Ninoy Aquino International Airport Terminal 3

Cancelled

The private sponsors were to build, operate and transfer a new passenger terminal for the Ninoy Aquino Airport in Manila. The new terminal will have a capacity of 13 million passengers per year (182,000 square meters). The construction works started in Jan. 2000 and the terminal was scheduled to open in July 2002. The project was awarded to PIATCO in 1996, but the contract was signed only in July 1999. PIATCO was headed by Philippine Airport and Ground Services (a subsidiary of GlobeGround, part of the Lufthansa Group) and Germany's Fraport AG (65%); other partners included People's Air Cargo & Warehousing Co., two Philippine banks and two trading houses (one from Japan and another from Singapore). The project achieved financial closure in September 2001 as follows: US$50 million IFC A loan; a US$ 40 million Asian Development Bank (ADB) loan; US$50 million IFC B loan; US$40 million ABD complementary loan; US$ 110 million commercial loan and a US$150 million tranche covered by German export credit agency GKA. During the concession period, PIATCO will pay US$ 393 million in lease fees to the government (US$ 7.42 million per year during the first 4 years; US$ 17.3 million per year from the fifth to the last year). In December 2002, Philippine President Gloria Arroyo-Macapagal, backed by the courts, broke the contract, citing discrepancies in the contract and questionable "consulting" fees. The courts had ruled that the contract violated the build-operate-transfer (BOT) law as it allowed government guarantees in the event of the contractor's default. Under the law, unsolicited proposals such as the airport terminal project should not be given government guarantees. The government then offered Fraport compensation and said it would take over ownership of the terminal. After months of talks that ended in a stalemate, Fraport registered its "Request for Arbitration" with the World Bank's International Center for Settlement of Investment Disputes (ICSID) against the government in October of 2003. Fraport wanted more than US$425 million in compensation, claiming the government expropriated the project and treated the German company's investment unfairly in the construction of the terminal building. Terminal 3 was to remain closed until the legal issues with Fraport are resolved. Construction of the terminal was near completion in November of 2002, but an additional US$90 million was needed for the new terminal. Fraport wrote off its EUR293 million investment in the terminal. In 2001, it wrote off EUR60 million. http://www1.ifc.org/ar2002/pdf/FY2002Commitments.pdf Note that in order to calculate the real value of the concession fee, a discount rate of 12.894% aa was used; this rate is the lending rate of the year of financial closure provided by the International Financial Statistics. None