CEBU CITY — Listed builder Megawide Construction Corp. and its partner, Bangalore-based airport operator GMR Infrastructure Ltd., are planning to put in bids for six airport projects, a company official said, as the government studies plans to bundle the projects into a single public-private partnership (PPP) contract.
Two of the six airport projects, the P2.34-billion New Bohol (Panglao) Airport and the P15.92-billion Laguindingan Airport in Cagayan de Oro City, have been approved by the National Economic and Development Authority (NEDA) Board.
The four others — Iloilo, Davao, Bacolod and Puerto Princesa — have yet to be approved by the NEDA Board, PPP Center Executive Director Cosette V. Canilao said in an e-mail to BusinessWorld. Project costs have also to be finalized.
There is “no definite decision on the bundling of airports yet,” Ms. Canilao said.
Manuel Louie B. Ferrer, president of GMR-Megawide Cebu Airport Corp. (GMCAC), said “it makes sense” for the partnership to bid for the other airport deals because it bagged the first airport PPP contract.
The 25-year PPP contract for the operation and maintenance of the Mactan Cebu International Airport terminal, with an estimated cost of P17.52 billion, was awarded to GMR-Megawide last April despite a protest made by second highest bidder Filinvest-Changi consortium and the filing before the Supreme Court by Sen. Sergio R. Osmeña III of a petition to nullify the contract.
“We have operations already in Cebu and most of the airports are based in the Visayas. So it makes sense that we should participate [in the bidding],” Mr. Ferrer said in an interview on the sidelines of the launch of the new Mactan Cebu International Airport brand last week.
He said GMR would still be the technical partner for any airport-related ventures.
“We have a strong partnership and we believe in how they operate an airport,” he added.
GMR-Megawide, which is 60% owned by Megawide and 40% owned by GMR, is set to take over and start rehabilitating the Mactan Cebu airport terminal on Nov. 1. Construction of a second terminal will start in January.
Mr. Ferrer said a consortium of financial institutions led by BDO Unibank has committed to finance the P17.52-billion project. Financial close is targeted between the end of October and mid-November.
Expansion of the terminal will raise the airport’s annual passenger carrying capacity to 12.5 million. The existing terminal was designed for 4.5 million passengers, but currently serves 7.1 million.
Mr. Ferrer, who is also chief marketing officer of Megawide, said the construction company is also interested in other PPP projects that the government has lined up.
“We’d like to grow our airports. We’d also like to grow our hospital business. The other interesting projects would be water, prison facilities and the ITS (Integrated Transport System) — everything that has construction which is our core strength,” Mr. Ferrer said.
Megawide earlier bagged the PPP contracts for the modernization of the Philippine Orthopedic Center and the School Infrastructure Project. — Marites S. Villamor
MACTAN, CEBU — GMR-Megawide Cebu Airport Corp. said it will initially focus on improving the user experience when it takes over terminal operations and management at the Mactan Cebu International Airport (MCIA) at the end of October, and promised a marked improvement within six months.
In a briefing conducted after the company’s transition team inspected the terminal, the company said its immediate activities upon takeover will include renovating restrooms, reducing queues, and improving seating, with GMR-Megawide endeavoring to mitigate the inconvenience caused by the changes.
Chief Executive Adviser Andrew Acquaah Harrison said prior to the takeover, the company will be engaged in finalizing the airport’s redevelopment plan and consulting with customs, immigration, security personnel and other stakeholders.
“There are documents that have to be submitted and manuals to be written. We need to start procurement of materials, organize ourselves, recruit staff, launch the brand. At the same time, we need to train and prepare people so that the terminal can run smoothly from day one,” Mr. Harrison said.
The company, 60% owned by listed Filipino construction company Megawide Construction Corp. and 40% by Bangalore-based GMR Infrastructure Ltd., was formed after the consortium won the P17.52-billion MCIA rehabilitation and upgrading project under the public-private partnership scheme.
The consortium offered a winning bid of P14.4 billion during the auction in November. Mr. Harrison said the preliminary design stage will be completed 90 days after the concession agreement signing, after which it will proceed to detailed design.
The company is in talks to engage leading Cebu designer Kenneth Cobonpue for the interiors. “We have developed much larger airports and terminals. We know what needs to be done and in what order,” he added.
Over 100 employees of the Mactan Cebu International Airport Authority (MCIAA) with terminal-based functions have been offered employment by GMR-Megawide. “We’ve met with the employees and we’re very hopeful that many of them will join the organization,”
Mr. Harrison said. The company will also work with the local government to ensure that road capacity connecting to the airport grows in parallel with demand. “For an airport to be efficient, it has to be efficient from air traffic standpoint, terminal capacity standpoint and in terms of surface access,” Mr. Harrison said.
Manuel Louie B. Ferrer, GMR-Megawide president, said the aim is to make Cebu an international hub “not only to promote the island, boost local business and draw in investors but also become an invaluable support to the country.”
“We at GMR-Megawide… cannot do it on our own. We need the support of all stakeholders,” he said. The project aims to rehabilitate the existing passenger terminal and build a second to bring the annual capacity to 28 million passengers at the end of the concession period.
