Philippine PPPs queue up investors

Panglao airportThe bidding deadline for the Mactan-Cebu International Airport’s new terminal, part of the Philippine government’s dense list of PPPs, has been extended to April 5 due to overwhelming interest, which has brought in more than a thousand queries for the airport expansion, as well as two other PPP projects.

The increased amount of applications for PPP projects in the Philippines follows the country’s upgrade to investment grade status by Fitch on March 27, with many overseas investors now expecting S&P to follow suit.

The deadline for Mactan-Cebu’s $240 million terminal was originally slated for March 22, a date that was marked to ensure the project kicks off in 2013.

Vinci Airports, a French construction conglomerate that operates 12 airports, including three in Cambodia (Phnom Penh, Siem Reap, Preah Sihanouk), is thought to be the frontrunner in the bid.

The successful bidder will have to comply with the government’s desire to invest a further $185 million on expanding the domestic terminal to 41,000 square meters.

Many more projects have been promoted through the country’s PPP programme, which now boasts a burgeoning pipeline of over 20 projects, with a value of at least $7.4 billion.

“We need to update existing terminals and build news ones and new airports to meet future demand and believe that PPP projects are the best way to develop them,” Executive Director of the Philippine PPP Center Cosette Canilao told Airport World.

“We are aware that mistakes were made before with the T3 concession at Ninoy Aquino, which without doubt, damaged the reputation of the Philippines for international investors. However, we have learnt from the experience, which is why we have set up the Public-Private Partnership Center to assist in the preparation of projects.

 This includes negotiating the terms of the concessions with the government and overseeing the bidding process.

“We now have a clear strategy. We know what the government wants and obligations it expects from the private sector. We are also developing clear exit strategies so that the mistakes of the past cannot be repeated,” Canilao said, pointing to the evidence of the programmes success by the amount of investors now lining up.

Next on the agenda are PPP projects to expand the Puerto Princesa ($110 million) airport, as well construct new airports in Bicol ($120 million), Languindingan ($200 million) and Bohol ($175 million) on Panglao Island.

Among the other projects currently in live bidding include the Naia Expressway, a highway that will connect Manila’s Entertainment City to the airport, and the rehabilitation, operation and management contract for the Angat Hydroelectric Plant.

The Philippines has 87 airports including 12 international gateways that include Manila-Ninoy Aquino, Subic Bay and Clark.

 

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Justin Calderon

Justin Calderon is a research analyst for Inside Investor based in Manila, Philippines. His work has been featured in The New York Times, Newsweek (Japan), CNN Travel, GlobalPost, Global Times and The Nation (Bangkok). Living in and out of Asia since 2006, Justin spent two years in Shanghai working for a popular B2B magazine. He also hunkered himself down in Taipei for two years to teach English and study traditional Chinese characters. He is a Mandarin and Thai reader and speaker.

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