Feb 16, 2024,10:56pm EST
Philippine Government Awards $3 Billion NAIA Upgrade Contract to Ramon Ang’s San Miguel
Transport Secretary Jaime Bautista announced on Friday that the Philippine government has awarded a $3 billion contract to a consortium led by billionaire Ramon Ang’s San Miguel to upgrade and operate the aging Ninoy Aquino International Airport (NAIA), the country’s primary international gateway.
The consortium, which includes South Korea’s Incheon International Airport Corp, proposed an 82.2% share of NAIA’s revenues to the government, significantly higher than the 33.3% revenue share offered by India’s GMR Airports International, House of Investments, and Cavitex Holdings. Another bidder, the Manila International Airport Consortium, comprised of Aboitiz Equity Ventures, billionaire Andrew Tan’s Alliance Global Group, Ayala Corp, Filinvest Development Corp, JG Summit Holdings Inc., and tobacco tycoon Lucio Tan’s Asia’s Emerging Dragon Corp, proposed a 25.9% share.
To alleviate the fiscal burden on the government, the Philippines is seeking private sector involvement in NAIA’s rehabilitation. NAIA, which has been ranked as the world’s worst airport multiple times by the travel website Sleeping In Airports, is set for transformation under this initiative.
The consortium, in which San Miguel holds a 33% stake, expressed commitment to collaborating closely with the government and stakeholders to modernize NAIA into a world-class international gateway that Filipinos can take pride in.
The airport, which handled 48 million passengers in 2019 before the pandemic, far exceeding its 33.2 million capacity, has struggled to manage increasing traffic. In January 2023, a power failure resulted in the cancellation of over 300 flights, leaving more than 65,000 passengers stranded.
Passengers wait for information about their flights at terminal 3 of Ninoy Aquino International ... [+]AFP VIA GETTY IMAGES
“We need to improve NAIA,” emphasized Bautista, highlighting the airport’s congested conditions.
The government anticipates finalizing a concession agreement with the consortium within 30 days, requiring the winning bidder to pay an upfront fee of 30 billion pesos, Bautista disclosed. He added that the transaction’s completion is expected within three to six months.
The project aims to nearly double the airport’s annual passenger capacity to 62 million and includes a 15-year concession contract extendable by another 10 years.
While San Miguel is concurrently constructing the 740-billion-peso New Manila International Airport in Bulacan, located approximately 44 kilometers north of the current airport, Bautista stressed the necessity for multiple airports to manage the country’s growing air traffic.
“By 2050, we estimate the need for an airport with a capacity of almost 100 million. So, we really need another airport,” Bautista underscored. “I don’t foresee any operational conflicts between Manila International Airport and the Bulacan Airport.”
Ang, who acquired the majority of his San Miguel shares from the late tycoon Eduardo Cojuangco Jr. in 2012, serves as the conglomerate’s chairman and CEO. Under his leadership, the company transitioned from a brewer and food manufacturer to one of the Philippines’ most diversified entities, spanning real estate, oil refining, power generation, and infrastruc