DOTC Taps Independent Consultant for P17-B Mactan Airport Expansion

MANILA, Philippines – The Department of Transportation and Communications (DOTC) is spending P122.6 million ($2.8 million) to tap an independent consultant for the P17.5 billion ($399.47 million) Mactan-Cebu international airport expansion project.

An independent consultant is essential in all government infrastructure projects, DOTC spokesperson Michael Arthur Sagcal said.

“It will act as government’s engineer and representative in monitoring the project’s progress and ensuring compliance by the concessionaire with its obligations,” Sagcal said in a text message, Friday, June 20.

In a Request for Expression of Interest, DOTC is set to procure an independent consultant for the public-private partnership (PPP) project that was awarded to the tandem of Megawide Construction Corp. and Bangalore-based GMR Group.

Interested consultants were given until Monday, July 21, to submit their eligibility documents to the DOTC Bids and Awards Committee (BAC).

Bidding Criteria

The agency’s BAC would draw up the short list of consultants from the submissions made and have been determined as eligible in accordance with the provisions of Republic Act No. 9184 or the Government Procurement Reform Act.

Criteria for the short listing of 5 bidders include 45% for applicable experience; 45% for the qualification of key personnel; and 10% for current workload.

The Winning Bidder

DOTC issued a Notice of Award to the GMR-Megawide tandem in April. The project aims to modernize the country’s second largest aviation hub by constructing a new international passenger terminal building and by expanding its existing passenger terminal.

The existing terminal building has a capacity of 4.5 million and has been operating at over-capacity with 6.7 million passengers since 2012.

The Megawide-GMR tandem submitted in December 2013 the highest bid of P14.404 billion ($328.63 million) for the project, followed by the Filinvest-CAI Consortium, which submitted P13.999 billion ($319.39 million) as bid. (READ: Megawide-led consortium submits highest bid for Mactan airport).

Filinvest, however, asked the DOTC in January to disqualify the top bidder for alleged conflict of interest involving GMR Infrastructure of India, First Philippine Airports Consortium, and the Malaysia Airports Holdings Berhad (MAHB).

In February, Senator Sergio “Serge” Osmeña III supported the disqualification by revealing GMR’s ties with Frankfurt Airport Services Worldwide (Fraport), the operator partner and majority beneficial owner of Piatco (Philippine International Air Terminals Company Incorporated), the consortium in the NAIA 3 debacle. (READ: Cebu airport winning bidder another Piatco?)

The Megawide-GMR tandem has repeatedly denied the alleged conflict of interest. The same tandem has earmarked at least P20 billion ($456.31 million) for the project. –

GMR-Megawide Outlines Initial Plans for Cebu Airport Takeover

Image Source: Cebu Daily News
Image Source: Cebu Daily News

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.

Source: Marites S. Villamor, Business World

OPINION: A New Airport For Cebu

The new design of Mactan-Cebu International Airport
The new design of Mactan-Cebu International Airport

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.

The present Mactan-Cebu International Airport
The present Mactan-Cebu International Airport (Image Source: Cebu Daily News)

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.

Source: Domini M. Torrevillas,

GMR Infrastructure Signs Agreement for Mactan-Cebu International Airport

Mactan-Cebu International Airport
Mactan-Cebu International Airport


NEW DELHI: GMR Infrastructure has made an upfront 14.4 billion Philippine Pesos (about USD 320 million) payment and signed the concession agreement to develop and operate the Mactan Cebu International Airport in the Philippines. 

GMR, together with Philippines based construction firm Megawide, had won an international bid to develop and operate the Mactan Cebu International Airport (MCIA) on April 4. The project is estimated to cost about USD 700 million. 

“The GMR-Megawide Consortium today paid an amount of Philippine Pesos 14.4 billion (approximately USD 320 million) to the Mactan Cebu International Airport Authority in the Philippines as upfront premium for award of the concession of the MCIA,” GMR said in a statement today. 

Following the receipt of payment, the Department of Transportation and Communications (DOTC) and Mactan Cebu International Airport Authority today signed the concession agreement with the GMR Megawide Consortium it added.

