Is the Bulacan airport doomed?

When I brought up the question to Finance Secretary Sonny Dominguez last Friday, he said that as far as he is concerned the unsolicited proposal of San Miguel to build a world class airport in Bulacan is considered approved.

I told Sec. Sonny that was not the impression of San Miguel’s Ramon S. Ang when a group of journalists, including myself, had a long conversation with him last Thursday.

I told Sec. Sonny that Mr.  Ang told us they just received a discouraging list of conditions that DOF wants to incorporate in the concession agreement. We got the impression that Mr. Ang is worried the conditions will be seen as deal breakers by the financial institutions they have tapped.

For background, here is the list as earlier reported by Jarius Bondoc in his column which I slightly modified:

- Waiver of payment in case government fails on commitments. It is standard for government to justly compensate the contractor for broken promises, like clearances and permits. So long as obligations are legal, government must comply or else pay damages. It is natural in all deals. Yet SMHC is being asked to waive its right.

-Waiver of compensation in case of change of laws. Similarly, contractors are entitled to compensation in case new game rules are introduced that drastically alter the project viability in mid-stream. Yet SMHC is being made to forgo this right.

-No rights-of-way. Government usually expropriates private land for public use, so long as justly compensated. In this case, SMHC is willing to pay for land that would be needed for access roads to the planned airport. Yet the DOF does not want to expropriate any land the project needs.

-Drop San Miguel’s unsolicited proposal for the rehabilitation of NAIA. Apparently, San Miguel had an earlier unsolicited proposal sent to DOTr for the NAIA rehab. But MIAA gave original proponent status to a similar proposal of a group of conglomerates without first rejecting San Miguel’s prior proposal.

Mr. Ang didn’t say so, but I think this is not that important to them now except to point out they have been badly and maybe illegally treated by government.

When I asked Sec. Sonny for his reaction, he simply said they are just following the President’s instructions that the Bulacan airport proposal is approved provided there are no explicit or implied government guarantees. Sec. Sonny said the minutes of the NEDA Board meeting is their basis for sending those conditions.

I checked with NEDA Secretary Ernesto Pernia and his reply to my e-mail was: “PRRD couldn’t attend the NEDA Board meeting on the Bulacan airport. I chaired the meeting instead. The proposed airport was approved subject to the sorting out/clarification of remaining financial issues, the concession agreement, risk allocation matrix, and performance standards. There was no order or direction from PRRD.”

 Hmmm… what is going on here… Maybe the DOF conditions sent to DOTr expanded the definition of what constitutes guarantees. Indeed, Sec. Sonny appeared genuinely surprised at the San Miguel reaction and understanding of their conditions.

First of all, Sec. Sonny said once the government and San Miguel agree on terms in the concession agreement, it is binding on both. If government makes a commitment to do something, government will deliver.

Obtaining clearances and permits cannot be guaranteed however. There are rules in obtaining such things as environmental clearances. Neither DOF nor DOTr can guarantee the proposal won’t be rejected by DENR on environmental grounds.

Sec. Sonny also said that they cannot guarantee local government clearances and taxes. That is something San Miguel must deal with LGUs concerned.

As for right of way expropriation, Sec. Sonny said that, of course, government would help San Miguel because only government can expropriate property. After all, once finally approved, the airport also becomes a project of the administration.

Sec. Sonny also reminds San Miguel that the project is unsolicited and as such, does not enjoy the same privileges of solicited projects like the Mactan Airport Terminal 2.

The finance chief also wants to clarify who is the actual proponent because even if San Miguel is a large conglomerate with a balance sheet that can support it, San Miguel Holdings, the listed proponent doesn’t have the financial heft needed. 

Government, Sec. Sonny said, also wants to know more details like the impact of the airport’s land traffic on existing road infrastructure, among other things. This is why the negotiations with DOTr, due to start any day now, should clarify all those points.

Sec. Sonny said in so many words that he would not stand in the way of building that airport but that he has the responsibility of protecting government’s interest. He said he doesn’t want a repeat of the MRT-3 deal with the Sobrepena Group which was so lopsided in favor of the private proponent and we are still suffering for it now.

San Miguel’s Bulacan airport proposal is the most advanced among proposals for a civilized international gateway. San Miguel plans to have four runways and a modern terminal  were a capacity for 100 million passengers a year. I think it should be approved and construction started.

Mr. Ang told us that if the airport project is shelved, he would just turn the 2,500-hectare property into a mixed use development in Bulacan. That part of the Greater Metro Manila Area had been left behind with most of the development happening South of the city.

I suggested to Sec. Sonny that they also start building the second runway at Clark and establish a protocol that will guide Clark airport officials on how to treat diverted flights. Passengers must not be kept in the aircraft for longer than an hour, must get CIQ clearance at Clark and transported by land to Manila.

If government has a two airport policy, they must make it operational at hindi sabi sabi lang.

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco