Megawide-led group set to bag airport PPP

Megawide-led group set to bag airport PPP

MEGAWIDE Construction Corp. and India’s GMR Infrastructure Ltd. are likely to bag the P17.5-billion Mactan-Cebu International Airport (MCIA) project, the largest public-private partnership (PPP) deal offered so far by the government.

The consortium beat six others including the country’s top conglomerates, offering a premium of P14.4 billion for a 25-year concession to operate the country’s second-biggest airport, located in the Visayas, and build one of its terminals.

Financial proposals submitted last Nov. 28 were opened by the Transportation department yesterday.

The Megawide-led bid was about P400 million above the second-placed offer from a group led by property-to-banking firm Filinvest Development Corp. and Changi Airports Saudi Ltd.

"This is the highest, I think, premium paid to government, thus far. Last one was [the] NAIA (Ninoy Aquino International Airport) expressway which is P11 billion," PPP Center Executive Director Cosette V. Canilao said.

A unit of conglomerate San Miguel Corp. earlier this year bagged the P15.86-billion NAIA Expressway Phase II project by offering the government an upfront fee of P11 billion.

"[A]ll of the bidders were keenly interested and they believed in the project, that is why you can see of all them bid at a premium," Transportation Undersecretary Jose Perpetuo M. Lotilla said.

A notice of award will be issued on Jan. 6 while the signing of the concessionaire agreement has been scheduled for Feb. 6.

"It is still subject to the continuing process of evaluation before the notice of award is given," Mr. Lotilla said.

Megawide, with a market cap of $428 million, has so far won three out of five contracts -- valued at around P26 billion -- tendered by the government under the three-year-old PPP scheme.

On Wednesday, a Health department official said Megawide -- the sole bidder -- had won a 25-year contract for the P5.70-billion new Philippine Orthopedic Center project. In 2012 it bagged a segment of the PPP School Infrastructure Project Phase One (PSIP-1), followed by another deal under the PSIP-II last October.

Megawide’s MCIA offer bested those from bigger rivals that included the country’s most valuable conglomerate, SM Investments Corp., and the most diversified, San Miguel.

SM teamed up with Flughafen Zurich AG, while San Miguel partnered with Incheon International Airport Corp.

Other bidders were the consortium of Metro Pacific Investments Corp. and JG Summit Holdings Corp. with partner Aeroports de Lyon; First Philippine Holdings Corp. and Wellington International Airport Limited; and Ayala Corp, Aboitiz Equity Ventures Inc. and Houston Airport System.

Megawide and GMR aim to build an airport terminal that can accommodate 25 million passengers a year, more than three times the government requirement, said Oliver Y. Tan, Megawide chief finance officer.

But he said the plan would depend on developments in the tourism industry and the security situation, with Manila battling Muslim rebels in the south and a communist insurgency.

The group’s bid reflects its "expectations in terms of the internal rate of return" of the project, Mr. Tan said, adding GMR would take a 40% stake in the joint venture.

GMR operates and maintains three airports in New Delhi and Hyderabad in India, and in Istanbul.

Megawide shares climbed as much as 5% in afternoon trade after the offers were announced, but later erased its gains to settle flat. The broader market was down 2%.

Delays in the bidding process for high-profile PPP projects have clouded prospects of an infrastructure boost that will sustain Philippine economic growth at 7% or higher.

But Manila is now moving to expedite the process. On Monday, officials said a consortium of conglomerates Ayala Corp. and Metro Pacific Corp. gave the best bid for a P1.72-billion contract to operate a smart-card system for the elevated rail network in Manila.

The Mactan airport connects tourist spots in the central Philippines with direct flights from Asian cities such as Hong Kong, Singapore, Seoul and Tokyo.

The existing terminal was designed with a 4.5-million passenger capacity, but 6.2 million passengers passed through in 2011. -- main report by Reuters

source;  Businessworld