (CNS) systems, remote digital tower system, ATC system upgrade, and airfield network, including fiber upgrades, emergency equipment as well as technology enhancements to improve efficiency.
“Thirty years in the making, now we will be able to privatize the operations and maintenance of Naia,” said Bautista.
Bautista said the prequalification Bids and Awards Committee of the Department of Transportation (DOTr) finished their evaluation of the remaining bids and made their recommendation, which was approved by the Manila International Airport Authority (MIAA) Board, Friday morning.
Of the three bidders, the SMC-SAC Consortium submitted the highest bid amount, offering to share 82.16 percent of future gross revenues, excluding passenger service charges, with the government.
This is in addition to the fixed upfront fee of P30 billion and annual fee of P2 billion, both payable to the government.
The SMC SAP Company Consortium is composed of San Miguel Holdings Corp., RMM Asian Logistics Inc., RLW Aviation Development Inc. and Incheon International Airport Corp.
The other two bidders that submitted financial bids were Manila International Airport Consortium, which is composed of Aboitiz InfraCapital, Ayala’s AC Infrastructure Holdings Corp., Alliance Global-Infracorp, Filinvest and JG Summit Holdings, that offered 25.91 percent and GMR Airports International B.V., Cavitex Holdings Inc. and House of Investments Inc. of GMR Airports Consortium, that offered 33.3 percent.
“This is certainly a welcome development for this long overdue project. Naia has been operating beyond capacity for nine years, leading to poor service and passenger inconvenience. The Naia PPP project has been in the works for three decades, spanning six administrations. It has finally turned into a reality under the Marcos, Jr. administration,” said Finance Secretary Ralph Recto in a statement.
He noted that the Naia is the largest solicited PPP project under President Ferdinand Marcos Jr.
According to the DOTr, the concessionaire will begin operating the airport in three to six months. The public can expect service improvements as early as the first year of operations.
P30 billion
The SMC-SAC Consortium shall submit an upfront payment of P30 billion to the government as a premium, as well as an additional P2 billion in annuity payments.
The deal requires the consortium to remit a certain percentage of its revenues to the government, which served as the main bid parameter for the auction.
This PPP deal is aggressively forecasted to generate around P900 billion in revenues for the National Government in the course of its entire concession period, which is higher than the total dividends remitted by MIAA to the government from 2010 to 2023, which was only P22.05 billion.
Moreover, the modernization of the Naia with the help of the private sector will increase its handling capacity of 60 million passengers annually.
Naia is currently handling at least 50 million passengers despite its maximum capacity of 32 million passengers.
According to Bautista, once the airport is modernized, the country’s main gateway the airport’s security and efficiency will be improved, while attracting constant flow of revenue streams.
Once the modernization of Naia is complete, its runway capacity will increase at least 48 air traffic movements at peak hourly rate. Similarly, the airport’s passenger capacity is expected to accommodate 62 million passengers annually.
The last major expansion of Naia happened 10 years ago when its Terminal 3 was operationalized in 2014, leading to its current capacity of 35 million passengers per year. This capacity was breached as early as 2015 when Naia serviced 36.7 million passengers and 47.9 million during peak.