Time to move on

The Department of Transportation and Communications has finally awarded the P17.8-billion contract for the expansion and modernization of the Mactan Cebu International Airport to Megawide Construction Corp. and its Indian partner, GMR Infrastructure.

GMR-Megawide submitted the highest offer of P14.4 billion, while Filinvest-Changi submitted the second highest at P13.99 billion. The winning bid was announced in December last year.

The 25-year concession agreement involves an upfront payment of P14.4 billion to the Philippine government. In addition to this upfront payment, the consortium will shoulder the construction cost to expand the capacity of the airport to 16 million passengers from the current five million over a four-year time frame.  Work on the project will start late this year.

While the GMR-Megawide tender was the most advantageous to the government, the DOTC deferred the award of the project contract in view of several issues raised by Filinvest-Changi.

Filinvest said that GMR-Megawide should be disqualified because it lacked the financial capability and track record to undertake the project.

But the DOTC saw otherwise considering that GMR enjoys a Triple-A investment grade credit rating from international ratings agencies. In addition, reputable international banks have expressed interest in lending to the consortium for the project.

GMR continues to make operational profits and has been meeting all its financial obligations. In fact, GMR’s audited financial statements show that they have actually earned operational profits in each of the last six years.

Meanwhile, Megawide Construction’s financial status also stands on solid ground. Its net worth alone is four times the stipulated requirement for the MCIA bid.

As to the track record of GMR, it has developed and now manages the Delhi and Hyderabad airports in India.

When GMR took over the Delhi airport in 2006, it was ranked 101st in the world and last year they were ranked 4th, or in the same league as Changi’s Singapore Airport and South Korea’s Incheon Airport. They have consistently been in the top 5 airports globally since they opened the new terminal T3 in 2010.

As for Hyderabad Airport, it is ranked  No. 2 among best small airports in terms of the 2012 Airport Service Quality (ASQ) ratings of the Airports Council International (ACI), an association of airport operators.

GMR has emerged as one of the world’s leading airport companies. It is the third largest private company in the world in terms of passenger volume handled in airports.

The losing bidder also accused GMR-Megawide of conflict of interest, claiming that one of the directors of GMR also sat in the board of Malaysian Airports Holding Berhad, the foreign partner of First Philippine Airports.

While GMR eventually adequately addressed all the unfounded allegations, it had to contend with the intrusion of politics in what should have been a purely business decision, with a Senate probe of the bidding even conducted.

What is important now is for GMR-Megawide to immediately mobilize the required financial and human resources to make the Mactan Cebu International Airport the pride not just of Cebuanos, but of the entire nation.

After all, the Mactan Cebu International Airport will be the gateway of the world to central Visayas and even Mindanao where growth prospects are very bright especially with the expected dividend from the recent peace agreement creating the Bangsamoro region. The airport project, once completed, will no doubt spur more tourist arrivals and encourage more investments to southern Philippines.

Now, the long-overdue rehabilitation of the Cebu airport, whose share of passenger traffic grows by a whopping 12 percent each year and ranks second to the Ninoy Aquino International Airport which has the advantage of having three separate terminals, can start in earnest.

As one of the first PPP projects to be successfully awarded under a most transparent bidding process, the modernization of Mactan Cebu by Megawide-GMR is not only a victory for Cebuanos, but for all Filipinos.

Megawide-GMR’s proposal is to transform Mactan Cebu airport into a resort-style gateway which would mirror Cebuano style and sensibilities to the hundreds of thousands of leisure and business travelers served by this airport in the south.

The project calls for Megawide-GMR building a new terminal and rehabilitating Mactan Cebu’s existing terminal. The consortium would also build or put in place the necessary infrastructures and equipment that would transform it into a world-class airport.

Certainly, the congestion at Mactan Cebu at present would be alleviated.

Megawide-GMR’s new terminal would boast  of at least 149 modern check-in counters compared to the present 44 counters serving all its passengers at present.

The Megawide-GMR is a good partnership too in that both have expertise that should complement one another and result to a modern airport that should set a new benchmark for passenger comfort, lifestyle, safety and security.

Megawide, after all, is known in the construction industry for its use of advanced construction methods and technology, and the commitment of its big group of dynamic and well-trained engineers.

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