San Miguel Corporation-led SAP Company Consortium has officially won the 170.6 billion Philippine peso (US$3.05 billion) contract to rehabilitate the Ninoy Aquino International Airport, the country’s main international gateway. 

With a bid that promised the Philippine government a revenue share of more than double its nearest competition, the SAP Company Consortium was already the clear front-runner since the Department of Transportation publicly examined the financial propositions of the three qualified bidders last week. 

On Friday (February 16), transportation secretary Jaime Bautista made it official. “Today, we are pleased to announce that we will award this project to the winning bidder, the SMC-SAP group,” he says during a press briefing announcing the development. 

Fast process

The SAP Company Consortium’s award is one of the fastest public-private partnerships to be realized, with the winning bidder announced 12 months after the project was unveiled. 

Bautista also confirmed that the SAP Company Consortium, composed of San Miguel Holdings, RMM Asian Logistics, RLW Aviation Development and South Korea’s Incheon International Airport Corporation, was given the Notice of Award on the same day, with the official concession agreement to be signed after 30 days.

SAP Company Consortium offered the highest bid of 82.16% in revenue share to the government, while its nearest competitor, GMR Airports Consortium, offered the government a 33.3% revenue share. The third bidder, the Manila International Airport Consortium (MIAC), put forth a 25.91% profit share proposition. 

In addition to the revenue share that the government will get from the project, SAP Company Consortium will also have to pay the government a fixed upfront fee of 30 billion pesos, and an annual fee of 2 billion pesos.

Days after the propositions of the three bidders were made public, questions regarding SAP Company Consortium’s ability to fulfil its generous 82.16% profit share proposition came up. 

However, when asked, transportation undersecretary Timothy John Batan says the department isn’t worried. “Our solicited PPP experience is replete with examples of private sector ingenuity surprising the government,” Batan says, adding that the committee in charge of studying the bids also looked closely into San Miguel’s proposal. 

“We don’t just receive the bids, there’s a detailed evaluation of the financial proposals. We looked at whether the financial proposal is consistent with the technical proposal. We also looked at the funding sources of the bidder to see if they will be able to deliver,” he adds. 

Impressive bid

Under the terms of the deal, the San Miguel group will serve as operator of NAIA for a concession term of 15 years, with a possible 10-year extension. 

The project is a big win for Ramon Ang, San Miguel president and vice-chairman.

This is the second major airport project that San Miguel will be involved with. In 2020, the conglomerate won the franchise for the New Manila International Airport in Bulacan, a province about an hour and a half north of Manila.

San Miguel is also no stranger to making impressive bids – even earlier, in 2013, San Miguel also won the bid for the construction of the NAIA Expressway project, by massively outbidding its nearest competitor. For that project, San Miguel offered the government 11 billion pesos in upfront cash, beating out the measly P305 million cash upfront proposal of the Manila North Tollways Corporation.