GMR Infrastructure in race to bid for 5 regional airports in Philippines

GMR Infrastructure is bidding for USD 2.44 billion contract to operate five domestic airports in Philippines under PPP (public, private partnership). The five airports are Bacolod-Silay, Iloilo, Davao, Laguindingan, and New Bohol (Panglao). These airports are divided with three airports in Bundle 1 and remaining in Bundle 2. The contract includes development, operations and maintenance for regional airports. There are other probable bidders for these airports such as Metro-Pacific-JG Summit Consortium, Aboitiz Equity Ventures, Miguel Corp, Philippine Skylanders Inc and Union Equities. The Share price of GMR Infrastructure surged by 3.26 per cent to Rs 15.21 on intraday basis.

The regional airports total package estimation would be USD 2.44 billion. The cost for Bacolod-Silay Airport would be USD 450 million and USD 670 million for Iloilo Airport while the cost for Davao Airport would be about USD 900 million, USD 320 million for Laguindingan Airport and USD 100 million for New Bohol (Panglao) Airport.

GMR Infrastructure provides infrastructure services. The Company has employed the public-private partnership model to build a portfolio of assets and undertakes development of the infrastructure projects through its various subsidiaries. It operates in four segments: airports, energy, roads, sports and urban infrastructure. GMR operates India's busiest airport, Indira Gandhi International Airport in New Delhi and it has built a new terminal T3. The company developed and commissioned an international airport at Hyderabad. GMR-Megawide currently runs Mactan Cebu International Airport (MCIA), the first airport in Philippines to be privatised under PPP programme.

According to the department of transportation and communications of Philippines (DOTCP) private partner would provide extra facilities & other necessary improvements to enhance passenger safety, security, access, passenger and cargo movement efficiency and operational efficiency. Under the proposed 30 year contract, the private sector partner will take care of the apron and other airside or landside facilities. It will also undertake capacity augmentation to cater to future demand throughout the contractual term.

However, air traffic control services (ATC), air navigation services (ANS) and operation of these facilities will continue to be under the responsibility of the Civil Aviation Authority of the Philippines (CAAP), which currently runs the regional airport facilities.

GMR Infrastructure's consolidated revenue rose by 4.08 per cent to Rs 11088 crore in FY15 on yearly basis. EBITDA of the company declined by 0.42 per cent to Rs 2555 crore in FY15 compared to previous fiscal year. It posted net loss of Rs 2733 crore in FY15 while it had net profit of Rs 10 crore in FY14.

Recently, GMR Infrastructure won contract to expand and modernize Mactan-Cebu international airport on build-operate-transfer (BOT) basis for 25 years. The company is the designated operator for the airport and it officially took over the responsibility of operations of the airport on November 1, 2014. The new terminal T2 is expected to be complete by 2018. Passenger handling capacity is going to increase from 4.5 million to 15.8 million.