12 December 2013, InterAksyon.com

by Darwin Amolejar

 

The group led by Megawide Construction Corp has topped the bidding for the P17.5-billion Mactan Cebu International Airport Terminal Project, the biggest public-private partnership (PPP) airport venture of the Aquino administration.

During the opening of bids held today at the Department of Transportation and Communications (DOTC), GMR-Megawide Consortium submitted the highest bid of P14.4-billion.

Megawide is a listed building contractor partly owned by the Philippines’ richest man, Henry Sy, whose holding firm, SM Investments Corp, lodged a separate P12.5 billion bid for the Mactan airport project through the Premier Airport Group.

Besides GMR-Megawide Consortium and the Premier Airport Group, the five other prequalified bidders and their respective offers were as follows:

– MPIC-JGS Airport Consortium, P11.23 billion;

– AAA Airport Partners led by Ayala and Aboitiz groups,  P11.08 billion;

– Filinvest-CAI Consortium, P13.99 billion;

– SMC-Incheon Airport Consortium, P9.05 billion; and

– First Philippine Airports Consortium, P4.7 billion.

“As you can see, it’s very clear that all of the bidders were keenly interested and they believed in the project. That is why you can see of all them bid at a premium,” DOTC Undersecretary Jose Perpetuo Lotilla, who heads the Bids and Awards Committee, told reporters after the auction.

The premium bids mean the winner will pay the government upfront, on top of the cost of constructing the airport terminal.

Lotilla said the bids committee’s technical working group would evaluate the financial bids for 25 days starting today.

Game changer

The DOTC expects to issue the notice of award on January 6, and to seal the contract by January 27.  The concession agreement is scheduled for signing on February 6.

“This is the highest, I think premium paid to government, thus far,” said PPP Center executive director Cosette Canilao, adding that the “last one was [the] NAIA Expressway.”

San Miguel Corp’s Optimal Infrastructure Development Inc had paid P11 billion upfront for the P15.86-billion NAIA Expressway Project.

Louie Ferrer, chief marketing officer of Megawide, told reporters that the company prepared for this auction.

“I think the real winners are the Filipino people. We would like to congratulate everyone. All the bidders spent so much time and money for this. We would like to congratulate everyone and the rest of the Filipino people,” he said.

“This is really a game changer for us, we are known as a vertical building contractor and we’ve started doing PPP projects and it is really an important for us. It’s an important project and a game changer,” he added.

Oliver Tan, chief financial officer of Megawide, said the bid amount “was pretty close, but we submitted a very, very comfortable bid.”

He said the company is confident that the consortium submitted a compliant bid for the project.

“GMR has been in the business for quite sometime already. For us, we will bring our construction expertise; it’s a terminal building which is our core competence. It is a bid that we are very happy and with a good internal rate of return,” Tan said.

GMR Infrastructure has done more than three airports: two in India and one in Turkey.

Funded through 70-percent debt

Ravishankar S, general manager for commercial and business development of GMR Airports, said the company welcomes the result of the bidding and expects the project to be very viable.

Tan said the consortium will pay the P14.4 billion to the government within 20 days of receipt of the formal notice of award.

“On top of the P14.4 billion that we will pay to the government, we will have to spend around P13-15 billion for the initial capex,” Tan said, adding that the capital expenditures will be funded through 70 percent debt and 30 percent equity.

“We have more sufficient funding for this,” he said.

“We will put up a special purpose vehicle that would hold the concession for the 25 years; build operate and transfer concession with the government,” Tan said.

He said the first phase of the project would be completed in two-and-a-half years.

The project involves the construction of a new world-class international passenger terminal building, with a capacity of about eight million passengers per year; renovation and expansion of the existing terminal; installation of all the required equipment; and the operation of both new and existing facilities.

When this new international terminal building is completed, the existing terminal, which caters to both domestic and international passengers, will then be converted into an exclusively domestic passenger terminal.

Third PPP project

The Mactan airport would be the third PPP for Megawide, which through another consortium won the P5.69 billion project to upgrade the Philippine Orthopedic Center, as well as the two phases of the School Infrastructure Project worth a combined P25 billion.

Incorporated in July 28, 2004 to engage primarily in general construction, Megawide began as the contractor of the SM group, particularly for its high-rise condominiums under SM Development Corp.

Megawide has since diversified by taking on contracts with other property developers and by venturing into the manufacture of pre-fabricated materials. The company, which went public two years ago, is also eyeing construction ventures overseas.

In the first nine months, Megawide posted a net income of P349 million, up 55 percent from last year’s P633 million because of higher construction revenue.