SMC-led group wins bid for NAIA privatization

MANILA, Philippines — A consortium led by San Miguel Corp. (SMC) together with the operator of South Korea’s Incheon airport has bagged a 15-year concession to rehabilitate and run the Ninoy Aquino International Airport (NAIA), in a privatization tack that promises P900 billion in revenue for the government.

SMC SAP & Co. Consortium yesterday received the notice of award to upgrade NAIA, marking one of the quickest privatization processes for any government asset in history, with the bidding lasting less than six months.

With the award, the group will manage the airport until 2039 in line with the 15-year concession granted by the Department of Transportation (DOTr).

This can be extended by up to 10 years depending on the performance of the consortium, which would be tasked to invest at least P122.3 billion – or P4.89 billion per year – during a 25-year period.

For the first six years of the concession, the consortium would be required to spend a minimum of P88 billion for upgrading the services of the airport.

The consortium won the contract for offering the government the highest revenue share of 82.16 percent, beating rivals that tendered way below its offer.

GMR Airports Consortium was planning a 33.3 percent revenue share for the government, while the Manila International Airport Consortium pitched the lowest at 25.91 percent.

In total, the government expects to raise more than P900 billion in revenue from turning over the operations and maintenance of the country’s premier gateway.

Broken down, the government will get over 82 percent share in earnings from NAIA operations, an upfront payment of P30 billion and annuity cost of P2 billion.

Transportation Secretary Jaime Bautista said it is urgent that NAIA is improved to accommodate the resurgent demand for air travel, as the New Manila International Airport (NMIA) – which is also being built by SMC in Bulacan – will become operational only by 2028.

As mandated, SMC SAP & Co. has to elevate the passenger capacity of NAIA to at least 62 million per annum. Bautista said the Philippines would require an airport that can facilitate as many as 100 million per annum by 2050.

“It (NAIA) is a very congested airport