P146-B airport contracts set for signing this year
The Department of Transportation (DOTr) will sign this year more than P146 billion worth of contracts for the privatization of four airports, freeing up fiscal space for the government and building up the public-private partnership (PPP) landscape.
In documents obtained by The STAR, the DOTr will award within the year P24.17 billion in projects that would turn over regional airports to the private sector.
Apart from this, the DOTr will sign on March 18 with the consortium led by San Miguel Corp. (SMC) the 15-year concession to operate and maintain the Ninoy Aquino International Airport (NAIA), a project that would cost at least P122.3 billion.
Transportation Undersecretary Roberto Lim confirmed to The STAR that the DOTr will award the contracts for Laguindingan Airport, Bohol-Panglao International Airport and Iloilo International Airport this year.
By project, Aboitiz InfraCapital Inc. (AIC) maintains the original proponent status for the P12.75 billion upgrade of the Laguindingan Airport. In February, the DOTr opened the Swiss Challenge for the project, giving other companies the chance to submit comparative designs.
The Laguindingan Airport, located in Misamis Oriental, serves as the main gateway to Northern Mindanao, particularly to highly urbanized cities Cagayan de Oro and Iligan.
AIC also proposes to operate and maintain the Bohol-Panglao International Airport for 35 years through a P4.53 billion investment in the infrastructure.
The DOTr is negotiating with the Aboitiz Group the terms of that offer, and expects to finish the discussions no later than May 21, after which the agency will open the floor for other proposals.
Meanwhile, the DOTr will reengage the Villar Group regarding its P6.89 billion bid to take over the Iloilo International Airport. However, AIC is interested in controlling the airport as well, and is committed to spends much as P9.95 billio for its expansion.
Once the project is opened for comparative proposals, the Aboitiz Group may counter the tender submitted by Villar-led Prime Asset Ventures Inc. (PAVI). Afterward, PAVI can match any offer as part of its rights as the original proponent.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the P25 billion PPPs for regional gateways would generate economic opportunities in the provinces.
“The P25 billion is equivalent to about 0.1 percent of the country’s GDP, but also benefits supply chains, such as indirect employment and other business transactions,” Ricafort told The STAR.
Infrawatch PH convenor Terry Ridon also sees the privatization of regional airports as a way for the government to reallocate infrastructure budget for social services.
“Awarding P25 billion in airport contracts to the private sector effectively allows the government to spend the same amount on other important initiatives. [These programs include] cash transfers for marginalized families, health care and education subsidies,” Ridon told The STAR.
The government managed to slash its budget deficit by six percent to P1.51 trillion in 2023, from P1.61 trillion in 2022. Still, this translated to a deficit-to-GDP ratio of 6.2 percent that exceeded the target of 6.1 percent.
For 2024, the government aims to slash the fiscal gap to P1.39 trillion and bring down the deficit ratio to 5.1 percent, as it works on reverting its finances back to pre-pandemic levels.
The largest airport PPP – the privatization of NAIA – is scheduled to be formalized on March 18, and the gateway will be turned over to SMC SAP & Co. Consortium by Sept. 11.
The consortium will be given a period of 15 years, extendable by 10 years, to run NAIA, and the government is estimated to generate up to P900 billion in revenue from the privatization.