Issues raised vs GMR-Megawide’s NAIA proposal

THE proposed rehabilitation of the Ninoy Aquino International Airport (NAIA) has hit another snag, as the government asked the joint venture of Megawide Construction Corp. and GMR Infrastructure Ltd. to comply with some requirements under the Build-Operate-Transfer (BOT) law.

A Transportation department official said the National Economic and Development Authority (NEDA) Board’s Investment Coordination Committee (ICC) wanted the GMR-Megawide tandem to clarify issues “on financial capacity and the joint and solidary liability agreement of the consortium,” before negotiations can continue.

“There was a deliberation (on Wednesday) and the ICC-Technical Board noted a number of pending compliance with certain requirements of the BOT law, so we have conveyed that to the proponent and we asked them to comply,” Transportation Undersecretary for Planning & Project Development Ruben S. Reinoso said in an online briefing.

Megawide Chairman and Chief Executive Officer Edgar B. Saavedra was asked to comment but no reply has been made as of press time.

Elenita M. Fernando, senior assistant general manager of the Manila International Airport Authority (MIAA), said in the same briefing they will meet again with the proponent by next week to discuss the outstanding issues raised by the NEDA-ICC.

On July 15, the GMR-Megawide tandem received original proponent status (OPS) for the NAIA upgrade, after the government revoked the OPS granted to the so-called super consortium of the country’s top conglomerates.

The consortium — originally composed of Aboitiz InfraCapital, Inc.; AC Infrastructure Holdings Corp.; Alliance Global Group, Inc.; Asia’s Emerging Dragon Corp.; Filinvest Development Corp.; JG Summit Holdings, Inc; and Metro Pacific Investments Corp. — had failed to get the government’s approval to revise the project terms and conditions to reflect the impact of the coronavirus pandemic on the aviation and travel industry. 

Megawide Director Manuel Louie B. Ferrer earlier said the government gave its own terms of reference for the NAIA project when it granted OPS to their consortium. 

Under the BOT rules, a company that has been granted OPS for an unsolicited proposal will be subjected to a Swiss challenge after the award. At this stage, other companies are invited to counter the proposal, and the original proponent will have the right to match them.

MIAA’s Ms. Fernando declined to give a timeline for the Swiss challenge.

The tandem of Megawide and GMR submitted in March 2018 a $3-billion (approximately P148.43-billion) unsolicited proposal to rehabilitate the NAIA over an 18-year period. It had tapped American company The Mitre Corp. as its technical partner for the project.

At that time, GMR-Megawide said they plan to increase NAIA’s capacity to 72 million annual passengers from its original 30.5 million by boosting the airfield capacity to 950-1,000 aircraft movements per day and expanding existing terminals to more than 700,000 square meters.

However, their proposal was set aside in favor of the super consortium, which was granted OPS in September 2018 after tweaking its proposal and reducing the project cost to P102 billion from P350 billion.

According to Section 10.6 of the revised implementing rules and regulations of the BOT law or Republic Act No. 6957, the “second complete proposal will only be entertained if the first one is rejected.”

“Otherwise, the second proposal will be considered only if there is a failure in the negotiation of the first proposal or during the ‘invitation for comparative proposals.’”

The NAIA rehabilitation project is among the projects identified as having a “high risk” of becoming non-viable due to the pandemic in a recent working paper by economists Jedd Carlo F. Ugay, Monica Paula Lavares, Jerome Patrick D.R. Cruz, and Marjorie S. Muyrong of the Ateneo de Manila University’s Department of Economics and Center for Economic Research and Development.

The Transportation department argued that “investments in unsolicited proposals are to be made by the proponents who are in the position to assess the viability of their investments.” — Arjay L. Balinbin