NAIA 3: Old promises, new promises

By Lala Rimando,

Posted at Dec 22 2010 07:49 PM | Updated as of Dec 24 2010 10:26 AM

NAIA 3: Old promises, new promises 1MANILA, Philippines – After operating at half its capacity for over 2 years, the country’s largest and newest international airport terminal will be fully operational by December 2011.

This was the promise of Transportation and Communications Secretary Jose "Ping" de Jesus during a press conference on Tuesday when the issue of the Ninoy Aquino International Airport Terminal 3 (NAIA-3) was discussed.

“About this time this year, we hope we will be able to see that airport fully operational,” he said during a briefing.

NAIA-3 has been marred by legal, financial, structural and safety issues after the Arroyo government nullified the build-operate-transfer (BOT) contract with private concessionaire Philippine International Air Terminals Corporation (PIATCO) in 2002.

It had been mothballed for 6 years until the Arroyo government, through the expropriation court, commenced commercial operations in July 2008.

Only 55% of the 4-storey one-kilometer-long NAIA-3 has been open for business with local budget carriers Cebu Pacific and AirPhil Express and several food businesses as lessors.

The other portions need to be repaired and retrofitted, while some equipment need to be replaced, since they currently do not meet international building and aviation safety standards.

100% operational

The NAIA-3 has been an infrastructure project of many promises.

It was supposed to be Asia’s most modern airport terminal had it opened as scheduled on December 2002.

After standing idle in the country’s main gateway for years—amid cramped and overcrowded adjacent NAIA-1 and NAIA-2 terminals, and the Domestic Terminal nearby—the Arroyo government also made several promises to open it.

After several promised opening dates—with December, March or June as usual target months—the Arroyo government finally opened it in July 2008 amid opposition from legal teams working on arbitration cases filed against the government in Washington and Singapore courts.

Even President Benigno Aquino III made a promise to “open” NAIA-3 in August, months after he assumed office.

His target date was end-2010.

Structural, safety issues

While the legal issues clouded efforts of the government to assert control over the building terminal, the structural issues and problems persisted.

Portions of the terminal's ceiling fell three times.

The facility consists of 10 separate buildings that are supposed to withstand the country’s humid environment and earthquakes that regularly hit the country.

Negotiations between the Arroyo government and Takenaka, the Japanese firm tasked as the general contractor by PIATCO, failed to reach productive levels.

Talks with Takenaka started way back in 2004.

When the Aquino administration took over, the Manila International Airport Authority (MIAA) had entered into contracts with individual equipment suppliers and sub-contractors.

During the hearings and documentary submissions at the international tribunals that heard the NAIA-3 case, it was determined that some of the sub-contracts with the suppliers and subcontractors were not above board.

“When we took over in July, we put on hold all pending contracts to allow us a chance to review,” De Jesus said during the press conference held on Tuesday (Dec. 21).

His office considered the contracts with the NAIA-3 subcontractors and suppliers--and those entered into by other agencies--as “midnight contracts” since they were entered into a few months before the Arroyo government bowed out of power.

De Jesus told that after their review, they decided to “put on hold”—not exactly cancel— the contracts related to NAIA-3.

These 18 contracts amounted to around P2.3 billion.


Instead of forging stand-alone contracts with the subcontractors and suppliers, the Department of Transportation and Communication (DOTC) is returning to the negotiating table with Takenaka.

The goal is to find a general contractor—which could be Takenaka if a deal is sealed—who will then commission other subcontractors to finish the remaining unused—and unsafe—portions of NAIA-3.

As a general contractor—the original role of Takenaka with PIATCO in 1998 to 2002—the Japanese firm would be solely responsible for ensuring that 100% of the NAIA-3 facility is safe.

De Jesus said the contracts MIAA had previously sealed with the subcontractors “may be subsumed under the Takenaka contract.”

“We are in discussions with Takenaka for the completion, testing and commissioning of the airport [terminal],” said De Jesus.

The choice of pursuing talks with Takenaka was “the approach that will fast-track the full operational decision of NAIA-3,” De Jesus added.

NAIA-3 has an integrated system where all the aviation and passenger activities are controlled by just one operator.

The control of the various airport systems-–from the baggage, flight information, telecommunications, flight information display, even the air conditioning—are handled by a central control room.

The codes for these systems are with Takenaka.

Lower cost

Since Takenaka has possession of the codes and intimate knowledge of the NAIA-3 build plans, the learning curve should be less compared to other general contractors.

A deal with Takenaka should also translate to lesser repair and replacement expenses for the Aquino government.

“You could run it [NAIA-3] with separate systems but it will be quite expensive and inefficient. We are holding all of these [stand-alone contracts] because they will be incorporated into the contract that we will be negotiating with Takenaka, expectedly, at a much lower cost,” De Jesus added.

“Our preliminary discussions with them [Takenaka] is very positive, and they’ve been very cooperative. Discussions are made frankly, with trust and fair[ness],” Transportation Undersecretary Ruben Reinoso told

Mutually beneficial

It may also be in Takenaka’s interest to pursue a deal with the Aquino government.

It has a pending uncollected sum from PIATCO, representing construction works rendered during the tail end of the 2002 target opening.

Takenaka won in a London-based international tribunal that it has the right to collect some hundreds of millions of [US] dollars worth of construction services from PIATCO, a consortium of Filipino and German firms.

However, Takenaka still needs to have a local court to enforce the collection case.

PIATCO recently lost its $565 million compensation claim against the Philippine government in an international tribunal, but it is still entitled to “just compensation” from the government, which unilaterally cancelled their contract.

The determination of “just compensation” is currently in the hands of the Philippines' Solicitor General.

Takenaka may just have a piece of that compensation.

Meantime, there’s a December 2011 deadline to meet.