THE government has received from Bulacan airport proponent San Miguel Holdings Corp. (SMHC) the revised contract for the project on Monday, which contained altered provisions to accommodate requests from the Department of Transportation (DoTr), it said on Tuesday.
Transportation Undersecretary for Planning Ruben S. Reinoso, Jr. said in an economic briefing the new concession terms for the New Manila International Airport took into account the issues that have been flagged by the DoTr in previous meetings.
“Based on a discussion on Sept. 6, the San Miguel Holdings Corp. submitted a revised concession agreement yesterday (Sept. 17). So it’s now under review, and due for another negotiation on Monday (Sept. 24),” he said.
Mr. Reinoso told reporters that while they had not gone through all the pages of the revised draft contract, it is expected to contain changes in three main provisions: what constitutes a material adverse government action, what constitutes a change in law that would warrant government compensation, and how would payment be determined in case either parties commits any fault.
“[The initial version of the contract] is very broad. So we wanted it to be more specific. We wanted more details. Kasi pag broad ’yung language (Because when the language is broad), sometimes it becomes subject to dispute in the future,” he said.
The next step once the terms and conditions of the contract are finalized would be getting the approval of the National Economic and Development Authority’s investment coordination committee (NEDA-ICC), Mr. Reinoso said. This would be done simultaneously with the preparations for the Swiss challenge.
Under the Swiss challenge, other firms are invited to submit counterproposals to that of SMHC’s, but as original proponent, the company may match.
Mr. Reinoso added, “Hopefully if everything is agreed upon, the proponent will be granted final approval and awarding of the contract by early next year or hopefully towards the end of the year.”
Last week, Mr. Reinoso told reporters they were being cautious in approving the concession terms for the Bulacan airport proposal to ensure it would not contain any contingent liability that might be interpreted as government guarantee.
Being an unsolicited proposal, the Bulacan airport project is not allowed to exhibit any form of government guarantee, in accordance with Republic Act No. 7718 or the Build-Operate-Transfer (BOT) Law.
“We are careful that if we feel this is tantamount to a government guarantee, then we tell them. They have to give us something that we will accept as not a government guarantee,” Mr. Reinoso said.
Contingent liabilities are payments that come from untoward incidences in the course of a project. While Mr. Reinoso said contingent liabilities are “fine,” it becomes alarming once it turns into a real liability.
The Department of Finance last week also deflected comments that they were delaying the final approval of the project, noting it was simply ensuring that the Bulacan airport would not cost unnecessary expenses on the government.
“It is my responsibility to not only look after all of government assets, but also manage our contingent liability,” Finance Secretary Carlos G. Dominguez III said.
He likewise questioned the viability of the airport proposal because of SMHC’s supposed insufficient equity of P60 billion in 2016 to back the P735-billion project.
Mr. Dominguez said if the SMHC wants the project to push through, it needs the financial support of parent company San Miguel Corp. through a joint and several liability agreement.
SMHC’s proposal is to construct, operate and maintain a 2,500-hectare airport in Bulacan with an 8.4-kilometer toll road connecting to the North Luzon Expressway. It was conditionally approved by the NEDA board on Apr. 25, but is still subject for another round of evaluation for questions on its financial viability. — Denise A. Valdez
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