SMC-led group to operate NAIA

By Ma. Cristina Arayata

February 16, 2024, 2:37 pm Updated on February 16, 2024, 6:18 pm

<p>Ninoy Aquino International Airport Terminal 1  (<em>PNA file photo by Cristina Arayata</em>)</p>

Ninoy Aquino International Airport Terminal 1  (PNA file photo by Cristina Arayata)

MANILA – SMC-SAP & Co. Consortium emerged the winning bidder to operate and rehabilitate the Ninoy Aquino International Airport (NAIA), Transportation Secretary Jaime Bautista announced Friday.

The group, composed of San Miguel Holdings Corp., RMM Asian Logistics, Inc., RLW Aviation Development, Inc. and Incheon International Airport Corp., bagged the PHP170.6 billion public-private partnership (PPP) project by offering the biggest revenue share of 82.16 percent to the government.

"The privatization of the operations and maintenance of NAIA was conceptualized as early as 30 years ago when the government of then president Fidel Ramos started the privatization of Terminal 3. Unfortunately, it ended up in court and in early 2000, it was taken over by government. So 30 years in the making, now we will be able to privatize the operations and maintenance of the Manila International Airport," Bautista said in a press briefing.

Transportation Undersecretary Timothy Batan said the project could be among the fastest in the country's PPP history -- from the project development process that started on Feb. 2, 2023 until its approval on Feb. 15 this year.

"This process is one of if not the fastest solicited PPP project of the Philippine government. Prior to this, it was 18 months for the MCX PPP project," he said. "It is the directive of President (Ferdinand) Marcos Jr. to make the PPP more attractive to the private sector," he added.

This was seconded by Bautista, saying the Transportation department, along with the PPP Center, the Manila International Airport Authority, the Department of Finance and the National Economic and Development Authority worked hard to implement the project the soonest.

The government opened the bidding for the contract to rehabilitate, operate, and maintain the NAIA in August 2023.

Aside from SMC-SAP & Co., two other groups qualified for the bidding -- the GMR Airports Consortium which offered 33.30 percent revenue share, and the Manila International Airport Consortium that offered a 25.9 share.

As winner, the SMC-led group is expected to improve the NAIA complex, including facilities such as the runway, taxiway, and ramp areas and firefighting facility.

It is also expected to increase the airport's current annual passenger capacity of 32 million to 60 million.

The turnover to the new operator will be by the second half of 2024, MIAA earlier announced.

The private operator's contract initially cover 15 years and could be extended by 10 years.

MIAA, on the other hand, will govern the private operator and set the standards.

It will monitor the key performances and service level of the private proponent.

Meanwhile, Senator Grace Poe said she is looking forward to the success of the government's new partnership with the SMC-led consortium to rehabilitate NAIA.

“The rehabilitation's success will not only give the Filipinos safety and convenience, but pride in welcoming the world with a world-class gateway," Poe said in a statement.

The chairperson of the Senate Committee on Public Services said she also wishes the consortium “the best of luck” as it addresses the efficiency and safety needs of the increasing number of passengers at NAIA.

"The winning bidder faces a herculean task of giving the decades-old structure the crucial expansion and modernization so it could graduate from the list of the world's infamous airports," Poe said.

She also expressed her trust in the Department of Transportation in its role of monitoring “the efficiency and transparency of the project."

‘Best deal out of biggest PPP’

House Ways and Means Committee chair Joey Salceda lauded the Philippine government for locking in the "best deal out of the biggest" PPP in the country's history with SMC offering 82 percent government share out of the airport revenues, as well as an "upfront outright payment" of at least PHP30 billion to the government.

“All in all, an excellent deal for the government. We got the best deal out of the biggest PPP in history, right after the enactment of the PPP Code,” Salceda said in a statement.

He said the rate-based bidding also makes it fair to all parties involved.

"Since we can’t really equalize proposals qualitatively, the best metric is what gives the best deal for the government. We fought for rate-based bidding, as the ultimate measure of what counts as a fair deal in PPPs," he said.

Salceda said he would convince SMC to do "immediate improvements to the airport” including the installation of walkalators along the full length of Terminal 3, the interconnection of Terminals 1,2, and 3, and better lounge facilities for overseas Filipino workers.

“Immediately, there will be enhancements. I’m getting the proponent to commit,” he said.

Salceda said he looks forward to a "declogged pipeline" of PPPs modeled after the "fair and verifiable" rate-based bidding system." 

Welcome development

Finance Secretary Ralph Recto welcomed the MIAA Board’s approval to award the contract to SMC-SAP & Co. Consortium.

“This is certainly a welcome development for this long overdue project. NAIA has been operating beyond capacity for 9 years, leading to poor service and passenger inconvenience," Recto said in a statement Friday.

"The NAIA PPP project has been in the works for three decades, spanning six administrations. It has finally turned into a reality under the Marcos, Jr. administration,” he added.

The PPP deal is projected to generate around PHP900 billion in revenues for the national government in the course of a 15-year concession period, with a provision for extension of another 10 years.

The DOF said this is opposed to the total dividends remitted by MIAA to the government from 2010 to 2023, which was only PHP22.05 billion.

The NAIA rehabilitation project is the largest solicited PPP project under President Ferdinand R. Marcos Jr.

A solicited proposal refers to projects identified by the implementing agency from the list of their priority projects, with the selection of the private proponent done through a public bidding process. (With a report from Filane Cervantes/Wilnard Bacelonia/Anna Leah Gonzales/PNA)