MANILA, Philippines – The government will privatize the operation and maintenance of the Ninoy Aquino International Airport Terminal 3 (NAIA 3) once all the legal obstacles to its full operation have been resolved, according to Transportation and Communications Secretary Jose de Jesus.
“All these legal issues, involving just compensation and arbitration proceedings, will have to be resolved first,” De Jesus said.
An expropriation case pending before the Pasay City Regional Trial Court appears to be the remaining legal obstacle to NAIA 3’s full operation after the International Criminal Court (ICC) in Singapore on Saturday, ruled in favor of the Philippine government in the arbitration case against the Philippine International Air Terminals Co. or PIATCO.
Earlier, the Washington-based International Center for Settlement of Investment Disputes or ICSID dismissed the complaint of German firm Fraport AG Frankfurt Services Worldwide against the Philippine government.
President Aquino said that with the development in Singapore, the government hopes to fully operate NAIA 3 in December.
“It is with very intense delight that I was informed that we won by the dismissal of the complaint in Singapore,” the President said in a press conference yesterday.
With the Singapore ruling, the Philippine government will not have to pay $1.1 billion to the complainants.
“As you know, the devil is in the details. I am waiting for briefings on the details to move it forward so that NAIA 3 can be used to its maximum capacity in time and we are targeting in time, at the very least, for the Christmas holidays,” Mr. Aquino said.
Mr. Aquino said the compensation for NAIA 3 would still have to be discussed.
“But it is significant that in both of this arbitration cases they have lost and the government and the people have won and they’re gonna go back to our court systems to be guided under our laws,” Mr. Aquino said.
The PIATCO consortium led by Philippine Airport and Ground Services Terminals Inc. and Fraport AG built NAIA-3 under the build-operate-transfer scheme.
In December 2004, the Supreme Court voided the contract between the government and PIATCO citing onerous changes to the original contract.
PIATCO, in response, filed an arbitration case in Singapore while Fraport lodged a similar case with ICSID against the Philippine government.
Fraport AG sought ICSID’s help in September 2003 in recovering its investments in the airport reportedly amounting to $425 million.
“Now that it’s cleared, we can turn to the DOTC to discuss how the operations at NAIA 3 (will be done),” presidential spokesman Edwin Lacierda earlier said referring to the Singapore development.
Lacierda said the government would still have to see if PIATCO and Fraport would take further action. He added he would have to look into the rules of procedure in arbitration.
“If it’s final and executory, then we welcome that. If that’s the case, the DOTC will now have a more direct hand in dealing with NAIA 3,” he said.
Following the SC’s voiding of the NAIA 3 deal in 2004, the government took over the terminal and began expropriation proceedings against PIATCO.
The SC also denied a petition filed by the Lucio Tan-led Asian Emerging Dragon Corp. that it be given the right to operate NAIA 3 after the high court’s voiding of the BOT contract. The AEDC was one of the proponents of the NAIA 3 project.
No rejoicing yet
Despite the favorable developments on the legal front, sources have advised the Aquino administration against rejoicing prematurely and paying for the facility without conducting financial and technical evaluation first.
“Before the (Aquino administration) considers taking over the facility, it must check first whether it’s worth buying in the first place and fund the repairs or it can just be bidded out (to the private sector),” a source said.
The source said the real value of the airport must be assessed and that the books of the builders must be opened.
Another source stressed that reports on the airport’s questionable structural integrity should not be readily dismissed.
The source also rebuffed Lacierda’s giving the previous Arroyo administration credit for the legal victories.
The Arroyo administration, sources said, should not given any credit because the cases involving NAIA 3 filed during its time did not prosper.
The source said both the Singapore and Washington cases got the same evidence and that even the Senate Blue Ribbon committee confirmed this.
It was found that PIATCO did not have the qualification as well as financial and technical capabilities when awarded the contract.
But even before the SC decision, the sources said PIATCO had already filed cases before the ICC to compel the government to revert to the original contract and be paid the amount it desired.
In December 2005, the SC issued a ruling ordering the government to pay PIATCO just compensation if it wanted to take over the terminal. The source said the Arroyo administration paid P3 billion without checking the viability of the airport despite warnings from experts.
Sources said there had been numerous other cases involving NAIA 3 such as the anti-dummy suit against Fraport and other investors filed with the Sandiganbayan.
The sources added that the Department of Justice during the Arroyo administration dismissed the anti-dummy case and that many petitions before Anti-Money Laundering Council were not acted upon. –Mary Ann Reyes and Aurea Calica (The Philippine Star)
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