The Department of Transportation (DOTr) on Tuesday terminated the procurement of the P108.2-billion Regional Airports Development Program, leaving the Public Private Partnership (PPP) Program badly bruised.
According to the PPP Center, the transportation department has decided to transfer the deals for the development of five regional airports in the country to another mode of implementation.
“Expansion and upgrading of the airports via the General Appropriations Act [GAA] make the project cheaper as cost of money would be lower, thus more beneficial to the public,” Transportation Assistant Secretary Leah Merida-Quiambao told the BusinessMirror.
This way, she said, the government expects project completion to be faster and more efficient. “Further, this would help avoid legal issues that may cause regrettable
delays. This decision was brought about through collegial discussions, including the economic clusters and congressional leaders,” Quiambao said. The previous administration started the auction for the contract to develop and operate five airports around the Philippines in two packages to make it more enticing to investors.
The first package consists of the Bacolod-Silay Airport (P20.26 billion) and Iloilo Airport (P30.40 billion), while the second bundle is composed of the New Bohol or Panglao Airport (P2.34 billion), Laguindingan Airport (P14.62 billion) and Davao Airport (P40.57 billion).
After officially launching them for tender, the Duterte administration decided to unbundle them to hasten their auction.
PPP Center Executive Director Ferdinand A. Pecson said his office respects the decision of the DOTr and the Civil Aviation Authority of the Philippines (Caap), but noted that implementing the projects under the PPP initiative was also a viable option.
“While the PPP Center believes in the credibility of these airport projects structured as PPP, and gratefully acknowledges the solid interest of the private sector, we respect DOTr’s and Caap’s authority and their decision to terminate the projects,” he said.
There were five prequalified bidders for the project, namely, Filinvest-Jatco-Sojitz Consortium (Filinvest Development Corp.; Filinvest Land Inc.; Filinvest Alabang Inc.; Japan Airport Terminal Co. Ltd; and Cyberzone Properties Inc.).
GMR Infrastructure and Megawide Consortium (Megawide Construction Corp.; GMR Airport Developers Ltd.; GMR Hyderabad International Airport Ltd.; and Delhi International Airport Ltd.); Maya Consortium (Aboitiz Equity Ventures Inc.; VINCI Airports SAS; ANA-Aeroportos de Portugal SA; VINCI Construction Grands Projets SAS; Therma South Inc.; and Hedcor Sibulan Inc.); Philippine Airports Consortium (Metro Pacific Investments Corp.; and ADP Ingenierie); and SMHC-IIAC Airport Consortium (San Miguel Holdings Corp.; Incheon International Airport Corp.; Star Infrastructure Development Corp.; and Citra Metro Manila Tollways Corp.).
Sought for comment, GMR-Megawide Cebu Airport Corp. President Louie B. Ferrer said the group is supportive of the government’s pledge to the development of the airports the quickest time possible.
“It is crucial for the airport-development projects to be implemented immediately because efficiencies in the airport system are greatly hampered by the lack of proper infrastructure,” he told the BusinessMirror.
Ferrer’s company is the operator of the Mactan-Cebu International Airport, which is currently being modernised through the PPP Program.
Aboitiz Infra Capital Inc. COO Randall C. Antonio also signified his group’s support in the endeavor.
“We acknowledge the government’s decision to terminate the PPP process for the regional airports in favor of other modes of procurement,” he said. “We remain committed to supporting the government’s push to build the infrastructure necessary to promote inclusive economic growth for our people.”
Metro Pacific Investments Corp. CFO David C. Nicol, for his part, said: “We await developments with interest. The private sector has a great track record of rapid execution on capital projects, for example look at the progress on the LRT 1. We are ready and keen to help.”
He was referring to the Light Rail Transit (LRT) Line 1 Cavite Extension deal, which his group bagged in 2014.
From a bias on deals developed under the PPP Program, the government has taken a different leaning on infrastructure growth, with its eyes now keen on building more infrastructure through bilateral loans and tax payers’ money.
Finance Secretary Carlos G. Do-minguez III earlier explained that the apparent shift in bias was borne out of the nature of PPP deals, which he described as too slow in movement, when compared to projects that are under official development assistance (ODA) and
Infrastructures built through these modes will also see their operations and maintenance components being auctioned off to the private sector. These are called hybrid projects.
In a nutshell, these so-called hybrid deals are infrastructure whose construction will be shouldered by the government, but their operations and maintenance components will be tendered to the private sector.
Despite the apparent setback because of the termination of the deals’ bidding, Pecson still believes that the PPP Program will help complement the government’s thrust in infrastructure development.
“Notwithstanding this development, the PPP Center remains ready and committed to support government agencies in their infrastructure and development projects. The critical foundations of the PPP Program have been laid down, and the institutions, both in the public and private sectors, are ready to deliver,” he said.
Pecson added: “It is clear that PPPs remain as a viable option in the procurement of infrastructure projects, especially those that require an integrated approach, i.e., design-build-operate-maintain in order to save on procurement timing, reduce interface risks, and avail of private sector’s technology and efficiency.”