San Miguel wins $376m Philippine PPP

A subsidiary of the Manila-based firm has won the tender for the Ninoy Aquino International Airport Expressway PPP thanks to a bigger up-front lump sum payment.

The long-discussed bidding process for the Ninoy Aquino International Airport (NAIA) Expressway Phase II Project, a public-private partnership (PPP) to develop roads to Manila Airport, has been granted to Optimal Infrastructure Development, a subsidiary of Manila-based San Miguel Holdings Corporation.

Three other private infrastructure developers were bidding for the estimated P15.52 billion (€297 million; $376 million) project, but Ayala Corporation and India’s IL&FS Transportation Networks withdrew from the bidding process earlier this month, according to the Philippine Department of Public Works and Highways (DPWH).

That left San Miguel and the Metro Pacific Group subsidiary Manila North Tollways Corporation as bidders. What finally swayed the Philippine government, according to the official statement, was San Miguel’s “up-front lump sum payment of P11 billion”, as compared to MPG’s offer of P305 million.

“The leading bidder is the one who gave the bigger up-front commitment,” DPWH undersecretary Rafael Yabut told Infrastructure Investor.

The NAIA Expressway project is the DPWH’s second PPP project, after the Daanghari-SLEX Link Road Project that was awarded to Ayala Corporation in 2011, according to the Philippine government website. Yabut adds that the DPWH has about six more projects in planning stage within Manila alone, and one or two in other parts of the Philippines.

San Miguel is now required to finance, design, construct, operate and maintain the NAIA project, which has a 30-year concession period. The project is expected to continue the completed Phase I by building 7.15 kilometres of elevated expressways over existing roads to connect the airport to main roads and, more particularly, to the casinos in PAGCOR City.

Yabut hopes to bring the entire project to financial close within two weeks, because the Philippine government is in a hurry to get the project at least partly completed. The archipelago is preparing to host two major international events over the next two years: the World Economic Forum in 2014, and the Asia-Pacific Economic Cooperation in 2015.

Although the entire NAIA Expressway project is only slated for completion in 2016, Yabut hopes that by bringing San Miguel on board, the project will have the first segment completed in time for the World Economic Forum in 2014.

The expressways leading to the airport will be toll roads, which will be the primary means of remuneration for San Miguel, Yabut said. The government-owned and -operated corporation Philippine Amusement and Gaming Corporation also offered to contribute P6.5 billion towards the construction, but San Miguel chose not to use their money, Yabut said – which means that P6.5 billion can be used for other PPP projects.