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China-backed group loses $10bn Philippine airport project

Award cancellation boosts San Miguel's $15.4bn plan for separate project

The planned Sangley Point International Airport would take pressure off Manila's Ninoy Aquino International Airport. (Illustration courtesy of Cavite provincial government)

MANILA -- A China-backed consortium has lost the right to develop a $10 billion airport project in the Philippines, the group's local partner said on Wednesday.

MacroAsia, the Philippine partner of state-owned China Communications Construction Co., told the Philippine Stock Exchange that the Cavite provincial government had canceled the notice of award it granted to the consortium last year.

The airport is one of the high-profile projects supported by Chinese companies that have clinched infrastructure projects in the Philippines since President Rodrigo Duterte embraced China as an economic partner in 2016.

CCCC's airport bid won Duterte's backing last year after the company was blacklisted by Washington for its role in reclamation projects in the South China Sea, where Manila and Beijing are locked in territorial disputes.

The Sangley Point International Airport project, located south of the Philippine capital, is aimed at alleviating congestion at Manila's Ninoy Aquino International Airport. The project involves a massive reclamation of Manila Bay and will be able to accommodate over 100 million passengers annually once completed.

The planned airport is located near Philippine Navy facilities and faces the navy's bay-side headquarters, raising national security concerns from some in the military.

Cavite Gov. Jonvic Remulla said the consortium repeatedly failed to comply with requirements of the joint venture contract with the provincial government. "We gave them two extensions, but they failed to comply with three requirements, a lot of them documentary," Remulla told Nikkei Asia.

The provincial government plans to reopen bidding for the project next month, and MacroAsia and CCCC may still participate, the governor said.

CCCC, a global contractor once blacklisted by the World Bank for alleged fraudulent practices in a Philippine road project, and MacroAsia, an aviation support services provider owned by Philippine Airlines Chairman Lucio Tan, did not immediately respond to requests for comment.

The award's cancellation comes amid pandemic-induced turmoil in the aviation industry that has hit MacroAsia's finances. The company posted a net loss of 857 million pesos ($17.8 million) from January to September as revenues fell 58% to 1.9 billion pesos. Its key client, Philippine Airlines, is considering a court-backed debt restructuring that would require Tan's group to infuse more capital into the flag carrier.

With the latest setback for the Sangley project, the 740 billion peso airport planned by beer-to-infrastructure conglomerate San Miguel has become the only major project aimed at decongesting Manila airport. The project is located in Bulacan Province north of Manila and is expected to break ground this year.

Megawide, a local contractor that has partnered with India's GMR Group, said on Tuesday that the government had rejected its 109 billion peso proposal to expand the existing Ninoy Aquino International Airport complex, a boost for San Miguel's project.

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