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NEWS Last modified on April 10, 2014

Deal reached for development of Mactan-Cebu Airport

The Philippines has awarded a $390 million deal to renovate, expand and operate Mactan-Cebu International Airport to India's GMR Infrastructure and local partner Megawide Construction, according to reports.

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), the Department of Transportation and Communications (DOTC) explains.

The two firms have been selected to renovate the passenger terminal building, build a new terminal to service international flights and operate the airport, which is the nation's second-biggest gateway.

The group aims to build a terminal that can accommodate 25mppa, 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 DOTC took more than three months to award the project after one of the six other bidders, Philippine conglomerate Filinvest, raised a conflict-of-interest issue against the GMR-Megawide group.

The group offered a premium of PHP14.4 billion pesos ($320 million) at a tender in December to win the 25-year concession.

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, 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 the next three to four years.

The GMR-Megawide outbid the second-place offer from the group of Filinvest, which had Changi Airports Saudi as a partner.

Others bids came from SM Investments and San Miguel, with SM teaming up with Flughafen Zurich, while San Miguel partnered with Incheon International Airport.

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

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

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