April 23, 2014 10:15 am JST

Philippine-India consortium to overhaul Cebu airport by 2018

CLIFF HARVEY C. VENZON, Nikkei staff writer

MANILA -- A consortium led by Philippine builder Megawide and India's GMR Infrastructure signed a 25-year contract Tuesday to operate and expand Mactan-Cebu International Airport.

     The plan calls for the construction of a new terminal building, to start next year, with completion by 2018.

     The Philippine Transportation Department said the concession agreement was signed after GMR-Megawide Consortium paid to the government the 14.4-billion-peso ($320 million) premium it tendered during an auction in December.

     The consortium pledged that amount and offered to carry out a 17.5-billion-peso airport expansion at no cost to the government. The consortium outbid six other parties, which include groups that partnered with Singapore's Changi Airport Group and South Korea's Incheon International Airport.

     The transportation department said the operation of the airport on the central Philippine island of Cebu would be transferred to the consortium within the next six months and that construction of a new terminal next to the existing one would start in the first quarter of 2015.

     The new terminal would increase the airport's annual passenger capacity from 4.5 million to 25 million.

     Megawide CEO Michael Cosiquien told reporters after the signing ceremony that his company would build a hotel, a mall and commercial parking spaces beside the airport to recover the cost of its bid.

     The consortium is in talks with foreign and local banks to fund the project, he said.

     The modernization of the airport is part of the government's public-private partnership program, which mainly involves privatization of aging infrastructure, such as airports, sea ports, railways and hospitals.

     The awarding of the project concludes a rocky post-auction evaluation, which was marked by complaints from a bidder and a threat from a lawmaker to block the project due to concerns over GMR's financial capabilities.

     The Philippine Transportation Department, however, said it proceeded with the signing after no court injunction was issued within 15 days following the awarding of the project earlier this month.

     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, meanwhile, operates airports in New Delhi and Istanbul.