An upfront payment of USD 320 million to the authority was one of the conditions to be fulfilled before the award of concession agreement for developing and operating the airport. 

Commenting on the development, GMR Chairman G M Rao said, “This is just the first step in our endeavor to transform the Mactan Cebu International Airport into a world class airport destination.” 

The GMR-Megawide consortium had emerged as the highest bidder in the international bidding process held in December 2013 for the project after submitting a bid of PHP 14.4 billion. The DOTC had formally issued the Letter of Award to the GMR consortium on April 4, 2014.

The Bangalore-based GMR currently operates two airports at Delhi and Hyderabad.

Recently the company exited from the Istanbul airport by selling its entire 40 per cent stake for Euro 225 million (Rs 1,900 crore) to Malaysia Airport Holdings Berhad.

GMR shares today fell by 0.98 per cent to close at Rs 25.30 apiece on the BSE. 

After Mactan-Cebu, Megawide Eyes 6 More Airport Projects

The future of Mactan-Cebu International Airport

Cebu City , Philippines – Megawide Construction Corp., one of the most active local companies in the public-private partnership (PPP) scene, is joining more auctions for airport rehabilitation and operations.

The consortium of Megawide and Bangalore-based GMR Infrastructure Ltd. will continue their partnership that recently bagged the P17.5-billion Mactan-Cebu International Airport (MCIA) deal, executives said.

Megawide chief financial officer Oliver Tan said the company is planning to join the bidding for six more airport PPP projects this year.

“The Philippines is the fastest growing economy in this region. Tourism is a growing business and considering that, it generally means that airport development is good in the Philippines,” said Manish Khalghatgi, vice president for corporate communications of GMR.

Khalghatgi said Megawide-GMR tandem is ready for more airport projects particularly in Visayas and Mindanao.

The government plans to roll out more PPP projects this year including the P15.92-billion operation and maintenance (O&M) of the Laguindingan airport, the P2.34-billion enhanced O&M of the new Bohol airport. It also listed the O&M of the Puerto Princesa, Iloilo, Davao, and Bacolod airports as PPP projects.

The Megawide-GMR consortium last week received the formal award of the P17.5-billion MCIA project, the largest PPP offered to date.

Aside from airport projects, Megawide is also interested to be the contractor for the winning bidder of the P65-billion Light Rail Transit Line 1 elevated railway extension to Cavite province, Tan said. Megawide is also preparing to join the bidding for the P35.6-billion Cavite-Laguna Expressway project.

So far, Megawide has bagged four PPP projects: the P5.7-billion new Philippine Orthopedic Center, the MCIA, the PPP School Infrastructure Project Phase One (PSIP-1) and PSIP-2.

Despite numerous projects on its plate, Megawide is still prepared to pursue more infrastructure ventures.

“The airport is a collaboration with GRM and Megawide. We will have an entirely separate organizational structure,” Tan said.

Megawide also has manageable debt levels as available cash is larger than existing debts, Tan said.

For its part, GMR has the skill and the expertise for end-to-end airport projects that deal with financing, rehabilitation and operation, Khalghatgi said.

Megawide is one of the top contractors in the Philippines while GMR is the world’s third largest private airport developer in terms of passenger traffic.

Source: Neil Jerome C. Morales (The Philippine Star)

DOTC awards Mactan Cebu International Airport Deal to Megawide-GMR


An expanded “world-class” international airport for Cebu, one of the country’s busiest tourism and business hubs, may soon be underway after the Department of Transportation and Communications (DOTC) finally awarded the coveted public-private partnership deal late Friday.

Megawide Construction Corp. and India’s GMR Infrastructure, the frontrunner in the bidding, was named the winner for the government’s first airport PPP, after the DOTC resolved issues raised by the second-closest bidder that delayed the process by almost three months, transportation department spokesman Michael Sagcal confirmed Friday.

Sagcal said a formal statement was expected to be issued Saturday while Megawide was already informed Friday night.

The DOTC bids and awards committee made the decision Friday, a few days past a self-imposed deadline it had given to lawmakers, who sought an inquiry into the bidding process for the P17.5 billion project.

