US$6.7 billion unsolicited proposal for Manila airport PPP

US$6.7 billion unsolicited proposal for Manila airport PPP

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A consortium consisting of seven of the biggest conglomerates in the Philippines has submitted to the Department of Transportation and the Manila International Airport Authority a proposal to rehabilitate and upgrade the Ninoy Aquino International Airport (NAIA), in Manila. The proposal requires a total investment of PHP350 billion (US$6.7 billion).

The companies involved are Alliance Globe Group Inc., Ayala Corp., Aboitiz Equity Ventures Inc., Metro Pacific Investments Corp., Filinvest Development Corp., JG Summit Holdings Inc. and LT Group. JG Summit and LT Group own the country's two largest commercial air carriers, Cebu Pacific Air and Philippine Airlines, respectively.

As reported on this platform, the project has been in development for some time. It was approved by the National Economic and Development Authority (NEDA) Board in September 2016, after which the conglomerates expressed their interest in the project. However, the tender was put on hold in February 2017 as the government decided to prioritise the development of a second international airport in the country over upgrading NAIA.

The unsolicited proposal entails two phases of development. The first will involve improving and expanding the terminals in the current NAIA land area, with the aim of increasing the airport's annual capacity to 65 million passengers in 48 months. NAIA was built to handle 30 million passengers but is currently handling nearly 40 million passengers.

Phase two will involves the development of an additional runway, taxiways, passenger terminals, and associated support infrastructure. In addition, the airport will be linked to the Metro Rail Transit Line 3 and Light Rail Transit Line 1.

The consortium has proposed a 35-year concession period, after which ownership of the airport will be transferred to the government.

At the official announcement of the proposal, consortium speaker and Aboitiz InfraCapital vice president Jose Emmanuel Reverente explained the group's intentions,

"Through this proposal, we envision a new NAIA: a fully integrated premier gateway that we Filipinos can truly be proud of, backed by the know-how of an experienced technical partner and the strong synergy of seven homegrown teams."

The consortium is in talks with Changi Airport International, the operator of Singapore's Changi Airport, regarding the technical partner position.

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