SMC’s Bulacan airport proposal remains viable

MANILA, Philippines — San Miguel Corp.’s Bulacan airport proposal remains a viable project, but the National Economic and Development Authority (NEDA) is still seeking more information on the financial aspect of the project before it advances in the approval process.

The proposed P700-billion international airport project in Bulacan will cover around 2,500 hectares of which 1,168 hectares will be an airport complex, while the remaining 1,332 hectares will serve as a city complex. The gateway is expected to be completed in six years upon approval.

Socioeconomic Planning Secretary Ernesto Pernia said the project – which is under review by the technical board of the NEDA Investment Coordination Committee (NEDA-ICC) – passes the so-called hurdle rate or the minimum rate of return required to make the investment worthwhile.

Clarifications, however, are sought on the financial rate of return of the project which would give the government a clearer picture of the project’s profitability.

“There are questions on the financial rate of return. What is the basis? Does it only include income from the airport or also outside the airport? Because that is a large area,” he said in a recent interview. “That has implications on the financial and fiscal aspects of the project which is the concern of the Department of Finance.”

Pernia said NEDA is taking greater care in the evaluation of the project because it is an unsolicited proposal from the private sector, and as such must make sure the sustainability of the project.

“It seems viable… The main criterion for economic evaluation is that it passes the hurdle rate,” he said. “But we do not only look at the economic return, we also look at the financial return because this is an unsolicited proposal from the private sector.”

Another unsolicited project that is currently being reviewed by the ICC technical board is the East West Rail Project of East West Rail Corp and Alloy MTD Group.

The rail project, which was endorsed by the Philippine National Railways (PNR), entails the construction and operation for 30 years of a nine-kilometer, 11-station elevated Light Rail Transit (LRT) line that would traverse Diliman, Quezon City to Lerma, Manila.