PPP deal for Laguindingan airport upgrade signed

By Kyle Aristophere T. Atienza, Reporter

THE PHILIPPINE government on Monday greenlighted a public-private partnership (PPP) project that seeks to turn Mindanao’s second-busiest airport into an international gateway, from which it expects a 3% share in gross revenue.

The Transportation department said it would advance more projects this year, including one that will build an international airport and set up a container terminal in the central Philippine province of Cebu.

President Ferdinand R. Marcos, Jr. on Monday witnessed the signing of the 30-year concession agreement for the upgrade and maintenance of the Laguindingan airport in northern Mindanao, which was awarded earlier this month to Aboitiz InfraCapital.

Aboitiz, the Department of Transportation (DoTR) and Civil Aviation Authority of the Philippines were the signatories.

Under the P12.75-billion project, the company will upgrade, expand, operate and maintain the airport in two phases, the first of which is expected to increase its capacity to 3.9 million.

The second phase will further increase the gateway’s passenger capacity to 6.3 million, Mr. Marcos said.

“This also shows our commitment to invest in the development of Northern Mindanao,” he said in a speech.

“Expectedly, the improvement of the airport will significantly boost tourism, create jobs, increase business presence and ultimately aid in achieving our goal of economic growth.”

Aboitiz InfraCapital’s deliverables under the agreement include the reconfiguration of existing terminal space to improve processing capacity, the construction of a passenger terminal building, as well as repair and maintenance activities that would fix “airport capacity shortage,” the DoTR said in a statement.

“Opportunities for investments, trade and tourism are expected to pour in Northern Mindanao and its adjacent cities.”

Transport Undersecretary Roberto C.O. Lim said the government would receive fixed payments worth P47 million in the first year “and in subsequent years, it will be growing.”

“And then we have a revenue share of 3% of gross revenues,” he separately told a palace briefing after the signing ceremony. “We expect to receive P3.766 billion over the concession period. That is the expected revenue for this project.”

Transport Secretary Jaime J. Bautista said the privatization would “lead to making this airport an international airport.”

“So with the implementation of this PPP project, there will be international flights and we will request Philippine carriers to fly out of Laguindingan to other Asian countries,” he said.

“We will also request the other airlines of other countries to fly to Laguindingan. The objective is to make this as a regional, international airport.”

The PPP Center told BusinessWorld last month that five more projects worth P28 billion are expected to be awarded this year and by early 2025.

The Aboitiz Group’s infrastructure arm also secured an original proponent status for the operations and maintenance of the Bohol-Panglao International Airport for 25 years.

Mr. Bautista said the government seeks to begin the Swiss challenge for the PPP project for the Bohol-Panglao airport by Nov. 11.

“If there will be no challenger, it’s possible that we can award this before the end of the year.”

INFRA DEVELOPMENT
Under the Swiss challenge, the government will allow other companies to challenge the proposal of Aboitiz.

The Bohol airport opened in 2018 after decades of plans, replacing the Tagbilaran Airport to respond to the province’s increased passenger traffic.

Mr. Bautista said the government is also planning to begin construction of the proposed Cebu International Container Terminal, which is funded by the Export-Import Bank of Korea, by the end of the year.

“We will do the notice of awardee in a few weeks. And maybe the agreement, we can sign before the end of the year also.”

The Finance department signed a $172.64-million loan agreement with the Korean bank for the project.

The DoTR earlier said the proposed container port, which will be equipped with four quay cranes, is targeted for completion by 2028.

In his state of the nation address in July, Mr. Marcos said the government aims to complete 350 airport and seaport projects by 2028.

Mr. Bautista said the government is expecting the start of operations of the Light Rail Transit (LRT) Line-1 extension by mid-November.

The government also expects to start construction of the proposed Taguig International Exchange, which had an estimated cost of P5.2 billion at the time of approval, this year, he added.

The DoTR earlier said Ayala Land, Inc. (ALI), a unit of Ayala Corp., will build the multimodal passenger terminal, which has been stalled since 2016.

The project seeks to connect passengers to city buses and other public utility vehicles, and other systems such as the North-South Commuter Railway project.

In December, Mr. Marcos signed the PPP Code, which amended the Build-Operate-Transfer (BOT) law to create a unified legal framework for all PPPs at the national and local levels.

“Let us draw inspiration from this second successful airport privatization project to advance our nation’s infrastructure development,” Mr. Bautista said of the PPP project for the Laguindingan airport.