The existing terminal was designed for 4.5 million passengers, but currently serves 7.1 million, Mr. Ferrer said.
After nearly a year of heated hearings, the refurbishment of the Mactan, Cebu International Airport has been awarded to consortium bidder Megawide Construction Corp. and GMR Infrastructure of India. Now Cebuanos, and all of us visiting the “crown jewel” (my term) of the Visayas, can expect world-class, spanking clean, modern facilities upon landing in Mactan.
The existing rundown airport was meant to handle 4.5 million passengers per year, but government data showed that close to seven million travelers arrived in Mactan in 2013. Clearly, there’s a need for a bigger, more efficient facility. The Filipino-Indian consortium announced that the airport, to be operational in 2018, will be a world-class facility that would serve as a regional hub.
The consortium topped six other bidders last Dec. 12, but it was only early this month that the contract was signed between the proponent Megawide Construction partnering with GMR Infrastructure of India — and the Department of Transportation and Communications. The winning bidder offered P14.4 billion.
Observers will note the raging controversy over who gets the building award. The next-highest bidder, Filinvest-Changi, raised questions about the winning bidder’s qualifications, including allegations of conflict of interest and doubts on the partnership’s ability to meet its financial commitments. Filinvest-Changi is believed to have the support of the Osmeñas of Cebu, led by Sen. Serge Osmeña.
Osmeña had raised questions about GMR’s capability to undertake the big-ticket infrastructure project, and even asked the Supreme Court to stop the award. But GMR-Megawide cleared such doubts, saying that it has considerable financial clout. GMR enjoys a Triple-A investment grade credit rating from international ratings agencies. In fact, reputable international banks have expressed interest in lending money to the consortium for the project. GMR is a viable business enterprise, as it has been meeting all its financial obligations. This, with its audited financial statements backup, saying the company actually earned operational profits in each of the last six years. Its net worth alone is four times the stipulated requirement for the Mactan Cebu International Airport.
The consortium has already completed the post-award requirements, including the payment of a P14.4 billion cash premium. It will spend an additional P17.5 billion for the passenger terminal, which would help the congested airport handle about 5 million passengers annually by the end of the 25-year concession projects.
GMR is now one of the world’s leading airport companies, the third largest private company in the world in terms of passenger volume handled at airports. It developed and now manages the Delhi and Hyderabad airports in India.
GMR’s Andrew Acquaah-Harrison said that GMR counts some 17,000 employees in three countries where they have airport projects. He cited the Indira Gandhi International Airport in New Delhi, which was ranked No. 101 in a global ranking of airports in 2006, but last year, was ranked 4th or in the same league as Singapore’s Changi airport, and South Korea’s Incheon airport. The Hyderabad airport is ranked No. 2 among the best small airports, according to industry ratings in 2012.
But that’s not all. GMR has earned praise for being environment-friendly. It was awarded a Gold Leadership in Energy and Environment Design (LEED) rating by the US Green Building Council for the new third terminal at the New Delhi airport. It also received a silver LEED for the Hyderabad airport
Megawide, said its executive Louie Ferrer, is a “relatively” new construction outfit compared to “more venerable competitors,” but it has proven experience and track record in both the private and public spheres, and is best known as the general contractor for a number of condominium projects undertaken by the SM Development Corp. Recently, it won a contract to construct 10,000 classrooms for the Department of Education – “a contract it won without too much controversy,” Ferrer added.
It’s taken long for the consortium to win the project bid, but this is natural in bids for government projects, said Ferrer. As things go, most everything in these islands operate beneath the heavy cloud of political intrigue. But Ferrer testifies that his company’s dealings with the DOTC have been open and aboveboard, except for the unhappy objections raised by Filinvest-Changi supporters.
As a matter of fact, the senator from Cebu had said in the course of hearings on the project, described the proposed design as a “glorified chicken coop.” But a noted columnist said that she was struck by “how light-filled the interiors would be, and how airy and modern the ‘feel.’ Certainly a far cry from the box-like utilitarian structure that currently serve as the country’s second major gateway.”
As it had finally awarded the PPP (Public-Private Partnership) project to Megawide-GMR, the consortium said the “fair and timely award” of the project “will encourage other investors to take part in sustaining the economic gains made over the past several years, with not just Cebuanos but the entire nation as well” benefiting from the project. As for Osmeña’s description of the airport facility design being a “glorified chicken coop” Ferrer said the concept reflects “a modern expression of . . . traditional Filipino architecture (that) imbibes the cultural ethos of Cebu without sacrificing efficiency.”
At the dinner with media women, Ferrer said the company cooperated with Cebu-based and international architects and designers to make the Mactan, Cebu airport the best example of a modern, efficient facility.
The 25-year concession agreement will allow the consortium to earn from the commercial development and terminal fees, which will still be regulated by the government.
Apart from the airport facility, the consortium will develop an adjacent six-hectare property into a retail complex and hotel — another source of income that makes non-winning bidders shake their heads in frustration.
The winning airport project bidder understandably is a pain in the neck for frustrated developers, but not to travelers who look forward to the welcoming arms of an airport that’s spanking clean, its toilets working, with hidden cameras — and that promises to be many times better than the NAIA 3 that’s taken years to complete, and is still being completed.