2018News

‘Guarantee’ provision in Naia bid questioned

By Miguel R. Camus, August 31 2018; Philippine Daily Inquirer

http://business.inquirer.net/256425/guarantee-provision-naia-bid-questioned

Image Credit to ABS-CBN News

The Department of Transportation wants to wrap up the bidding of the Manila’s Ninoy Aquino International Airport this year, however, final wrinkles—including a provision that appears to be a state guarantee—still need to be ironed out with the private sector proponent.

This came to light during a Senate hearing Wednesday on the recent Xiamen Air accident, during which DOTr officials answered queries on their plans to augment capacity in Naia and to build new air gateways.

In response to questions from Sen. Ralph Recto on the proposal of Naia Consortium—the group of seven conglomerates that offered to rehabilitate and run Naia for a period of 15 years—Transportation Undersecretary for planning Reuben Reinoso said the proposal included a “passenger service charge adjustment” throughout the concession.

The passenger service charge, otherwise known as terminal fee, is collected by the government, however, there will be a revenue sharing agreement once the private sector takes over.

The fee is determined by a fare matrix, which typically takes into consideration factors such as inflation and the improvements being done on the airport.

During the hearing, Sen. Recto said the provision was tantamount to a government guarantee. Sought for comment by the Inquirer, Reinoso did not explain how the proposed fees in Naia would be adjusted, but he agreed with Senator Recto’s assertion.

“It’s a proposal of [Naia] Consortum but the government has not acceded to it,” Reinoso said. “ Senator Recto is correct that it can be deemed as a government guarantee.”

A Naia Consortium representative could not immediately respond to a request for comment.

The issue emerged in light of the DOTr’s policy that no subsidies or guarantees would be allowed in all unsolicited offers, such as the one proposed by Naia Consortium.

The proposal would still need the approval of the National Economic and Development Authority board after the DOTr announced that it had awarded Naia Consortium an original proponent status earlier this month.

Reinoso explained that any increase in charges would go through the mandated public hearings.

“We have yet to commence negotiations on the concession agreement and we will ensure that there will be no direct government guarantee as required by law,” he said.

Jose Reverente, spokesperson for Naia Consortium, said during the hearing that their proposal would require an investment of P102 billion.

Within four years, it will increase capacity in Naia to about 65 million passengers per year. Naia is currently serving over 40 million passengers yearly, above the 31 million passengers allowed by its design.

Moreover, hourly takeoff and landing movements under Naia Consortium will rise to 52 movements, up by a third. Naia Consortium will also build a “people mover” to link Naia’s terminals.

During the hearing, Reinoso also said they would enter into negotiations with conglomerate San Miguel Corp. for its offer to build a new international airport in Bulacan.

Reinoso said the P700-billion proposal, which would have at least four parallel runways and a capacity of over 100 million passengers a year, had certain provisions that needed clarification.

He said these included the “obligations of the government on the acquisition of right of way.”

“That is something that we really need to clarify with the proponent,” Reinoso said.

Apart from improving Naia and building an airport in Bulacan, the DOTr said it was open to a proposal from the provincial government of Cavite to build an international airport on a reclaimed land near Sangley Point.

The administration, through the Bases Conversion and Development Authority, is also expanding the capacity in Clark International Airport in Pampanga province. By next month, the BCDA plans to bid out the operations and maintenance contract for Clark Airport.

Once the terminal is completed by 2020, Clark Airport’s capacity of four million passengers will increase to 12 million a year.

 

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