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Manila Bulletin devider Business devider San Miguel completes P30-billion upfront payment for NAIA—DOF

San Miguel completes P30-billion upfront payment for NAIA—DOF

Published Sep 17, 2024 06:07 am

San Miguel Corp.’s New NAIA Infra Corp. (NNIC) has remitted its upfront payment for the Ninoy Aquino International Airport (NAIA) public-private partnership (PPP) project, the Department of Finance (DOF) said.

In a statement, Finance Secretary Ralph G. Recto said the P30 billion payment, made through the Manila International Airport Authority (MIAA), received clearance from the Bureau of the Treasury on Sept. 16.

This payment was executed on the first business day after the MIAA officially transferred the operations and maintenance (O&M) of NAIA to NNIC on Sept. 14, Saturday.

READ: San Miguel unveils three-pronged plan for 'New NAIA'

“We are hitting two birds with one stone on this project. This will not only transform NAIA into a world-class airport but also guarantees the government a healthy income stream from the private sector operator,” Recto said.

The PPP project is expected to generate non-tax revenue for the government, providing an alternative source of funding without increasing the tax burden on the public, Recto said.

“The P30 billion is just the upfront payment from the private sector partner,” Recto said.

“As the project finally takes off, the government is expected to generate roughly P900 billion in revenues from this deal over the entire term, which is a 15-year concession period, extendable by another 10 years. This will be equivalent to a revenue source of more or less 36 billion pesos annually to fund more projects in education, public health, and infrastructure,” he added.

With an estimated project cost of P170.6 billion, the proposal to rehabilitate NAIA is the largest PPP project under President Marcos’ administration. 

The initiative aims to tackle ongoing issues of undercapacity, congestion, and underinvestment at the country's main airport.

Led by the Department of Transportation (DOTr) and MIAA as co-grantors, the NAIA rehabilitation project is expected to increase capacity from 35 million passengers annually to 62 million and boost air traffic movements per hour from 40 to 48. 

It will implement internationally benchmarked Minimum Performance Standards and Specifications and leverage private sector expertise for modernization and expansion.

The project received approval from the NEDA Board, chaired by President Marcos, on July 19, 2023, after being evaluated in just six weeks—the fastest approval for a PPP proposal in Philippine history. 

The DOF’s Privatization and Partnerships Group (PPG) evaluates both solicited and unsolicited PPP proposals, which undergo a thorough screening process before reaching the Investment Coordination Committee (ICC) and NEDA Board.

In February 2024, the MIAA board awarded the contract to the SMC-led consortium, which presented the highest bid parameters. 

The consortium will provide a P30 billion upfront payment, a fixed P2 billion annual payment, and an 82.16 percent share of national government revenue, excluding passenger service charges. 

The Concession Agreement for the project was signed by the DOTr, MIAA, and the SMC-led consortium on March 18, 2024. (Derco Rosal)

Related Tags

San Miguel Department of Finance (DOF) NAIA REHABILITATION ralph recto Finance Secretary New NAIA Infrastructure Corporation
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