Mactan-Cebu International Airport Deal Awarded

Passengers in Cebu can soon look forward to a new world-class international airport gateway as the Department of Transportation and Communications finally awarded the contract for the construction of the Mactan-Cebu International Airport to the consortium of India's GMR Infrastructure and Philippines based Megawide Construction Corporation just three months after the consortium submitted the winning 14.4 billion peso bid.

Image Source: GMR Megawide Facebook

The GMR-Megawide consortium emerged as the highest bidder defeating six other competing bidders. The awarding of the contract was delayed for three months due to allegations from rivals that a conflict of interest existed in the GMR-Megawide consortium.

"Amidst all the noise drummed up in different forums the past few months the Department of Transportation and Communication has allowed nothing but the law and the country's interests to matter in awarding the project," said Micheal Arthur Sagcal, spokesperson for the DOTC. "This project should have been done at least a decade ago, so there is no more time to waste. We have resolved all issues, we are ready to defend our decision and it is now time to push forward."

Allegations have been made by the second highest bidder, Filinvest, a partner of Singapore's Changi Airport group, over the financial capabilities of GMR, which currently operates airports in Hyderbad and New Delhi. The Megawide-GMR consortium denied all allegations.

The expanded international airport for Cebu comes under the government's public-private partnership program. It is the first major deal to be awarded under the scheme. With Cebu being one of the country's busiest hubs for business and commerce, investors are watching the development of Mactan-Cebu International Airport closely given its potentially lucrative position as a key gateway to the Philippines. The airport is already the country's second busiest airport behind Ninoy Aquino International Airport in Manila.

The bidding process drew a number of high profile corporations in the Philippines including San Miguel Corporation, Ayala Corporation, JG Summit Holdings, and SM Group. All bids that were received by the Department of Transportation and Communications in December represented "premium" offers meaning that the money bid will go directly to the government on top of the cost of developing the airport. It remains possible that the awarding to the GMR-Megawide consortium may still be challenged by lawmakers or its chief rival. However, only an order of the Supreme Court can halt the infrastructure project.

According to Nigel Paul Villarete, General Manager of the Mactan-Cebu International Airport Authority, the current terminal building has already breached its designed capacity. "The existing terminal was built in 1995 and it had a capacity of around 4.5 million passengers per year," said Villarete. "This was breached in 2010 when we exceeded 5 million passengers."

Under the new contract, Megawide-GMR will construct a brand new terminal structure and obtain the rights to operate the facility for the next 25 years. The new terminal building is expected to be configured for international operations while the existing terminal will be reconfigured for domestic operations.The new terminal is expected to be able to handle 8 million passengers per year.

Last month, executives from Megawide revealed plans for the development of the nation's second busiest airport. The company's Chief Marketing Officer declared that the Mactan-Cebu Airport would be turned into a "resort-airport" facility boasting 20 aircraft parking stands with aerobridges and 13 remote aircraft parking stands to be served by bus transfers. He added that the new airport would feature distinct domestic and international passenger terminals while each terminal would reflect the rich Cebuano heritage in its state of the art design and soothing resort-like atmosphere as conceptualized by local designers. 

In 2013, Mactan-Cebu Airport handled 6.9 million passengers with domestic passenger traffic increasing by 14 percent and international traffic increasing by 11 percent.