April 7, 2014 6:21 pm JST

Philippine-Indian partners win contract to expand Cebu airport

CLIFF HARVEY C. VENZON, Nikkei staff writer

MANILA -- A consortium led by locally listed builder Megawide and Bangalore-based GMR Infrastructure has bagged a 17.5 billion-peso ($390 million) project to expand and operate an airport in the central Philippines.

     In a statement over the weekend, the Department of Transportation and Communications said it had awarded the contract ‎to the Megawide-GMR Consortium on Friday.

     In bidding that took place in December, the consortium offered to take care of the construction for free and pay the government a 14.4 billion-peso premium once the contract is sealed.

     The contract covers the rehabilitation of the existing Mactan-Cebu International Airport and the construction of a new gateway beside it. The project should bolster the aviation hub's annual capacity to 25 million passengers from the current 4.5 million.

     The contract involves operating and maintaining the expanded airport for 25 years. Afterward, the airport will be turned over to the government.

     GMR-Megawide has 20 days to complete the post-award requirements, such as submitting an irrevocable letter of credit worth 180 million pesos and making the premium payment, the transportation department said.

     However, the airport expansion could be delayed; a senator has threatened to block the project.

     One of the senator's issues has to deal with doubt cast by the runner-up, a consortium led by the Filinvest Group and Singapore's Changi Airports International. The consortium has questioned GMR's financial capability to undertake the project.

     The transportation department, however, has stood by its decision and vowed to defend the winning bidder in court.

     The project is part of President Benigno Aquino III's public-private partnership program, which aims to rehabilitate dilapidated and congested ports, railways, school buildings, and public hospitals.

     The Mactan-Cebu airport is indeed congested; it handled more than 7 million passengers last year, way beyond its capacity.

     The government also wants to boost tourism, the growth of which, according to critics, has been hampered by the Philippines' poor transportation infrastructure.

     Megawide, one of the country's leading builders, is an active participant in the government's public-private partnership program; it has won multibillion-peso contracts to build thousands of classrooms and modernize a public hospital.

     GMR operates airports in New Delhi and Istanbul.