Industry

Here's the Brief and Sordid Tale of the NAIA Rehabilitation Project

The airport authority has withdrawn Original Proponent Status from Megawide and its foreign partner.
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On Tuesday, the Manila International Airport Authority (MIAA) withdrew Megawide Construction Corp. and its foreign partner’s Original Proponent Status (OPS) for the rehabilitation of the Ninoy Aquino International Airport. The news was relayed to Megawide’s representative Manuel Ferrer through a letter signed by MIAA’s Corporate Secretary Leonides Cruz. 

Although the letter did not state a reason for the revocation of the OPS, various reports indicate the issue has something to do with Megawide’s financial capabilities to take on a project this massive.

The revocation of the OPS is the latest twist in the attempt to overhaul the aging NAIA, the premier gateway to the country and long a target of shame and ridicule, especially when compared to other gigantic and gleaming airports in the region.

Here’s a brief timeline of the efforts to rehabilitate NAIA:

February 2018 - The first unsolicited proposal to improve and transform NAIA is submitted by a “superconsortium” of seven of the country’s biggest conglomerates—Aboitiz InfraCapital Incorporated, Ayala-led AC Infrastructure Holdings Corporation, Andrew Tan-owned Alliance Global Group Incorporated, Lucio Tan’s Asia's Emerging Dragon Corporation, Filinvest Development Corporation of the Gotianun family, Gokongwei-led JG Summit Holdings, and Manny Pangilinan-chaired Metro Pacific Investments Corporation. 

The superconsortium planned to tap the expertise of Singapore’s Changi Airports International Pte. Ltd. and the proposal itself was initially estimated to cost P350 billion.

March 2018 - Megawide and Bangalore, India-based partner GMR Infrastructure Inc., also submit an unsolicited proposal to decongest and redevelop the airport. Responsible for the Mactan Cebu International Airport (MCIA), the companies plan involved $3 billion (about P156 billion), which was less than half of what the “superconsortium” proposed.

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August 2018 – The NAIA superconsortium reveals it has been granted OPS by the MIAA and the Department of transportation to upgrade and expand NAIA. By this time, the cost had been pared down to P102 billion. 

July 2019 – The NAIA superconsortium submits a revised proposal for the project, one patterned after the concession agreement the government signed with the North Luzon Airport Consortium for the operation and maintenance of the Clark International Airport. 

November 2019 – After several revisions, the National Economic Development Authority (NEDA) approves the NAIA superconsortium’s proposal. It then undergoes a Swiss Challenge, where other private groups are invited to submit competing offers. 

March 2020 – Manny Pangilinan’s MPIC announces it is withdrawing from the superconsortium. Although Pangilinan did not reveal the reason for exiting the project, he did mention issues related to real property taxes the consortium has to pay to local government units (LGUs).

DOTr Secretary Arthur Tugade also imposes a March 15 deadline for the superconsortium to iron out a deal, otherwise, “it would terminate the agreement and make it available and open to other parties who are interested.”

July 2020 – MIAA withdraws OPS from the NAIA superconsortium. The group reportedly proposed changes to the terms of the proposal, most of which the government rejected. DOTr Secretary Tugade reportedly returned the NAIA superconsortium proposal as the agency insisted it should follow the Clark template. But members of the NAIA superconsortium were reportedly not comfortable wit the Clark template and called it “risky.”

A few days later, on July 15, MIAA awards OPS to Megawide for the NAIA rehabilitation project. The company’s updated proposal costs P109 billion under a 25-year concession period.

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August 2020 – The DOTr raises several “concerns and issues” to Megawide and its partner GMR before the proposal could push through. These issues include “financial capability” and “joint and solidary liability agreement.” 

October 2020 – During a hearing on the DOTr’s 2021 budget, Rep. Jericho Nograles of the party-list Pwersa ng Bayaning Atleta, reveals that Megawide was “red-flagged by the Investment Coordination Committee of the National Economic Development Authority, because the company is not only non-compliant with the documentary requirement for a multi-billion PPP, but is also incapable of proving that it has the capital to carry out the project.”

November 2020 – Megawide releases a proposed design for the new NAIA terminal, patterned after the Banaue Rice Terraces. The company also announces an update to the status of the project, saying that it was due to submit financial requirements to NEDA and that it was hoping to complete a Swiss Challenge to the project by March 2021.

Also around this time, NEDA’s Investment Coordination Committee-Cabinet Committee (ICC-CabCom) rejects Megawide’s unsolicited NAIA proposal over insufficient equity.

However, Megawide releases statements that it was still capable to meet financial requirements for the NAIA project.

December 2020 – MIAA announces it has formally revoked Megawide’s OPS for the NAIA project. Megawide says it will appeal MIAA’s decision and railed against parties with “vested and corrupt interests.”

"At a time of deep economic crisis, the Filipino people today received a devastating blow against progress,” Megawide says in a statement following the revocation of the OPS. “A critical step towards the Philippines' national economic recovery was delayed further by vested and corrupt interests who have spent millions in trying to bring down the only capable and qualified player."

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Paul John Caña
Associate Editor, Esquire Philippines
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