San Miguel consortium wins P171-B NAIA operations, rehab project

The Department of Transportation (DoTr) [link] announced on Friday that the San Miguel Consortium had been awarded the P170.6-billion contract to operate, maintain and rehabilitate NAIA. The consortium is comprised of San Miguel Holdings (a subsidiary of San Miguel [SMC 108.00, down 0.9%]), RMM Asian Logistics (a small company owned by Raymond Miller Moreno), RLW Aviation Development (a small company owned by Robert Lee Wong), and Incheon International Airport Corp. (a major South Korean airport operator). The consortium’s winning bid proposed giving 82.1% of NAIA’s revenue straight to the government, while also increasing NAIA’s annual passenger capacity from 32 million to 60 million. The initial contract to operate will be for 15 years, starting in H2/24, and could be extended for an additional 10 years. The deal is expected to generate P0.9 trillion in revenues for the government throughout the 15-year contract.

MB bottom-line: Anything to do with NAIA was going to be a political mess, and I’m actually surprised to see something this substantial happen so quickly. Are there legitimate questions to be asked about a contract that splits revenues with the government in this way when the other qualified bids didn’t go above giving the government 33% of the revenue? Sure. Are there legitimate questions to ask about awarding this contract to a company that is building Metro Manila’s alternate mega airport in Bulacan? Yes. Are there legitimate questions to be asked about the nature of the non-SMC and Korean companies involved in the bid? Of course. But how could this have ended any other way? As Reddit user comradeyeltsin0 commented: “If they manage to fix the goddamned AC in Terminal 1 I would already consider that a success.” This is how low the bar for success will be for the San Miguel Consortium.  

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