Favila won’t touch Piatco deal

Trade and Industry Secretary Peter B. Favila is keeping his hands off the controversial sale of Fraport A.G.’s share in the Ninoy Aquino International Airport Terminal 3 (NAIA T3) to the Manila Hotel Group.

Favila, who is part of the oversight committee sorting out the government dispute with Philippine International Air Terminals Co. (PIATCO) over the compensation for the construction of the NAIA T3, said that the government is proceeding with its existing talks with PIATCO over the "just compensation" for the new airport terminal.

"As far as the government is concerned, it has no knowledge and is not a party to the reported agreement between Fraport and Manila Hotel," Favila said.

Favila pointed out that Fraport is merely a member of the Piatco consortium.

Government decided to expropriate the NAIA-T3 last Dec. 21, 2004 after negotiations with PIATCO failed to reach a reasonable compromise.

PIATCO has been insisting on full payment of its cost in building the NAIA-T3. However, the government will only pay PIATCO the actual cost for the construction of the NAIA-T 3 and nothing more.

The Arroyo administration will not pay for any so-called "transaction or facilitation cost" following allegations of overpricing.

Government had been meeting with the Cheng Group and the German Fraport Group to discuss compensation of PIATCO following a Supreme Court ruling that nullified a government contract with PIATCO for the construction and operation of the NAIA-T3.

Unfortunately, after the expropriation, PIATCO has been able to get a favorable court ruling from the Pasay Regional Trial Court ordering the government to immediately pay PIATCO $62 million for the airport facility. The government, however, is contesting the Pasay RTC ruling.

Because of the continued legal wrangling, foreign airlines are hesitant to transfer their operations to the new terminal for fear of becoming embroiled in the legal dispute.

The government has also been negotiating with the original Japanese contractors to finish the NAIA T3 terminal.

Thus, even with the announced sale of the Fraport shares to the Manila Hotel Group, it is still uncertain if the new airport terminal will be able to open anytime soon as certain legal issues would still have to be clarified regarding ownership, control and operation of the facility.