This can potentially lead to financial difficulties that may lead to serious losses to its investors. This was the conclusion made by the leading investment and financial newspaper in Germany, Handelsblatt, in a recent article datelined Manila, titled "Philippine project turns into burden for Fraport."
Fraport "has assumed the role of primary contractor in the projected construction of the International Passenger Terminal 3 for the Ninoy Aquino International Airport in Manila at a cost of nearly $600 million," the financial paper noted.
Fraport’s Philippine partner is the Philippine Air Terminals Co. Inc. (PIATCO) owned by the Cheng family.
The creditor banks have withheld the release of funds for the project until charges of corruption heaped on the deal are cleared. An amended deal on the Terminal 3 project was pulled off during the Estrada administration, without the required review of the National Economic and Development Authority, the financial paper revealed.
Transportation and Communications Secretary Pantaleon Alvarez has been sued before the Ombudsman for his alleged involvement in shady deals related to the PIATCO contract. Both houses of the Philippine Congress are also investigating the PIATCO deal, it added.
"The project and Fraport have received the cold shoulder from President Arroyo, who has led the country since Estrada was deposed in a popular uprising at the start of this year," the German newspaper explained.
After winning the air terminal project, the Cheng family needed to raise capital for the mega-project and to this end, it brought Fraport onboard. In 1999, the two companies signed a partnership agreement in the presence of Estrada. Now, Fraport in effect, controls 60 percent of PIATCO, the company set up by the Chengs to manager Terminal 3.
The Chengs also cornered exclusive rights to the highly attractive duty-free business at the new terminal. The German newspaper said Fraport would need to spend its own money to finish the terminal.