The award resolves allegations raised by No. 2 bidder Filinvest, a partner of Singapore’s Changi, over the financial capability of GMR, which operates airports in New Delhi and Hyderabad. Filinvest, which sought the disqualification of Megawide-GMR, also alleged there was a violation of the conflict-of-interest provision.

Megawide-GMR, which was expecting an award as early as January. 6 this year, has denied all allegations.

Developments at the Mactan-Cebu Airport, the country’s second-busiest, are being closely watched by investors given its potentially lucrative position as a key gateway to one of the biggest Philippine tourism and business hubs outside Metro Manila.

The PPP deal drew a total of seven bidders, which included the country’s biggest conglomerates, including San Miguel Corp., Ayala Corp., Metro Pacific Investments and JG Summit Holdings.

Despite being a much newer player, Megawide and GMR topped all other bids with a P14.4-billion offer, edging out even the proposal of the SM Group, controlled by the country’s richest man Henry Sy, owner of a minority stake in Megawide.

Filinvest-Changi’s offer came in second at about P14 billion.

All bids received by the DOTC last December were “premium” offers, meaning this money would go directly to the government and would come on top of the cost to develop the airport.

The award to Megawide-GMR may still be contested by its chief rival and even lawmakers.

Sen. Sergio Osmeña III, one of the most vocal against the Megawide-GMR consortium, threatened to sue to the Transportation Department should the award go to the Filipino-Indian group as he cited lapses in the bidding process.

It should be noted, however, that only a Supreme Court order can halt an infrastructure project like the Cebu airport PPP.

The Mactan-Cebu International Airport project, which is running beyond normal capacity, will entail the construction of a new world-class international passenger terminal building with a capacity of about eight million passengers a year, the department had previously announced.

The facility has an annual capacity of 4.5 million passengers, but it handled close to seven million passengers in 2013.

The winner of the Mactan-Cebu International Airport PPP will operate the facility for 25 years.

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Megawide and India’s GMR Won Bid for Mactan-Cebu International Airport Project

Megawide Construction Corp. and partner GMR of Bangalore, India bested investors led by SM Group, Ayala Corp., San Miguel Corp., JG Summit Holdings Inc., and Metro Pacific Investments Corp. by bidding P14.404 billion to take on the Mactan-Cebu International Airport expansion project.
The consortium GMR Infrastructure of India-Megawide made the highest bid for the project, said Jose Perpetuo Lotilla, undersecretary of the Department of Transportation and Communications (DOTC).
The DOTC Bids and Awards Committee (BAC) will now hunker down to review the financial bids over the next two weeks and issue a notice of award on Jan. 6, 2013, Lotilla told reporters, saying the contract with the winning group will be signed on Feb. 6.
In a separate interview with reporters, PPP Center executive director Cosette Canilao said the bids were beyond government expectations and noted that the Aquino administration was prepared to subsidize the project.
“Those are really good bids, all premium bids and exceeded our expectations. The government was prepared to give a subsidy. We got all the good operators from all over the world to participate. It’s good for the government,” Canilao added.
For Megawide chief financial officer Oliver Tan, it was a David and Goliath story, saying they slew the “Goliaths” by outbidding conglomerates that include SM Group, Ayala Corp.,  San Miguel Corp., and Metro Pacific Investments Corp.
“We really prepared for this…” Megawide chief marketing officer Louie Ferrer told GMA News Online. “It took us months to prepare, and we found a good partner in GMR,” Ferrer said, noting the Bangalore-based operator has three ongoing airport projects in India and Turkey.
According to DOTC, MPIC-JGS Airport consortium made an P11.23-billion bid for the project, AAA Airport Partners bid P11.088 billion, San Miguel Corp.-Incheon Airport wanted the deal for P9.05 billion, while First Philippine Airports tried to bag the airport project for P4.7 billion.
The winner is expected to build a world-class international passenger terminal building – capable of processing eight million passengers a year – for the second-largest Philippine airport after the Ninoy Aquino International Airport.
Ferrer told reporters Megawide already won several public-private partnership (PPP) projects to construct classrooms under the Department of Education’s School Infrastructure Project.

Source: Danessa Rivera/VS/JDS, GMA News