The Market Monitor Minding the Nation's Business
A consortium of the country’s seven biggest conglomerates insisted it is not asking for government guarantees on its unsolicited offer to modernize and operate Manila’s Ninoy Aquino International Airport (Naia) for 15 years.
Naia Consortium was reacting to last week’s Senate inquiry on the recent Xiamen Air incident, during which its proposal for terminal fees was tagged as a potential guarantee. It was unclear how it was considered as such.
The Duterte government has adopted a policy that barred any state subsidies or guarantees for unsolicited offers, which include the one proposed by Naia Consortium. The current issue raises questions on what should be considered as a guarantee.
Naia Consortium spokesman Jose Reverente said government guarantees were those that protect proponents from risks and ensure a return even if the project fails.
“The consortium is not asking for such protection and guarantee and is taking all the risks, including a drop in the number of passengers and consequently revenues,” he said.
At the Senate hearing, Sen. Ralph Recto asked details on Naia Consortium’s P102-billion offer to improve and operate Naia while expanding its capacity.
Transportation Undersecretary Reuben Reinoso, responding to those queries, said the proposal included a passenger service charge adjustment, another term for the terminal fee, throughout the concession period. He later agreed with Sen. Recto’s assertion that the provision could be “deemed a government guarantee.”
Reinoso said the terminal fee structure was still a proposal and that negotiations between the government and the Naia Consortium has not started. He promised that as a result of these negotiations, there would be “no direct government guarantee as required by law.”
Naia Consortium’s proposal still need the approval of the National Economic and Development Authority board after the DOTr announced it awarded Naia Consortium an original proponent status earlier this month.
Under its proposal, Naia Consortium wants to increase capacity in Naia to 65 million passengers annually in four years. This is double the existing capacity of 31 million passengers. Naia’s four passenger terminals served 42 million passengers in 2017.
It also plans to increase the number of flights Naia can accommodate while building a “people mover” to conveniently link Naia’s terminals.
The Naia Consortium members are Ayala Corp., Aboitiz Equity Ventures, Alliance Global Group Inc., Asia Emerging Dragon, Filinvest Development Corp., JG Summit Holdings Inc. and Metro Pacific Investments Corp. Its technical partner is Changi Airports International.