NAIA CONSORTIUM TO SHORTEN CONCESSION PERIOD | Marvin Germo

NAIA CONSORTIUM TO SHORTEN CONCESSION PERIOD

By: Marvin Germo | March 24, 2018

Companies In charge

The Consortium for the NAIA upgrade this 2018 is made of 7 conglomerates namely Aboitiz InfraCapital Inc., AC Infrastructure Holdings Corp., Alliance Global Group Inc., Asia’s Emerging Dragon Corp., Filinvest Development Corp., JG Summit Holdings Inc. and Metro Pacific Investments Corp. The consortium has actually submitted its P350 billion proposal to the Department of Transportation last February 12, 2018 and such proposal would cover a 35-year concession period.

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Inclusions of development

The improvements to be done in the airport would be done in two phases. The first phase will focus on the expansion of the terminals in the existing land area. For phase two, it will include the construction of an additional runway, taxiways, and passenger terminals. The said proposal will also include a construction of a people mover linking its existing terminals while connecting the airport to the existing mass transport system in Metro Manila like the Light Rail Transit (LRT)-1 system extended to Cavite. Apart from that, the Mega Manila Subway project would be commenced immediately.

Pros and Cons

Although the government hopes for a shorter concession period in order to address the airport congestion directly, the disadvantage is that, the consortium will not be able to build a third runway due to the lack of time. The expansion is limited to the improvements in its terminals and other facilities.

Competition is tight

Considering the shortened concession period, there were proposals made from other companies towards the construction and expansion to be made of the airport. Among those include Megawide Construction Corporation and GMR Infrastructure Ltd. of India which offered a shorter concession period for only 18 years. With regards to the guidelines and rules for accepting and processing proposals, such are evaluated and assessed under the Build-Operate-Transfer (BOT) Law implementing rules and regulations (IRR). This means that the company or group that submits first will be given priority. If the first company or group does not satisfy the necessary requirements, it is only then that the next succeeding proposals will be reviewed.

Impact

The NAIA’s consortium proposal will be given one year for its approval so deadline will be on December 31st of this year. Records show that last year, there were 42 million passengers which exceeded the airport’s passenger capacity of 31 million annually. If the consortium’s proposal will be approved and given a go signal, one of its expected advantages is an increase of the airport’s capacity. By 2020, it will be increased to 47 million and two years after, 65 million.

The improvements to be made to the airport will indirectly bring an economic benefit to the country. First of all, if there’s a larger airport facility, more flights and passengers can be accommodated. This means that if there’s an active transport of people and goods, the economy is expected to generate more income from the funds spent for it. Also, the country will be visited by tourists from around the world and if this happens, businessmen will be encouraged to open their own company here. The effects then will be shown by the macro and micro economic indicators.

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