Philippines airport PPP finally awarded amid controversy

7 April 2014

After months of wrangling, the Philippines’s Department of Transport and Communications (DOTC) has finally awarded the concession to renovate, expand and then to operate the Mactan-Cebu International Airport to a consortium comprising an Indian firm and a Philippine firm.

It emerged in January that India’s GMR Infrastructure and the Philippines’ Megawide Construction had offered the highest premium, approximately $320m, for the project, which entails renovating the existing passenger terminal building, building a new one for international flights, and operating the airport for 25 years.

The award process for this public-private partnership (PPP) has been controversial.

The second highest bidder, a consortium of the Phillipines’ Filinvest Development Corporation and Singapore’s Changi Airport Group, sought the disqualification of GMR-Megawide on grounds of conflict of interest and insufficient capacity to handle the project.

Then, just a day before the contract award, a senior politician, Senator Sergio Osmeña III, asked the Philippines’ Supreme Court to stop it. He, too, alleged conflict of interest on GMR’s part.

But the DOTC remained committed to the GMR-Megawide bid.

Mactan-Cebu International Airport will benefit from a new terminal as part of the development (Wikimedia Commons)

"Amidst all the noise drummed up in different forums the past few months, the DOTC has allowed nothing but the law and the country’s interests to matter in awarding the project," said DOTC spokesperson Michael Arthur Sagcal in a statement.

"This project should have been done at least a decade ago, so there is no more time to waste," he added. "We have resolved all issues, we are ready to defend our decision, and it is now time to push forward on Daang Matuwid by delivering our services to the people."

(Daang Matuwid, meaning ‘straight path’, is the name given to the anti-corruption initiative launched by Philippines’ president Benigno Aquino.)

GMR-Megawide now have 20 days to complete the post-award requirements, such as submitting a $4m line of credit up front, and the payment of the $320m premium to the Philippines government. 

The DOTC said the construction work is expected to take three to four years. The total cost of the renovation and expansion has been estimated in the Philippines’ media to be 17.5bn pesos, or roughly $390m.

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