Puerto Rico authorities have shortlisted six groups for a potential concession of the US island territory’s main airport, marking the next step in Puerto Rico’s large-scale programme of privatisations.
The Puerto Rico government is looking to partner with a private developer to renovate and expand Luis Muñoz Marín International Airport, located near San Juan, in exchange for an operating concession of 40 to 50 years.
The Puerto Rico Public-Partnerships Authority (PPPA), together with the Puerto Rico Ports Authority, issued a request for qualifications (RFQ) for the concession this July and drew 12 responses by the early August deadline.
The PPPA has now eliminated half of the respondents from the bidding process, announcing that it has selected the following six consortia to continue in the race:
– A group comprised of Goldman Sachs Infrastructure Partners and German airports operator Fraport;
– Grupo Aeropuertos Avance, a consortium comprised of Macquarie Capital Group and Ferrovial Aeropuertos, the airports subsidiary of Spanish infrastructure group Ferrovial;
– The Puerto Rico Gateway Group, comprised of GE Capital Aviation, Allegheny County Airport Authority, US retirement fund manager TIAA-CREF, OPTrust, which manages the pension fund for the Ontario Public Service Employees Union and airport retail developer Airmall USA;
– Indian firm GMR Infrastructure and Korea’s Incheon International Airport Corporation;
– A group comprised of Canada’s Public Sector Pension Investment Board, Zürich airport operator Flughafen Zürich, Camargo Corrêa Investimento em Infra-Estructura, and Gestión e Ingeniería;
– A group comprised of Grupo Aeroportuario del Sureste and New York-based infrastructure investor Highstar Capital.
The news comes just as the PPPA announced the financial close of another major PPP – the 40-year concession of the territory’s busiest highway, known as the PR-22. A consortium comprised of Goldman Sachs Infrastructure Partners and Spanish developer Abertis won that concession, which also includes a smaller road known as the PR-5, with a $1.4 billion bid.
The PPPA evaluated the 12 groups that showed interest in the airport concession based on the groups’ technical and financial capabilities, as well as their reputations and their compliance with the requirements of Puerto Rico’s PPP legislation.
The airport privatisation has inspired some controversy in Puerto Rico. Over the past two months, the PPPA has issued two rebuttals to statements alleging a conflict of interest in the airport privatisation process. In an August statement, the PPPA said Puerto Rico Popular Democratic Party representative Charlie Hernández had charged a conflict of interest in relation to Macquarie’s potential participation in the airport project, a charge which the PPPA disputed.
Macquarie Capital acted as procurement and financial advisor to the PPPA on the toll road concession, but the PPPA argued that Macquarie Capital had not provided consulting services related to the airport concession. The PPPA added that the advisory division of Macquarie was separate from the investment funds division participating in the bidding process for the airport privatisation.
In September, the PPPA issued a statement rebutting another charge by Hernández that a conflict of interest exists in relation to law firm Mayer Brown, which is acting as US legal counsel to the PPPA for the airport concession. The PPPA statement said that Mayer Brown is not simultaneously advising any private sector proponents while advising the government on the process.
The airport and toll road concessions are two of the PPP projects that Puerto Rico has begun to procure since 2009 legislation enabled the government to undertake such partnerships and created the PPPA. The PPPA has also considered or managed PPPs in sectors including water and social infrastructure, according to the PPPA website.