Two, six or eight bidders?

EYES WIDE OPEN - Iris Gonzales - The Philippine Star

The Asian Development Bank (ADB), the Transaction Advisor on the privatization of the Ninoy Aquino International Airport (NAIA), has spoken.

It recommends extending the deadline for the submission of bids for the NAIA modernization project.

As of this writing, the Marcos administration has not announced any decision yet on the matter but it should know that deadline extensions are not unusual. It is, in fact, an international practice.

As someone closely observing the NAIA developments for decades now, I believe a one-time extension is reasonable, just to ensure a more competitive process.

The ADB said that it expects only two prospective bidders with participation by large local corporations to submit bids if the deadline for the submission of bids isn’t extended.

“They have both submitted unsolicited proposals for NAIA in the past and are thus significantly more familiar with NAIA than the other four prospective bidders,” the ADB said.

The question we must ask ourselves now is whether we want just two or six bidders or even eight.

In any big-ticket bidding, the more participants, the merrier; the less, the scarier. And in this case, more bidders would surely make the process more competitive and credible.

Thus, the ADB recommends the extension of bid submission by one month or up to Jan. 29, 2024, “to give bidders more time to prepare and submit bids, thus resulting in more competition and a better financial outcome for the Philippine government.”

“It would also provide concrete evidence of the government’s commitment to encourage new players and foreign investment in Philippine public-private partnerships, without causing undue delay to NAIA’s modernization and the PPP program,” it said.

Of the six prospective bidders which have been participating actively in pre-bid activities, four – including large, credible international airport operators with no prior investment in the Philippines – have requested an extension, the ADB also said.

“They have asked for more time to request and analyze additional information from MIAA (Manila International Airport Authority) and DOTr (Department of Transportation), and to secure their internal corporate approvals, which will take longer in light of the upcoming holiday season,” the ADB said.

For sure, these international airport operators – with proven track record in running gateways abroad – should be given the opportunity to bid for NAIA.

This is not to say I prefer foreign participants. If it were up to me, I actually prefer a local group because they best understand the needs of the Filipino traveler, including our jeepney-loads of relatives who send us off, not to mention the luggage and boxes and boxes of belongings we want to bring with us to distant shores. But the local group will likely get a foreign operator as its technical partner.

On the other hand, local companies –not necessarily as big as these large corporations – with proven track record in running big-ticket infrastructure in the Philippines may also be qualified and deserve an equal chance to participate in the process.

Whether local or foreign, big or small, however, what is important is to really attract as many bidders as possible for the simple reason that it would make the process more competitive.

This is no rocket science. In love and in war, the more competitive the race is, the better, isn’t it?

Who are the interested parties?

At least six companies have bought bid documents for the airport’s privatization. These are GMR, San Miguel Corp. the Manila International Airport Consortium, SPARC 888, Asian Airport Consortium, IGA of Turkey, Cengiz Insaat Sanayi ve Ticaret A.S. and Incheon International Airport.

As I wrote on Sunday, some of these local and international bidders vying for the modernization of NAIA are formally seeking an extension, saying that the bidding is happening fast and it’s happening during the dizzying holiday season.

The Invitation to Bid was issued last Aug. 23, 2023 and by the first week of December 2023, the government will release the concession agreement.

The deadline for submission of bids is Dec. 27, 2023, according to the Department of Transportation (DOTr), giving bidders only about 20 days, including Christmas, to study the terms and prepare their bids and get all the approvals from their foreign partners and respective boards.

If the foreign partners are not able to finish their due diligence, a potentially best bid could be missed.

In all, the ADB said that extending the bid submission date would attract more bids, thus resulting in greater competition and a better financial outcome for the government.

“The winning bidder would have bested robust competition from a larger number of bidders, giving the public further assurance that the concession was awarded to the best possible bidder. It would also send a strong statement that the government is committed to ensuring a level playing field for all investors, now that recent reforms allow local and foreign investors to compete for NAIA on the same terms, without foreign ownership restrictions,” the ADB said.

Biggest PPP project

I am excited about this NAIA privatization because I personally experienced going through airports here and abroad. It’s no secret that in NAIA, you’re sometimes in for a surprise. It can be so bad or so good. We need consistency.

This NAIA modernization is potentially the biggest PPP project of the Marcos administration. It should be completed with utmost credibility.

As I said before, we deserve better. We deserve more. Let’s start by ensuring that more bidders can actually participate and among them, may the best one win.

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Email: [email protected]. Follow her on Twitter @eyesgonzales. Column archives at EyesWideOpen (Iris Gonzales) on Facebook.

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