PBA Representative Jericho Nograles on Tuesday, September 15, questioned the financial capacity of the latest set of companies proposing to rehabilitate the Ninoy Aquino International Airport (NAIA).

Nograles said the Manila International Airport Authority (MIAA) is in a better position to fund the NAIA rehabilitation, compared to listed Megawide Construction Corporation and its Bangalore-based partner GMR Infrastructure Limited.

GMR-Megawide bagged the original proponent status for the main gateway’s upgrade following the government’s collapsed talks with the NAIA Consortium.

“I think we have to consider scrutinizing the billions of pesos and the MIAA. And we must consider na hindi dapat ituloy itong (that we shouldn’t pursue this) expansion via these onerous and unfair provisions,” said Nograles in the budget hearing of the Department of Transportation (DOTr) at the House of Representatives.

The required proponent equity for the project is at P32 billion, according to the congressman. However, Megawide reported an equity of P18 billion in 2019.

“Based on the documents that were submitted previously, both the equity and financed portions that were submitted were not sufficient for the P107-billion proposal,” said Nograles.

“The MIAA alone [had] P47 billion in equity [in 2018], which means it is more than sufficient for MIAA to develop NAIA by itself.”

The congressman did note that the government removed the NAIA rehabilitation from its priorities.

“Nakakatakot kung ipu-pursue pa rin natin ang pag-lift [ng equity requirement] at pagbibigay ng concession na ito. Binibigyan pa ng extrang pampagana ang private [group] dahil 18 years lang ang concession period, pinagbigyan in the same meeting ng July 24. ‘Para kumita naman kayo ng mas malaki, gawin na lang 25 years,'” said Nograles.

(It would be alarming if we continue to pursue the lifting of the equity requirement and awarding this concession. The government even enticed the private group because the concession period was only for 18 years, yet this was extended during a meeting on July 24. “So that you can earn, let’s extend the concession period to 25 years.”)

In response, Transportation Secretary Arthur Tugade said the option to extend the concession period was not given only to GMR-Megawide, but to the NAIA Consortium as well.

“Because of the pandemic, the recovery and financial recovery was greatly affected. That is why the proponent – initially from the consortium of 7 – requested for a change. But then, in the discussions, what was reached upon was not to change the financial numbers [or the] formula, we’ll just give them sufficient time by extending the term,” said Tugade.

In a statement, Nograles said he wrote to Tugade raising the possible violation of Republic Act No. 6957 or the Build-Transfer-Operate law which requires private proponents to have an “adequate financial base” to fund projects.

“It is therefore very alarming that your office negotiated and approved that there will be no minimum equity requirements on the part of the project proponent. This accommodation was not extended to the previous mega-consortium, and may be considered in violation of Republic Act 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, for giving unwarranted benefits, advantage, or preference to a private party,” Nograles said in his letter to Tugade, dated September 7.

Can GMR-Megawide finance NAIA rehab?

During the hearing, Nograles claimed GMR-Megawide failed to submit additional financial documents being requested last week by the Investment Coordination Committee (ICC), which reviews big-ticket projects.

This was confirmed by Transportation Undersecretary Ruben Reinoso, but he said the deadline was set by the MIAA and not the ICC.

According to Reinoso, it’s up to the ICC to review if the proponent can actually finance the unsolicited proposal.

“The technical board of the ICC requested for more documents to prove the financial capability of the proponent to invest the P107 billion, which means the necessary equity for the 70-30 debt service ratio,” said Reinoso.

“We are still awaiting the compliance of the [proponent with] the requirements of the ICC so that we can review them, and forward them, and submit them to the ICC for their own evaluation and appreciation,” the transportation undersecretary added.

While GMR-Megawide missed the deadline set by the MIAA, Reinoso said that ultimately, it would be the National Economic and Development Authority, which co-chairs the ICC, who would set the deadline for submission.

GMR-Megawide recently took over the unsolicited proposal for the NAIA rehabilitation, after government negotiations with the NAIA Consortium, composed of the country’s top conglomerates, failed over the viability of the project.

GMR-Megawide’s proposal for NAIA involves rehabilitation, operations, and maintenance of the country’s main gateway. It was initially pegged at $3 billion, which is equivalent to around P150 billion.

If negotiations move according to plan, the NAIA deal would be the 3rd airport project of GMR-Megawide. The two firms entered into the country’s first public-private partnership project for the Mactan-Cebu International Airport, as well as the construction of a new terminal at the Clark International Airport.

In July, Groupe ADP bought 49% of GMR Airports Limited, the airport development arm of the GMR Group. – Rappler.com