Philippine conglomerate San Miguel Corp signed a $15-billion or PHP740-billion infrastructure investment with the government on a build-operate-transfer (BOT) basis
MANILA – A measure granting a congressional franchise to conglomerate San Miguel Corp. (SMC) to build and operate an international airport in Bulacan has hurdled second reading approval at the House of Representatives.
During Tuesday night’s plenary session, the lower chamber approved through voice voting House Bill 7507, which grants SMC subsidiary, San Miguel Aerocity, Inc., a franchise to establish a domestic and international airport in the municipality of Bulakan, Bulacan and develop an adjacent airport city.
Under the bill, the franchise shall be in effect for 50 years, inclusive of the 10-year maximum period for the construction of the airport and the Airport City. Philippine Transportation Secretary Arthur Tugade and SMC President and COO Ramon Ang sealed the 50-year concession agreement for the airport project.
During the 10-year construction period, the grantee shall be exempt from any and all direct and indirect taxes, including income taxes, value-added taxes, percentage taxes, customs duties, and tariffs, business taxes, franchise taxes, and supervision fees.
Under the profit-sharing agreement in the franchise bill, the grantee shall be entitled to generate income from the Airport City equivalent to a project Internal Rate of Return (IRR) of 12 percent per annum.
Any amount in excess of the 12 percent IRR of the Airport City shall be remitted to the national government.
Albay Rep. Joey Salceda, chairman of the House ways and means committee, said the project would be beneficial with the PHP740-billion infrastructure investment that “come(s) entirely out of the private sector’s hands.”
“This is probably the biggest single-item investment in the country’s history. San Miguel is a Filipino company that has kept nearly all of its money here, to develop this country,” Salceda said. “They are doubling down on their commitment to Philippine development with this investment. I want the airport to happen on fair and equitable terms.”
Meanwhile, Private Public Partnership (PPP) Center chair Ferdinand Pecson has assured the committee that the government would not have any financial obligation to SMC. (PNA)
By Filane Mikee Cervantes, PNA, September 2, 2020