Government may forfeit SMC performance bond on airport project

MANILA, Philippines — The P11-billion performance bond of San Miguel Holdings Corp. (SMHC) for the Bulacan International Airport project would be forfeited in favor of the government if the company fails to comply with the concession agreement, a transportation official said yesterday.

Transportation Assistant Secretary Giovanni Lopez said the P734-billion project was supposed to break ground last December or January, but San Miguel was given more time because of an unspecified personal issue of San Miguel Corp. (SMC) president Ramon Ang.

“The president of SMC is going through a serious matter... instead of repeatedly following it up with SMC, our secretary, at this point in time, has opted to exercise human compassion and decency, if we can give them more time so the proponent of the Bulacan airport can fully recover,” Lopez said at a press briefing in Malacañang.

Lopez, however, said there is no reason to worry about the delay in the project timeline. He noted that in a concession agreement involving an unsolicited proposal, the proponent of the project is required to post a construction performance security. 

“In the contract of San Miguel with the DOTr (Department of Transportation), the government is always at the advantage,” Lopez said.

“In this Bulacan airport, San Miguel posted a performance bond in the amount of more or less P11 billion, so if nothing happens in the construction and they violated rules or regulations in the construction of the Bulacan airport, rest assured, that will be forfeited in favor of the government,” he added.

Lopez said it would take six years before the airport is completed but the construction would “definitely” start this year.

The transportation department awarded the Bulacan airport project to SMHC last August. The company will handle the financing, design, construction, supply, completion, testing, commissioning and operation and maintenance of the airport, which is intended to help ease congestion at Ninoy Aquino International Airport in Pasay City.

Last December, Ang said the groundbreaking of the airport would be delayed “because it is on hold.” The transportation department has said the justice department is reviewing the concession deal of the project at the request of the finance department.

While there were no objections to the deal, the agency said there was a need to clarify the phrasing of provisions on material relating to adverse government action on situations where it deviates from contractual obligation. Such action would require the government to compensate a private entity.

The government also wanted to clarify the cap on liability in relation to operational performance and deliverables.