The award of the 25-year concession for the Mactan-Cebu International Airport had been delayed since bids were opened in December after a rival consortium, which included Singapores Changi Airports International (CAI), raised objections alleging a conflict of interest.
The bid of 14.4 billion Philippine pesos (around $320 million) by GMR and its partner, Philippines-based Megawide Construction Corporation, had beaten six other bidders, including the Filinvest-CAI consortium.
Amidst all the noise drummed up in different fora in the past few months, the Department of Transport and Communications (DOTC) has allowed nothing, but the law and the countrys interests matter in awarding the project, said Philippines DOTC spokesperson Michael Arthur Sagcal in a statement.
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, he said.
We are delighted to be awarded the Mactan-Cebu International Airport project. We firmly believe that the GMR-Megawide consortium has the right credentials and capabilities to undertake this prestigious project and deliver an airport that Cebuanos and Filipinos will be proud of, said GM Rao, chairman of the GMR Group.
The Mactan-Cebu airport is the second busiest in the south-east Asian island country, with a passenger traffic of nearly seven million last year. The GMR consortium will have to build a second terminal within three years, besides modernising the existing terminal.
Now that we have got the letter of award, we will have to make the upfront premium payment within 20 days, said Manish Kalghatgi, spokesman for GMR, without elaborating on the debt-equity mix. We dont want to comment on it right now. It will be a mix of debt and equity. We are working on that right now, he said.
The Mactan-Cebu airport will be the only international airport in GMRs portfolio, which currently comprises the Delhi and Hyderabad airports. The infrastructure company recently divested its 40% stake in Istanbuls Sabiha Gocken International Airport for 225 million euros (around R1,910 crore).
In December 2012, GMR was forced to exit the Ibrahim Nasir International airport in Male, after the Maldives government terminated its concession agreement. The matter is currently under arbitration in Singapore, with GMR seeking compensation. The first hearing is slated for next week.
Over the past year, GMR has been shedding non-core assets, including a power plant in Singapore and coal mines in South Africa, besides divesting stake in two highway projects to bring down its debt burden. The net debt at the group level stood at R39,170 crore at the end of the December quarter.