Philippines awards $390-mln Cebu airport deal to GMR-Megawide group

Sat Apr 5, 2014 1:42am EDT

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MANILA, April 5 Reuters) - The Philippines said on Saturday it had awarded the $390-million deal to renovate, expand and operate the Mactan-Cebu international airport to India's GMR Infrastructure Ltd and local partner Megawide Construction Corp.

GMR and Megawide submitted the best bid for the biggest infrastructure deal offered to investors so far under the government's Public-Private Partnership (PPP) programme, the Department of Transportation and Communications (DOTC) said.

It took the DOTC more than three months to award the project after one of the six other bidders, Philippine conglomerate Filinvest Development Corp, raised a conflict-of-interest issue against the GMR-Megawide group. [ID:nL3N0JR0ZQ}

The group offered a premium of 14.4 billion pesos ($320 million) at a tender in December to win the 25-year concession, which entails renovating the passenger terminal building, building a new one to service international flights and operating the airport, the nation's second-biggest gateway.

GMR operates and maintains three airports in New Delhi and Hyderabad in India, and in Istanbul. Megawide is a Philippine construction firm that has won three out of five PPP contracts -- valued at around 26 billion pesos -- tendered by the government in the last three years.

"Amidst all the noise drummed up in different forums the past few months, the DOTC has allowed nothing but the law and the country's interests to matter in awarding the project," DOTC spokesman Michael Arthur Sagcal said.

"This project should have been done at least a decade ago, so there is no more time to waste. We have resolved all issues, we are ready to defend our decision."

The DOTC has given the GMR-Megawide group 20 days to complete the post-award requirements, such as the submission of an irrevocable letter of credit in the amount of 180 million pesos, and the payment of the premium amount to government.

Once the requirements are satisfied, the concession agreement will be signed by the parties, allowing for the project's implementation over three to four years, Sagcal said.

The project is a test of the government's resolve to boost growth through PPPs in infrastructure, following delays in high-profile tenders that raised doubts about the scheme.

The GMR-Megawide bid was about 400 million pesos above the second-place offer from the group of Filinvest, which had Changi Airports Saudi Ltd as partner.

BIGGER RIVALS

The group also bested bigger rivals that included the Philippines' largest conglomerates, such as SM Investments Corp and San Miguel Corp. SM teamed up with Flughafen Zurich AG while San Miguel partnered with Incheon International Airport Corp.

Other bidders for the project were the consortium of Metro Pacific Investments Corp and JG Summit Holdings Corp with partner Aeroports de Lyon; First Philippine Holdings Corp and Wellington International Airport Limited; and Ayala Corp, Aboitiz Equity Ventures Inc and Houston Airport System.

The group aims to build a terminal that can accommodate 25 million passengers a year, more than three times the government requirement, Oliver Tan, chief finance officer at Megawide, said in December after his group emerged as the winning bidder.

The existing terminal was designed with a capacity of 4.5 million, but 6.2 million passengers passed through in 2011.

The Mactan airport connects tourist spots in the central Philippines with direct flights from Asian cities such as Hong Kong, Singapore, Seoul and Tokyo. (Reporting by Erik dela Cruz and Siegfrid Alegado; Editing by Ron Popeski)

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