THE envisioned modernization of the premier aviation gateway NAIA, made possible by a P170-billion contract signed with a private consortium on Monday, will help address its capacity issues and poor facilities, which damaged the country’s reputation to international travelers, President Ferdinand Marcos Jr. said Monday.
“The gateway that should be the red carpet to our country has become a dirty rug that unfairly defines a visitor’s first impression, which we all know is extremely important for all of those who are tourists, who are travelers, who…for any reason have come into the Philippines,” the President said.
He noted decades of “bureaucratic inertia, political turbulence, and legal wranglings” in the improvement of the Ninoy Aquino International Airport have cost the economy greatly.
For his part, Finance Secretary Ralph G. Recto said that as the Philippines anticipates a post-pandemic tourism resurgence, improvements at Naia will yield numerous economic benefits.
On Monday, the Department of Transportation (DOTr) and the Manila International Airport Authority (MIAA) signed the Concession Agreement with the SMC-SAP & Company Consortium for the NAIA Public-Private Partnership (PPP) project.
The chief executive said the project to be implemented by the consortium, led by San Miguel Holdings Corporation (SMC), will benefit commuters and almost double the current 35 million annual passenger capacity of NAIA to 62 million passengers per year.
Once completed, the project will also raise the hourly air traffic of NAIA from 40 to 42 to 48.
“So, let us we roll up our sleeves, let us be reminded that the bottom line of the Manila International Airport’s resurgence is not what it will bring to the coffers of our government but the comfort it will bring to its passengers,” Marcos said during the signing ceremony of the PPP in Malacañang last Monday.
Government benefits
Marcos Jr. said the PPP will also provide the government over P1 trillion revenue during its 15-year duration.
The payment includes a P30 billion upfront payment, P2 billion annuity payment and 82.16 percent gross revenue share.
“This is more than 15 times the amount remitted by the Manila International Airport Authority [Miaa] to the national government since 2010,” Marcos said.
Department of Transportation (DOTr) Secretary Jaime J. Bautista said the initiative will help draw more investments in the country’s transportation sector.
“The Naia privatization sends a strong message to the international business community on the viability of the government’s infrastructure projects. We have turned to international financial institutions, foreign government and private business organizations for funding support due to limited fiscal space,” Bautista said.
Next: Bohol-Panglao
After Naia, he said the next airport expected to undergo modernization is the Bohol-Panglao international airport.
“The [unsolicited] proposal [for modernization] is now subjected to the mandatory Swiss challenge,” Bautista said.
Recto said the PPP deal is expected to generate around P900 billion in revenues for the national government in the course of its entire concession period, which is 15 years with a provision for extension of another 10 years.
“This means that the government is assured a healthy income stream from the private sector operator amounting to 36 billion pesos annually to fund expanded social services in education, public health, and infrastructure,” Recto said at the signing held at Malacañan Palace.
Recto also expressed confidence that Naia is poised to become “the world’s best airport” from having a reputation as “one of the world’s worst airports.”
The rehabilitation project costing P170.6 billion is seen to improve overall passenger experience by addressing undercapacity, congestion, and underinvestment in Naia.
The Naia PPP project is the fastest-approved PPP proposal. It was evaluated within six weeks and was approved by the National Economic and Development Authority (Neda) Board on July 19.
The project sets the benchmark for efficiency for the government’s pipeline projects, Recto noted.
“If we act with the same dispatch on all public projects, I am confident that we can sustain the momentum of growth necessary to deliver an inclusive economy for our people,” he said.
Recto urged the SMC-led consortium to maximize Naia’s potential to reap the full benefits of the tourism industry to accelerate economic growth in the country.
The share of Tourism Direct Gross Value Added (TDGVA) to the country’s GDP in 2022 was estimated at 6.2 percent while the tourism sector employed 11.4 percent of the total workforce, according to the Department of Finance.
The government is keen on finalizing more PPP projects in the coming months and years starting with the signing of the Naia PPP concession agreement, Recto said.
The MIAA board awarded the contract for the project to the SMC-SAC Consortium last February 16. The Consortium submitted the highest bid amount and is sharing 82.16 percent of future gross revenues with the government not including the passenger service charges.
The Consortium comprises San Miguel Holdings Corp., RMM Asian Logistics Inc., RLW Aviation Development Inc., and Incheon International Airport Corp.