MCIA Terminal 2 a win for PPP

The new terminal at the Mactan-Cebu International Airport is one landmark structure in Cebu we can take pride in. Photos online and in the newspapers from the inauguration ceremony last Thursday show a world-class facility with a splendid design that also captures the cultural nuances of the Cebuano community (curved wooden roof, resort-themed with access to sunlight, rattan and mother of pearl materials, etc.).

Construction of the building by GMR-Megawide Cebu Airport Corp., a Filipino-Indian consortium, started during the administration of former president Noynoy Aquino. It was then touted as the biggest airport Public-Private Partnership (PPP) project of the Aquino administration.

To its credit, the Duterte administration made sure the construction will be completed in time for the scheduled start of operations by July. “No delays, no corruption,” announced Department of Transportation Secretary Arthur Tugade. President Rodrigo Duterte even expressed awe about the new airport terminal and was quoted in the reports saying, “Napakaganda ng airport. Inggit rin ako kasi matagal akong mayor sa Davao, 23 years. I suppose that I’d also like the Davaoeños to enjoy an airport as beautiful as what you have here.”

The government’s Public-Private Partnership Center defines PPP as “a contractual agreement between the Government and a private firm targeted towards financing, designing, implementing and operating infrastructure facilities and services that were traditionally provided by the public sector.”

The airport terminal in Mactan is a concession kind of PPP wherein the government grants the private sector the right “to build, operate and charge public users of the public good, infrastructure or service, a fee or tariff which is regulated by public regulators and the concession contract.”

PPP is seen as a win-win situation between the government which lacks the resources to meet infrastructure needs and the private sector which looks for investment opportunities in public infrastructure services. Thus, according to the PPP Center, “the project is to be structured in such a way that the private sector gets a reasonable rate of return on its investment.”

In a manner, the MCIA Passenger Terminal Building 2 project is realized because it is both a public infrastructure need and a good investment for its private consortium. The Cebu market, and its economy in general, can sustain the operation of the new public structure.

According to a report by Carlo S. Lorenciana of The FREEMAN last February, passenger traffic at the MCIA grew by 14 percent in 2017 at 10.05 million – that’s 3.15 million international passengers and 6.9 million domestic passengers. Air traffic volume also grew by 21 percent in 2017 at 86,380, the bulk of the growth mainly coming from international flights. This robust growth in passenger traffic and air traffic volume is projected to continue for many years. Correspondingly, the new terminal will increase passenger capacity from 4.5 million to 12.5 million.

The allure of well-executed public infrastructure projects under PPP, however, should not hide the common risks to the general public associated with PPP. One of these is when the private investor is allowed to obtain a rate of return of investment from service and other fees which most ordinary people find very expensive. Indeed, there is a cost attached to tapping the expertise of the private sector and letting it build and operate things.

For me, profit is a good motivation for offering excellent products or services. I don’t mind paying good money for excellent service. However, a balance must be struck especially when it comes to public and basic services.

Another challenge that comes with the new MCIA terminal is ensuring that the actual operation and service standards of the terminal live up to the same impressive standards of the structure’s design. Based on its good performance in the old MCIA terminal, I am quite confident that GMR-Megawide can do a similarly impressive job in the new terminal.

We’re all looking forward to giving our guests or tourists a good impression of Cebu once they arrive at our new world-class airport terminal. I just wish that we could sustain that good impression once they get out of the airport and experience Cebu’s urban jungle. With worsening problems of traffic congestion, disorganized and unkempt zones, and the ecological impact of urban growth – we still have a lot of work and fixing to do.