CAVITE PROVINCE will allow its future joint venture (JV) partner for the Sangley Point International Airport to co-own portions of commercial land that will be created by reclamation.
Foreign ownership of land will remain restricted, however, because the province will now require its JV partner to be 51% Filipino-owned or controlled.
“As a result of a policy decision by the province in response to the national security issues that have been raised, it is now required that the JV partner, whether it is a single entity or a consortium, is Filipino-majority owned and controlled,” Sol Castro, Cavite government’s consultant for the project, said at the Pre-Bid/JV Selection Conference held on March 18. A video of the conference has been posted on the province’s official Facebook page.
Lucio C. Tan’s MacroAsia Corp. only had a 40% stake in a previous consortium that negotiated with the province for the airport project, while its foreign partner China Communications Construction Co. Ltd. (CCCC) had a 60% stake.
“The land arrangements are still pretty much the same, which means that land use rights will be made available by the province to the JV partner, or to the airport company. But if you look at the land arrangements under the joint venture development agreement, there are material changes, and these changes I think will benefit the JV partner and the airport company, because it gives the company more flexibility in determining whether it wants to co-own a portion of the commercial land that will be created or that will be formed as a result of the land reclamation,” Mr. Castro added.
Mr. Castro also said that the option to co-own portions of the reclaimed land is “essential” to the project when raising debt financing.
“If (land ownership) is a requirement of the lenders, then it will be considered by the province,” he noted.
He said the 51% Filipino ownership requirement is not enough for a consortium or a private entity to qualify to own land in the country.
“You need to bring that up to 60% to own land in the Philippines,” Mr. Castro added.
“If these conditions are not met, then the province will have title over the land, and the JV partner and the airport company will eventually have perpetual use of the land.”
Under the joint venture development agreement, the JV partner will co-develop and co-own the project with the province. Cavite’s key equity contribution will be in the form of land use rights.
“On the part of the JV partner, its key obligation, which translates to a right as a result, will be to provide the equity investment and to raise the debt financing. On the basis of these contributions, that will reflect on the ownership of the airport company,” Mr. Castro added.
The airport company is to be created after both parties reach a final investment decision.
“The airport company will be the developer and owner, and it will decide as well on how it will have this new international airport operated, whether it would want to operate that on its own or whether it will grant a concession for the O&M (operation and maintenance) of this airport,” Mr. Castro said.
Cavite’s Public-Private Partnership Selection Committee Legal Officer Jesse R. Grepo said “two companies” have expressed interest in the project “as of March 18.”
The JV partner, according to Mr. Castro, must have developed and built at least one international airport, with a minimum handling capacity of 12.5 million passengers per annum, and at least one land reclamation project — both in the last 20 years.
“The financial qualification requirement that the JV partner must have is a current net worth or a combined net worth, in the case of a consortium, of at least $1.6 billion or roughly around P80 billion,” he said.
The Cavite government has set a May 4 deadline for the submission of proposals.
The province hopes to sign the joint venture and development agreement on or after July 1 this year.
In 2019, only the MacroAsia-CCCC JV submitted a proposal to develop Sangley airport. Other groups that bought bid documents for the project were Metro Pacific Investments Corp.; Prime Asset Ventures, Inc.; Philippine Airport Ground Support Solutions, Inc.; Langham Properties, Inc.; and Mosveldtt Law Offices.
Cavite informed the MacroAsia-CCCC tandem on Jan. 26 of its decision to cancel the notice of selection and award for the Sangley airport project it had issued on Feb. 12, 2020.
Cavite Governor Juanito Victor C. Remulla, Jr. said the “various deficiencies in the submission of requirements to conclude the joint venture agreement” led to the province’s decision. — Arjay L. Balinbin