February 16th, 2024
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) lauded Transport Secretary Jaime Bautista and Finance Secretary Ralph Recto for “locking in the best deal out of the biggest PPP in history” with the awarding of the NAIA operation and management privatization deal to San Miguel Corporation.
The P170 billion deal is the largest Public-Private Partnership project in the country’s history.
“The SMC proposal offered an eye-popping 82.6 percent government share out of airport revenues, not to mention an upfront outright payment of at least P30 billion to the government,” Salceda said.
Salceda adds that he is also “getting the proponent to do immediate improvements to the airport” including the installation of walkalators along the full length of Terminal 3, the interconnection of Terminals 1,2, and 3, and better lounge facilities for OFWs.
“Immediately, there will be enhancements. I’m getting the proponent to commit,” Salceda added.
Salceda said that a disqualified bidder offered a “second-best” proposal with 76 percent government share which would still have been lower than the SMC proposal.
“The SMC proposal still yields them an internal rate of return of about 11.4 percent, which is lower than the allowed Bulacan airport IRR of 12 percent, after which government gets everything earned.”
“All in all, an excellent deal for the government. We got the best deal out of the biggest PPP in history, right after the enactment of the PPP Code,” Salceda, principal author of the law, added.
“The rate-based bidding also makes it fair to all parties involved. Since we can’t really equalize proposals qualitatively, the best metric is what gives the best deal for the government.”
“We fought for rate-based bidding, as the ultimate measure of what counts as a fair deal in PPPs.”
Salceda also congratulated Privatization and Corporate Affairs Group Undersecretary Catherine Fong “for insisting on this fair and verifiable way of bidding the project out.”
“Quick, easy, and fair. Much credit goes to Usec. Cathy Fong for the way this bidding was conducted,” Salceda added.
The House tax chair, who also oversees PPPs as a financing mechanism for the government, said that he looks forward to “a declogged pipeline of PPPs modeled after this system.”
“It works. So let’s do it more often,” Salceda said.