GMR, Megawide group set to win Philippine airport contract

By Erik dela Cruz

MANILA (Reuters) - GMR Infrastructure and contractor Megawide Construction Corp are the likely winners of a $400 million airport terminal tender, the biggest so far under the Philippines' public-private partnership programme.

The consortium beat six others including the country's top conglomerates at an auction on Thursday, offering a premium of 14.4 billion pesos for the 25-year concession to operate central Philippines' Mactan-Cebu International Airport - the country's second-biggest - and build one of its terminals.

The project is a test of the government's resolve to boost economic growth through public-private partnerships (PPP) in infrastructure, following delays in previous high-profile tenders that have raised doubts about the scheme's effectiveness.

The Megawide-led offer was about 400 million pesos above the second-place bid from a group led by property-to-banking firm Filinvest Development Corp and Changi Airports Saudi Ltd. The winning bidder will likely be announced in early January.

Megawide, with a market cap of $428 million, has won three out of five contracts -- valued at around 26 billion pesos -- tendered by the government under the three-year-old PPP scheme.

It bested bigger rivals that included the country's most valuable conglomerate, SM Investments Corp , and most diversified, San Miguel Corp . SM teamed up with Flughafen Zurich AG while San Miguel partnered with Incheon International Airport Corporation.

Other bidders were the consortium of Metro Pacific Investments Corp and JG Summit Holdings Corp with partner Aeroports de Lyon; First Philippine Holdings Corp and Wellington International Airport Limited; and Ayala Corp, Aboitiz Equity Ventures Inc and Houston Airport System.

Megawide and GMR aim to build an airport terminal that can accommodate 25 million passengers a year, more than three times the government requirement, Oliver Tan, chief finance officer at Megawide, told reporters.

But he said the plan would depend on developments in the tourism industry and the security situation, with Manila battling Muslim rebels in the south and a communist insurgency.

The group's bid reflects its "expectations in terms of the internal rate of return" of the project, Tan said, adding GMR would take a 40 percent stake in the joint venture.

GMR operates and maintains three airports in New Delhi and Hyderabad in India, and in Istanbul.

Megawide shares climbed as much as 5 percent in afternoon trade after the airport bids were announced, but later erased its gains to settle flat. The broader market was down 2 percent.

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Delays in the bidding process for high-profile PPP projects have clouded prospects of an infrastructure boost to sustain Philippine economic growth at 7 percent or higher.

But Manila is now moving to expedite the process, opening bids for two projects this week.

On Monday, officials said a consortium of conglomerates Ayala Corp and Metro Pacific Corp gave the best bid for a 1.72 billion peso contract to operate a smart-card system for the elevated rail network in Manila.

The Mactan airport connects tourist spots in the central Philippines with direct flights from Asian cities such as Hong Kong, Singapore, Seoul and Tokyo.

The existing terminal was designed with a 4.5 million passenger capacity, but 6.2 million passengers passed through in 2011.

(Writing by Rosemarie Francisco; Editing by Stephen Coates)