Tan eyes foreign partners for NAIA-3 operations

Asia Emerging Dragons Corp. (AEDC) led by business tycoon Lucio Tan is in talks with at least three groups of foreign investors for a possible joint venture for the operation of the Ninoy Aquino International Airport (NAIA) Terminal 3.

A source close to Tan said that the tobacco and beer magnate himself is in discussions with American, European, and Chinese groups for the possible acquisition of as much as 40 percent stake in AEDC.

In 1993, six business leaders namely Tan, John Gokongwei, Andrew Gotianun, Henry Sy Sr., George Ty, and Alfonso Yuchengco were invited by then President Ramos to explore the possibility of investing in the construction and operation of a new international airport terminal. They then formed AEDC, which submitted in 1994 an unsolicited proposal to the government for the development of the NAIA-3 under a build-operate-transfer (BoT) arrangement.

The other AEDC partners later on sold their stakes to Tan but some of them are reportedly negotiating to reacquire their previous holdings in the company.

AEDC has asked the Supreme Court to order the Department of Transportation and Communication (DOTC) and the Manila International Airport Authority to formally award to it the NAIA international passenger terminal project and to execute and formalize the approved draft concession agreement embodying the agreed terms and conditions for the operation of the project.

It also petitioned the High Tribunal to cease and desist from awarding the NAIA-3 project to third parties, or negotiating and entering into any concession contract with third parties.

The Office of the Solicitor General claims that AEDC, the original proponent of the project, does not have the automatic right to operate the airport facility. The German group Fraport, in a consortium with winning proponent Piatco, sold its stake to the Manila Hotel Corp. of businessman Emilio Yap.

On May 5, 2003, the Supreme Court declared as null and void the award to Piatco of the project and the concession agreements and all supplements entered into by Piatco with government through the DOTC.

AEDC, in its petition to the High Court asserted that the setting aside and nullification of the award to Piatco restored the former to its preferred status as the unchallenged original project proponent. Piatco submitted a better offer to government when AEDC’s proposal was subjected to the "Swiss challenge," resulting in the award of the project to Piatco.

The Paircargo consortium, the predecessor of Piatco, was the only challenger then to AEDC’s unsolicited proposal. AEDC was unable to match the comparative proposal within the prescribed 30-day period, which according to the company was no fault of its own. In February1997, Paircargo was incorporated into Piatco. On July 12, 1997, the concession agreement was signed between DOTC and Piatco.

In its petition, AEDC said that despite the declaration of the nullity of the award to Piatco as well as the concession agreements, DOTC has refused to honor and recognize the automatic entitlement of AEDC to the project as the legitimate and unchallenged original proponent.

"DOTC has announced that it would take over the unfinished airport facility and bid out the operation to another entity, in flagrant violation and disregard of AEDC’s exclusive, clear, and vested right under the BOT law," AEDC said.

AEDC is willing to pay $350 million as fulfillment of its obligation under the BOT law, which company officials said is much higher than the actual construction cost of $200 million.

Government reportedly is expropriating the project and as a condition to taking over is preparing to pay 10 percent or around $65 million to Piatco."This means that government is recognizing a value for the project of as much as $650 million which is much more than the actual construction cost. If it does that, then the government officials concerned will be violating the anti-graft law for entering into a contract disadvantageous to government," AEDC legal counsel Perfecto Yasay said.