THE PROPOSED AIRPORT in Bulacan could be “viable,” but the proponent San Miguel Corp.’s assumptions for its development will determine the project’s ultimate rate of return, the government’s chief economic planner said.
Socioeconomic Planning Secretary Ernesto M. Pernia said that the P700-billion unsolicited proposal for a 2,500-hectare airport development has yet to be fully reviewed ahead of its presentation to the Cabinet-level Investment Coordination Committee (ICC).
“There are questions on the financial internal rate of return, what is the basis — does it include only the income of the airport, or also extra income outside the airport. Because that area is a large area… I think the owner is intending to make that not only an airport, but also an aerotropolis, a city with an airport,” Mr. Pernia told reporters on Friday.
“It seems viable. The economic rate of return is possible, although not by much. Just barely,” he added.
Mr. Pernia said that although the project has already gone through an ICC technical evaluation, NEDA would require “more definite information” on the developer’s assumptions for Cabinet-level deliberation.
“The main criteria for economic evaluation, is that it passes the hurdle rate. But we don’t just look at the economic rate of return, but we look at the financial rate of return because this is unsolicited,” he said.
When approved by the Cabinet Committee, the proposal will be submitted to the NEDA Board for the President’s approval.
The project will then be subject to a Swiss challenge, under which other parties submit rival bids to top the original proposal. San Miguel Corp. is then entitled to match any bid.
Finance Secretary Carlos G. Dominguez III has said that Ninoy Aquino International Airport (NAIA) will remain the main international gateway even if the San Miguel airport goes ahead.
“At this point there are no plans to shut NAIA down,” he said.
San Miguel Corp. has expressed plans to replace NAIA as the country’s main airport, but Mr. Dominguez said: “that was the original idea, but it seems that they have withdrawn that particular condition.”
“A lot of big cities have more than one airport around it,” he added.
The National Economic and Development Authority’s (NEDA) Cabinet Committee ICC approved on Friday the Subic-Clark railway, along with a larger budget for the Mega Manila Subway.
“The ICC approved today the Subic-Clark railway project that will be implemented by DoTr (Department of Transportation). The cost is roughly P50 billion. And that will be part of the railway network connected, hopefully when it’s all completed, all the ports will be connected by railway. From Batangas to Subic to Metro Manila,” Mr. Dominguez said.
“The second one is they approved also the increase in the estimated cost of the MM subway project, they feel that there will be a P1.3 billion additional cost that have not been originally estimated and this should cover any potential damage to underground wiring,” Mr. Dominguez said.
The Subic-Clark railway is funded by Chinese Official Development Assistance (ODA) while the Mega Manila Subway is bankrolled by the Japanese.
Mr. Dominguez also said that he suggested that the Department of Transportation — the implementing agency for the subway — consider a business model where stations located on government property can lease out retail space.
“I also suggested to the DoTr that they give us a map of where the underground stations will be. [If] they are government property, we can develop underground malls,” he said.
The subway will run from Mindanao Avenue in Quezon City to NAIA. Mr. Dominguez said that government-owned sites along the line could include the Bureau of Internal Revenue and the Social Security System headquarters in Quezon City, as well as the Department of Energy in Taguig City.
“I don’t know frankly if it will pass there, but those are the properties that we were thinking if it passes underneath, those they will be potential for additional government revenue for joint venture development.” — Elijah Joseph C. Tubayan