Piatco seeks fair return on investment

The consortium that built Ninoy Aquino International Airport’s new Terminal 3 said it is entitled to receive "reasonable returns" from the government after its contract to build and operate the terminal was nullified earlier this year.

Trade Secretary Manuel Roxas II earlier said the government would compensate Philippine International Air Terminals Co. (Piatco) only for the cost of construction.

Roxas heads a Cabinet panel tasked with untangling the legal controversy that has prevented the facility from becoming operational.

"Piatco’s position is, if ever the government wants to take over, under the law we are entitled to just compensation. Which means cost plus reasonable returns," said company official Jefferson Cheng. He said the government owes Piatco about $500 million.

Roxas said Monday the government will not pay for any so-called transaction or facilitation cost following allegations of overpricing.

Roxas’s committee has already begun discussions with Piatco’s main partner, the Cheng group, about the compensation issue. He did not say how much the government might have to pay.

"We have not discussed it in detail. Piatco’s position is still pending. We are still waiting for all the legal things such as the motion for reconsideration pending in the Supreme Court, and the result of the arbitration of the International Court of Arbitration in Singapore," Cheng said.

Cheng said the terminal may be opened before the end of the year. "I think it would be possible," he said without elaborating.

Piatco is appealing a May 5 Supreme Court ruling nullifying the consortium’s government contract to build and operate the terminal.

Officials said the government is required by law to compensate Piatco for "legitimate expenses" incurred in constructing the $350-million terminal after its contract was nullified.

One of the Supreme Court justices who voted in favor of the decision, Artemio Panganiban, wrote in a separate opinion that the government should compensate Piatco’s reasonable expenses.

"Indeed it should, otherwise it will be unjustly enriching itself at the expense of Piatco and, in particular, its funders, contractors and investors — both local and foreign," he said.

The Supreme Court ruled that Piatco was not qualified to participate in the 1997 bidding for the construction and operation of the terminal.

It also said the contract had provisions that gave Piatco "more favorable terms than was available to other bidders at the time the contract was bidded out" in 1997.

The court said the "special financial benefit or advantage" given to Piatco constituted a "grave abuse of discretion" among the parties that drafted the agreement, which the court said put the government "virtually at the mercy of Piatco."