SMC’s 1754-B airport plan up for final review by DOF, OSG
The San Miguel group’s unsolicited proposal to build an “aerotropolis” in Bulacan will undergo a final review by the Office of the Solicitor-General and the Department of Finance (DOF) before its Swiss Challenge in early next year, the National Economic and Development Authority (NEDA) said.
Socioeconomic Planning Secretary Ernesto M. Pernia said that the 1753.63-billion international airport project proposed by San Miguel Holdings Corp. (SMHC) would be up for a Swiss challenge in January next year after its revised concession agreement was approved by the NEDA Board last Friday.
For his part, Finance Secretary Carlos G. Dominguez III said the contract for the airport proposal located in Bulakan, Bulacan could be awarded before end-March next year.
Last Friday, the NEDA Board approved the report on the concession agreement’s negotiations submitted by the Department of Transportation (DOTr) and SMHC for the Bulacan international airport project, an unsolicited public-private partnership (PPP) proposal.
The original proponent SMHC, through an Unsolicited BuildOperate-Transfer arrangement, will assume the total project cost, the NEDA said in a statement.
Key features of the Bulacan international airport concession agreement include no government guarantee or any form of subsidy, the agency added.
"These are substantial features, proving the project is adequately advantageous to the government," Pernia said. “They certainly raise the bar on unsolicited PPP projects.”
Following the NEDA Board meeting, the DOTr will proceed with finalizing the Concession Agreement and convey the NEDA Board approval of the report to the proponent, SMHC.
Earlier, Dominguez said the DOF had meticulously scrutinized the concession agreement for the ambitious Bulacan airport to ensure the government would not incur unwarranted contingent liabilities, like what happened to the Mactan Cebu airport contract.
“If you compare the guarantees that were given to the Cebu contract comparing to what we have for the Clark and the Bulacan, you will see the big difference from before,” Dominguez said.
“We’re going to get those, the contract in Clark, and the contract for the Bulacan airport with no government liability at all,” he added.
In the case of the Mactan Cebu airport, Dominguez pointed out that it earned P1.1 billion last year, which was 48 percent higher than the P752 million projected net income during the appraisal stage done to secure the NEDA Board approval for the project.
“And yet, Government still made the commitment that there will be no other competing airports in Mactan and Cebu. Now, should the Government later on want to build a new airport in the area, we would be required to reimburse not just market value of the infrastructure assets, but also the future profit of the commercial business until the end of the concession,” Dominguez said.
The Bulacan airport is largest among the infrastructure projects approved by the NEDA Board this year that once completed, the facility should help ease congestion at the Ninoy Aquino International Airport (NAIA).
San Miguel's proposed new international "aerotropolis" involves an airport covering 1,168 hectares and a city complex to be built at a 2,500-hectare area along Manila Bay in Bulakan town, Bulacan.
The planned 50-year airport project will entail building six parallel runways with an initial annual capacity of 100 million passengers, or over triple the NAIA.
San Miguel's airport project will be subject to a Swiss Challenge under government rules, meaning other groups will be invited to make competing offers, with the original bidder given the right to match any better proposal.
The Philippines, one of Asia's fastest growing economies, is trying to improve infrastructure such as roads, ports, railways and airports with the help of the private sector under its $180 billion "Build, Build, Build" program.