New NAIA super consortium proposes 25-year concession

As the Philippines’ economy continues to see growth in the majority of its sectors, one of the most important undertakings of the current Philippine administration is to bolster economic growth by allowing foreign investors to establish and boost their businesses in and around the country. To achieve this, a group of major local and international companies formed what is referred to as a super consortium and proposed a significant P210 Billion Ninoy Aquino International Airport (NAIA) rehabilitation project. 

For an airport ranked as the ‘3rd most stressful’ airport in the world, NAIA is bound to receive some much-needed funding to pursue the necessary repairs and upgrades it needs to increase its efficiency and improve its overall ranking amongst the airports in the Southeast Asia region. 

The unmistakably major task of rehabilitating the NAIA airport is said to be one of the most vital undertakings that the current Philippine government can pursue in order to improve the local economy. And as an objective that seems to be not only critical but also feasible, the new Manila International Airport Consortium (MIAC) super consortium has put forward a new feasible 25-year consortium plan with the sole aim of rehabilitating the NAIA airport for the next two and a half decades. 

New Super Consortium Proposes A 25-Year NAIA Rehabilitation Roadmap

The Philippine government has received an unsolicited proposal last April from the new international consortium, MIAC, which consists of the biggest corporations in the construction and property development industry of the Philippines. Below are the following major infrastructure development companies that joined the MIAC:

• JG Summit Infrastructure Holdings Corp
• Aboitiz InfraCapital Inc.
• Filinvest Development Corp.
• AC Infrastructure Holdings Corp.
• Alliance Global-Infracorp Development Inc.
• Asia’s Emerging Dragon Corp.

These six major Philippine companies have teamed up with the Global Infrastructure Partners (GIP), which is based in the United States and has also invested in Edinburgh Airport, London City Airport, and the port of Melbourne. 

Compared to the solicited proposal of DOTr, MIAC’s proposal was deemed much more significant and promising. With P210 B in projected capital investments, MIAC offers P 57B to be rolled out in the first five years. This proposed amount is 80% larger than what DOTr has estimated in their solicited proposal, and if approved, will become the largest budget proposal by any PPP project, regardless of it being solicited or not.

According to GIP Vice President and former World Bank president Dr. Jim Yong Kim in an interview with ANC, the fee was substantially higher due to the goal of GIP to prove their commitment to the project and attain the high-quality service that they are promising to the Filipino people. In addition to this, the upfront fee was also larger due to the longer concession period that the GIP is proposing. In concession periods, projects shorter than 20 years take up only less than 10 percent of the project, according to Dr. Kim, and the actual average of concession periods actually takes 20 to 50 years.

“The 25-year concession is actually relatively short, and once we get to having these two airports, functioning well, we’ll be just catching up with the rest of the large cities in the world.” Dr. Jim Yong Kim

Regarding what the other airport will be in this prospect, Dr. Kim and Lourdes Josephine Gotiunan-Yap state that while there is still uncertainty surrounding the assurance of what the other airport will be, they are certain that other Philippine airports will also undergo rehabilitation within their proposed 25-year concession timeframe.

The Future The Philippines’ Main Gate

According to Gotiunan-Yap, if the proposal is approved by the end of the year, GIP can begin its undertakings for the NAIA rehabilitation by early next year, 2024. Other than the main goal of GIP being the increase of efficiency in operations, the consortium also hopes that the project will help the Philippines bolster its tourism economy by making the country’s main gate one of the actual destinations for international tourists themselves. The goal is to make NAIA one of the most efficient airports in the globe and one of the top-performing airports in the entire Southeast Asia region.

Regarding the worries of the Filipino people about raised airport fees, Gotiunan-Yap ensures that while the fees of NAIA are actually one of the lowest in the world with a large space for increase, the fees will remain affordable despite privatization, and will only mirror the other local airport fees like those of Mactan and Cebu. In two decades and a half, the proposal imagines a much better NAIA, that is both world-class and the best in the nation.

References:

• Wikipedia (n.d.) Global Infrastructure Partners. Retrieved from: https://en.wikipedia.org/wiki/Global_Infrastructure_Partners
• Cabuenas, J. (19 June 2023) Manila International Airport Consortium seeks 25-year concession period. Retrieved from: https://www.gmanetwork.com/news/money/companies/873360/manila-international-airport-consortium-seeks-25-year-concession-period/story/
• Royandoyan, R. (19 Jun 2023) New NAIA super consortium eyeing 25-year concession. Retrieved from: https://www.philstar.com/business/2023/06/19/2275016/new-naia-super-consortium-eyeing-25-year-concession
• ANC (21 June 2023) Mega consortium vows faster service, economic boost after NAIA’s rehabilitation. Footage rertieved from: https://www.youtube.com/watch?v=TzeOMtgoQM8