In what’s being called a landmark judgment, the Supreme Court of the Philippines has upheld a decision of the Department of Transportation and Communications (DOTC) to award the Mactan-Cebu International Airport (MCIA) expansion project to a consortium comprising India’s GMR Infrastructure (GMR) and local firm Megawide Construction Corporation.
The decision is a milestone on the road to airport privatisation in the Philippines, and gives a boost to GMR, which is bidding to operate five regional airports in the country.
Citing lack of merit, the Supreme Court denied the April 2014 petition by a senator to stop the contract and also denied the petition by the Business for Progress Movement, for lack of legal and factual bases.
In a statement following the decision GMR said the decision "clears any overhang" and paves the way for the modernisation and expansion project. It will see the airport move into private-sector control under a public-private partnership (PPP) scheme, which is new for the Philippines.
There being no violation of any law, regulation or the bidding rules, nor any arbitrariness or unfairness committed by public respondents, the presumption of regularity of the bidding for the MCIA Project must stand– Supreme Court of the Philippines
GMR and Megawide had offered the highest bid, approximately $320m, for the PPP scheme, which entails renovating the existing passenger terminal building, building a new one for international flights, and operating the airport for 25 years.
Dating back to the 1960s, the airport requires renovation and is operating at peak capacity.
The second highest bidder, a consortium of the Philippines’ 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.
A senior politician, Senator Sergio Osmeña III, also asked the Philippines’ Supreme Court to stop it, alleging conflict of interest on GMR’s part.
But the Supreme Court ruled in GMR-Megawide’s favour.
"There being no violation of any law, regulation or the bidding rules, nor any arbitrariness or unfairness committed by public respondents, the presumption of regularity of the bidding for the MCIA Project must stand," the decision reads.
GMR welcomed the judgment.
"It clears any confusion or misconception about the process of airport modernization," the company said in a statement.
"This decision reinforces our position as a credible & financially strong airport operator. The decision will also boost the confidence of foreign investors in the PPP program of the government of Philippines and comes at an opportune time when the 5 regional airports are being bid out, in which GMR is also participating."
GMR Group owns and operates India’s Delhi Airport and Hyderabad airport. The Group built Delhi airport’s Terminal 3 in 37 months and Istanbul’s Sabiha Gokcen airport in 18 months, which the company called a world record.
Despite the court case, the consortium, called GMR Megawide Cebu Airport Corporation (GMCAC) took over the management of the MCIA passenger terminal and related areas on 1 November 2014.
Photograph: Dating back to the 1960s, the airport requires renovation and is operating at peak capacity (mactancebuairport.com)