The Department of Transportation (DOTr) will prioritize the evaluation of the P350-billion unsolicited proposal of Naia Consortium for the redevelopment and expansion of the Ninoy Aquino International Airport (Naia), as it strictly follows the rules under the build-operate-transfer (BOT) law.
Transportation Director Goddess Hope O. Libiran told the BusinessMirror that the agency has yet to officially open the $3-billion unsolicited proposal of Megawide Construction Corp. and its Indian partner GMR Infrastructure Ltd., as the department has yet to finish the evaluation of Naia Consortium’s offer.
Section 10 of the BOT law spells out the method by which an implementing agency—in this case the transportation department— should follow when there are two or more proposals for the same or similar project.
“The proposal from Megawide has not been opened yet due to ‘first-in-time’ submission of complete documentary requirements mandated by the BOT law,” Libiran said. “Naia Consortium first submitted complete documents and [the proposal is] now undergoing review by the DOTr.”
This view was shared by Naia Consortium Spokesman Jose Emmanuel P. Reverente, who cited the specific rule on the treatment of unsolicited proposal of the similar project.
“Note the first-in-time concept. Two proposals are not to be evaluated simultaneously,” he said in a text message.
Naia Consoritum submitted its proposal to the transportation department on February 12. Megawide’s proposal came second on March 1.
This, however, does not mean that the group will be awarded the original proponent status—at least not yet. It may still be rejected on several grounds, including technical unviability, and lack of new technology, among others.
If the first proposal gets rejected, then the implementing agency will have the authority to open and review the second offer submitted to it.
“Only when Naia Consortium’s proposal is rejected can we open and review Megawide’s proposal,” she said.
Megawide respects process
For his part, Louie B. Ferrer, an authorized representative of Megawide, said the group will honor the transportation department on whatever track it will take in evaluating the proposals.
“Megawide-GMR respects and will adhere to the rules mandated by the BOT law on the evaluation of unsolicited proposals,” he said.
Due to their nature, unsolicited proposals are required under law to go through several approvals processes, including a review by the implementing agency and an evaluation by the several bodies of the National Economic and Development Authority (Neda).
Under current rules, unsolicited proposals are also required to undergo a Swiss challenge, which essentially allows other groups to outbid the original proponent of the project. The original proponent, however, has the option to submit a counteroffer to win the challenge.
The winner of the challenge will be determined after the Neda Board, currently chaired by President Duterte, has evaluated the challenger’s offer, and the original proponent’s counteroffer.
Hence, the process could go for as quick as six months to over a year, and as long as almost a decade, as in previous cases.
Naia Consortium’s P350-billion proposal involves expanding and interconnecting the existing terminals of the Naia, upgrading airside facilities, and the development of commercial facilities.
Divided into two phases, the group’s proposal aims to increase the capacity of the Naia to about 100 million passengers per year. It also plans to construct a people mover that will link Naia’s terminals to existing transport systems in Metro Manila.
Actual work will take 24 more months for the first wave of immediate expansion. Further expansions are planned to meet projected passenger demand moving forward.
The offer carries a concession period of 35 years.
On the other hand, Megawide’s offer involves a more affordable $3-billion price tag, with a shorter concession period of 18 years.
The multibillion-dollar proposal is divided into several phases, of which the first six years of the operations would focus on the expansion of the existing terminals, the optimization of the current runways and the capacity expansion of the whole airport complex.
Immediately upon takeover, the group proposes to construct full-length parallel taxiways for both runways, an additional rapid-exit taxiway for the primary runway, the extension of a second runway and the provision of maximum aircraft stands.
These solutions will increase airfield capacity to 950 to 1000 aircraft movements per day, a 35-percent increase from the current 730 aircraft movements daily.
Within the first two years, the group will rehabilitate and expand the existing terminals, which will roughly double the space and result in over 700,000 square meters of terminal area.
By that time, the airport will be able to handle as much as 72 million passengers annually, a huge jump from the current 30-million annual passenger capacity.
‘Best proposal’
Ferrer said his group submitted the better and more viable proposal, as rival Naia Consortium is “open to tweaking” its proposal.
“We firmly believe that we have submitted a stronger and more viable proposal. What we offer is a carefully studied solution to Naia, which includes an 18-year concession without the need for a third runway,” he said.
Ferrer added: “Our fellow proponent expressing publicly that they are open to ‘tweaking’ their proposal with terms similar to ours validates the viability of our own submission.”
A few weeks ago, Reverente announced that the group is open to tweaking its proposal, including the concession period that it earlier proposed, just to win the contract.
This was then questioned by Ferrer, saying that unsolicited proposals, once submitted and accepted, may no longer be amended.
Reverente, however, explained that the tweaking happens during the negotiations phase of the proposal’s approval.
‘Best deal’
Whatever happens, Ferrer said the group hopes that the government approves the best deal offered, as this will help drive growth in the country’s GDP and provide ease of transport for the common Filipino.
“Overall, the best proposal will assure that the government gets the best deal, and will yield the utmost benefit for the people and the economy,” he said.
Both groups found the need for the expansion and modernization of the Naia as “urgent,” noting recent statistics released by the Manila International Airport Authority.
The Naia has reached its peak, handling 42 million passengers last year, way above its maximum capacity of 35 million passengers annually. This year the throughput is expected at 44 million.
Avelino L. Zapanta, a well-known aviation expert in the Philippines, however, finds the proposals as either not viable or lacking (See “Two proposals for Naia upgrade fail to impress Filipino aviation expert,” in the BusinessMirror, March 27, 2018).