A ray of hope

Everything seems to be looking up as far as improving the country’s airport system is concerned.

Just recently, the Department of Transportation said that the development of a P700-billion new airport in Bulacan by San Miguel Holdings Corp. (SMHC), a unit of San Miguel Corp., could finally get the go-ahead from the government by early next year.

Transportation Undersecretary Ruben Reinoso said that if everything is agreed upon, SMHC can be granted final approval and award of the contract by early next year or even toward the end of this year.

According to Reinoso, government and SMHC are in the final stages of revising the contract’s terms.

However, after the project is approved, it will have to undergo a Swiss Challenge, which is required in unsolicited proposals.

The Bulacan airport has been prioritized by government in a bid to decongest NAIA, which has been operating beyond capacity. SMHC’s project would be built over a 2,500-hectare property, would have six runways, and can handle up to 100 million passengers a year.

Earlier, Finance Secretary Carlos Dominguez expressed concern that SMHC might not have the financial capability to build the massive international hub and has suggested that SMHC sign a joint liability agreement with its parent company.

But SMC had said that it is ready to enter in such sharing mechanisms as soon as the concession agreement is signed.

Just last Sept. 18, SMHC submitted a revised concession agreement which according to DOTr is currently under review and is set for another set of negotiations.

The revised agreement already included some of the major issues discussed between government and SMHC previously, such as provisions on what constitute material adverse government action, what constitutes change in law to warrant compensation by government to the private sector, and determination of payment in case of default of either party.

As reported by media, one of the conditions that DOF wanted incorporated in the concession agreement is that government will not expropriate private land for the project’s use and SMHC will have to negotiate and acquire the land it would need for access roads to the planned airport.

Also reported were conditions of DOF like the one that would require SMHC to waive its right to be paid in case government fails on its commitments as well as any compensation in case of change of laws, and that SMHC drop any plans by the latter to improve MIA aviation equipment, runways, and terminals preparatory to complementing by the Bulacan gateway.

What we know is that SMHC wants government to appropriate lands for the airport’s use, just like it does for other projects of the DOTr. We also know that SMHC does not agree with the other conditionalities.

But what is encouraging is DOTr’s statement that they are keen on moving forward with “the very advanced proposal” for the Bulacan airport.

DOTr Undersecretary for planning Ruben Reinoso said that the proposal is already in its advanced stage and that they are negotiating on the detailed terms and conditions of the agreement, even as they are already preparing for the Swiss Challenge.

He emphasized that as long as they are able to agree on the terms and conditions of the concession agreement, the document will be submitted to the NEDA Investment Coordinating Council (NEDA ICC) for confirmation. Simultaneously, DOTr is already preparing for the Swiss Challenge and is drafting the terms of reference, bid parameters, risk allocation matrix, among others.

The P735 billion Bulacan project, which was earlier granted approval by NEDA, involves the construction of a world-class major international gateway with four to six parallel runways, modern terminals, a sea port, an industrial zone, and expressways. The agreed concession period is 50 years.

The Bulacan airport could co-exist with Clark airport. As for NAIA, there are experts who insist that it either be decommissioned or it be reduced to one that only caters to the needs of private and smaller aircrafts.

Yes, a multi-airport strategy is a good idea, but as to how many international gateways should be allowed to operate is something that cannot be left to market forces. Earlier, DOTr Secretary Art Tugade said that a strategy of many airports is good. But government should also help make sure that the system works harmoniously. If government is not willing to give any guarantees or financial support, then at least it should create an environment that is good for business.

While it is true that the Bulacan airport is an unsolicited proposal, the fact remains that our country need a new airport that can accommodate the increasing number of passengers and tourists. Were it not for our private sector, where would our country’s infrastructure program be? Is it too much to ask from the DOF to support the SMHC proposal, instead of making it difficult for the project to survive? While the DOTr says one thing, the DOF says another? Aren’t they supposed to have a common agenda?

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