DOTr PPP contract at NAIA ‘illegal’

The Department of Transportation is entering in an alleged "questionable and patently illegal" Public-Private Partnership with a construction consortium for the P107-Billion expansion project for the Ninoy Aquino International Airport.

At a budget hearing of the agency at the House of Representatives, Puwersa ng Bayaning Atleta Party-list Rep. Jericho Nograles said that contractor GMR Megawide consortium, was able to secure the lifting of the minimum equity requirement for the multi-billion contract to cure the deficiency of its inability to finance the project.

During the deliberation, Nograles questioned the decision of Secretary Arthur Tugade to continue to give undue concessions to GMR Megawide even with a clear knowledge that the company does not have capital to guarantee the completion of the project as required by law.

Even more ironic, Nograles said, is the fact that the Manila International Airport Authority has more than enough financial capacity to upgrade NAIA by itself, and without the need to enter into a concession arrangement with a private contractor.

“All Airport PPP projects resulted with increased terminal fees forthe passengers. Some raised from P200 to P850. That is unconscionable especially if the government can pay for it instead of passing it to the private sector to turn a profit with terminal fees,” Nograles said.

During the hearing, the DoTr admitted that the government is considering to give the to GMR Megawide which submitted an unsolicited proposal for the expansion of the NAIA although the consortium has yet to submit all its documentary requirements within the deadline period.

“The expansion proponent, the GMR Megawide failed to submit the required financial document to fund the P107-Billion proposal…that the deadline was last week and based on the documents that were submitted previously, both the equity and the finance portions that were submitted were not sufficient for the P107-Billion proposal,” Nograles said.

Responding to Nograles, DoTr Undersecretary for Planning and Development Ruben Reinoso admitted that GMR Megawide has yet to comply with the needed documentary requirement which could prove that the consortium is financially capable to pursue the airport expansion project.

“We are still awaiting the compliance of the consortium on the requirement of ICC (NEDA Investment Coordination Committee) so that we can review them and submit them to the ICC for their own appreciation and evaluation if it is compliant with the requirement of the ICC,” Reinoso said.

Reinoso added that GMR Megawide submitted some documents but did not satisfy the requirement of the ICC.

“GMR indeed submitted some financial documents but in the last deliberation of the investment coordination committee of the NEDA board (National Economic Development Authority), they are requesting documents to prove the financial capability of the proponent to invest in the P107 Billion, which means that the necessary equity for the 70:30 debt ratio.”

Nograles said Rienoso’s statement is a clear admission that the DoTr committed something that is patently illegal that is tantamount to graft because a contract must be awarded only to a proponent which has already fully satisfied the documentary requirement as required by law.

Last week, Nograles wrote DoTr Secretary Arthur Tugade a letter expressing his concern on the “continuing consideration of the GMR Megawide unsolicited proposal for the expansion of the Manila International Airport.”

Nograles reminded Tugade that under Republic Act 6957 (BOT Law) as amended by RA 7718, which requires private sector project proponents to have an “adequate financial base to implement said project consisting of equity and firm commitments from reputable financial institutions to provide, upon award, sufficient credit lines to cover the estimated cost of the project.”

“It is therefore very alarming that your office negotiated and approved that there will be no minimum equity requirements on the part of the project proponent. This accommodation was not extended to the previous mega-consortium, and may be considered in violation of Republic Act 3019, otherwise known as the Anti-Graft and Corrupt Practices Act for giving unwarranted benefits, advantage, or preference to a private party,” Nograles said.

Nograles also questioned why the DoTr agreed to increase GMR Megawide’s concession arrangement from 15 years to 25 years whereas the original proponent wanted a concession of 35 years but Tugaded insisted that they should be only given 15 years.

“The original concession length granted to the previous mega-consortium was 35 years negotiated down to 15 years at the request of your office, which is one of the reasons as to why said mega-consortium have abandoned their proposal. However, with the GMR-Megawide negotiations, your Office allowed for the concession period increase from 18 years to 25 years. Again, this may be in violation of the Anti-Graft and Corrupt Practices Act, especially with the fact that the previous mega-consortium had a larger project cost compared to the GMR Megawide project cost of PHP107.5 Billion,” Nograles’ letter to Tugade said.

Topics: Department of Transportation , Public-Private Partnership , Ninoy Aquino International Airport , Jericho Nograles , Arthur Tugade
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