SMC to manage NAIA

Today, the administration of President Ferdinand R. Marcos Jr. will award the management for 15 years of the decrepit main Philippine gateway, the Ninoy Aquino International Airport, to the winner of the bidding conducted last December by the Department of Transportation and Communications under Secretary Jaime Bautista.

What was feared to be a tight bidding war turned out to be a no-contest.

San Miguel Corporation quoted such a high price as government share of NAIA revenues, the diversified beer, food, energy and infra conglomerate left the two other bidders eating dust, literally, and the latter’s backers and henchmen conducting a black prop against SMC president and CEO Ramon S. Ang, 70.

My PhilSTAR colleague Boo Chanco wrote in this paper yesterday: “SMC is leading the race for the contract to operate NAIA and is willing to give the highest government share of 82.16 percent of revenue. GMR Airports Consortium proposed to share 33.3 percent while the consortium of major taipans offered just 25.91 percent. Whoever eventually wins must also pay an upfront fee of P30 billion and annuity cost of P2 billion. The winner will get 15 years to run the airport, extendable by 10 years.

“The consortium of taipans delivered a stingy bet even after they made two unsolicited offers which suggested they really wanted the project. But too many taipans can spoil a bid. And the heads of the conglomerates that make up the consortium are your traditional CEOs who are focused on bottom lines more than the public interest nature of the project,” Boo wrote.

Passenger terminal fees are not included in the government’s revenue share. The government gets 70 percent of terminal fees and the concessionaire, the remaining 30 percent.

The government will get 82 percent of 70 percent, resulting in bottomline sharing of about 60 percent for the government and 40 percent for SMC, “which is just fair,” explains an SMC spokesperson. So it’s 60/40, not 82.16/17.84 as earlier estimated.

Both government and SMC are winners. The Philippines gets a properly managed globally first-class airport and the government collects P60 of every P100 of revenue, without spending a single centavo of salaries, benefits, operating costs and fixed equipment over the next 15 years.

And corruption, long the bane of NAIA, should come down to near zero. NAIA itself should be great enough to handle at least 62 million passengers a year, happy passengers, not cursing to hell passengers.

RSA himself will again put to shame many of the Ivy League-educated CEOs of our largest corporations who will now learn a page from the now legendary taipan’s book on How to Do Business in the Philippines, Modernize It and Doing Good for the Filipino.

No one in the current crop of CEOs, taipans and tycoons can probably match RSA for his visioning, skills at execution and the speed as a first mover into many businesses that SMC is in to today or is moving into. And his love for people and the environment.

From 2002, RSA was SMC president and COO. Since 2021, he has been the president and CEO. The mechanical engineer re-engineered San Miguel in a profound manner no one had ever imagined.

Until a quarter century ago, the venerable San Miguel was a cut-and-dry business producing great beer, ancient spirits, fancy carton and plastic boxes, as well as tasty chicken and flour on the side. In its first 100 years, San Miguel’s business was good. Revenues were OK and so were the profits, considering the happy times.

Today, the new San Miguel, at 134 years old and under RSA, is dominant in nine major businesses:

1) Fuel and oil: Petron Corp. is the largest and only integrated oil refinery and a leading oil marketing company in the country. It is also a strong player in the Malaysian market. With a total refining capacity of 268,000 barrels daily, Petron produces a wide range of refined petroleum products, including petrochemicals. It has 40 terminals in the region and more than 2,000 retail stations.

2) Beer and beverages: Over 90 percent of the market for beer, foods, which holds market-leading positions and most recognizable brands in many key food product categories in the country.

3) Power generation: SMC Global Power has 19 percent of power generation nationwide, 26 percent of the Luzon grid and 7 percent of the Mindanao grid, with the island of Luzon representing 73 percent of the nationwide demand.

4) Infra and tollways: Representing almost 55 percent of the tollways length in the country.

5) Packaging: Offering a total packaging solution.

6) Airports: It manages the Boracay airport and is building the New Manila International Airport in Bulakan town, Bulacan province. Costing P740 billion with six runways, NMIA is the single largest investment by any entity in the Philippines. Add NAIA to the portfolio.

7) Water: SMC promises to deliver to households the cheapest, cleanest potable water there is. For a start, the company will provide cheap water 24/7 to 24 water districts of Bulacan. It wants to produce water up to 3,800 million liters a day (MLD) at a cost of around P8 billion. It is now providing potable water to 12 districts.

8) A 7-star integrated tourism resort. SMC’s 12,500-hectare Bugsuk property at the southern tip of the Palawan archipelago will be the biggest and most modern, with an initially straight eight kms of 100-meter-wide white beach that rivals Boracay in the purity and fineness of its white sand.

9) Automobile distributorship: SMC sells the best-selling premium car, BMW, in the local market.

SMC has fortified its claim as the biggest company in diversity, size of businesses and revenues with annual sales of P1.5 trillion, about five percent of GDP.

RSA himself spends billions on philanthropy and hardly anybody hears about it.

“We have the best minds, the most capable business leaders in the Philippines. Just imagine the collective experience and resources…Together, we can all do so much,” RSA says of what Filipino businessmen can do for the country.

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