GMA scraps $100-million Clark airport deal with Kuwait firm

By Ding Cervantes

March 16, 2010

CLARK FREEPORT, Pampanga , Philippines – President Arroyo has directed the scrapping of the Kuwaiti Al Mal Consortium in the list of possible contractors for a $100 million passenger terminal at the Diosdado Macapagal International Airport here amid controversies.

Reliable sources from Malacañang and the Clark International Airport Corp. said the President relayed her directive to former Malacañang public affairs secretary Edgardo Pamintuan during her visit to her hometown in Lubao on Saturday.

“Cut it (any negotiation with Al Mal),” an angry President was quoted to have said. Mrs. Arroyo was reported to have been angered by reports linking her to Al Mal’s interest in the terminal project. Al Mal is a subsidiary of the Kuwaiti firm M.A. Kharafi and Sons.

Pamintuan said in a text message that the President was supposed to meet about this with CIAC president Victor Jose Luciano, CIAC executive vice president Nestor Mangio, and CIAC executive vice president Alex Cauguiran at the Haribon aviation complex of the Philippine Air Force before flying to the Visayas yesterday morning.

“Let’s make it (President’s directive) after she has met with them,” he said.

Reached by phone, Mangio, who has been pushing for Al Mal as contractor for the project apparently retained hopes that the Kuwaiti firm, with its local partner Al Mal-Pride, would still get the project amid a seven-day deadline imposed on Friday, for it to agree to CIAC’s terms of agreement on the project.

“The President went to the Middle East last year to look into the capability of Al Mal to undertake the airport project. We were impressed by the airport project it built in Egpyt,” he said.

A CIAC source said yesterday that a statement was supposed to be released after a meeting of its board late in the afternoon to officially announce the termination of negotiations with Al Mal-Pride as the President had directed.

Terminate negotiations

“We are terminating the negotiations with the Al Mal-Pride consortium due to the non-acceptability of their proposed terms and conditions for a possible joint venture agreement with CIAC for the development of various components of DMIA complex,” the statement said.

The statement said that “out of respect for the other party and until they have officially received our written communication, we will have to refrain from discussing those grounds for the rejection of their proposal.”

But it also said “we categorically deny any attempt to railroad the award of the project to Al Mal-Pride consortium. Records will bear out that Al Mal’s unsolicited proposal to develop the DMIA was first submitted all the way back to April 2008.”

“CIAC had been very careful and judicious in negotiating the terms of our agreement. But while we needed to develop DMIA through the entry of much needed foreign investments, we also needed to protect public interest and make sure we will not violate the law. It was a difficult balancing act,” the statement further said.

CIAC executive vice president Cauguiran said that Al Mal had been pushing for onerous provisions in its version of TOR, including the prohibition of any operation of a premiere airport within a 150-kilometer radius of the DMIA.

Clark International Airport Corp. (CIAC) chairman Nestor Mangio said he is “open to resignation” after President Arroyo ordered the junking of the Kuwaiti firm Al Mal as contractor for the $100-million Terminal 2 of the Diosdado Macapagal International Airport (DMIA) here.

This, as Max Sangil, director of the Bases Conversion Development Authority (BCDA), urged Mangio to “resign out of delicadeza” after the CIAC board again rejected Al Mal last Monday as contractor for the project, as directed by the President.

“I am open to resigning and I will think about this,” Mangio said, adding though, “Personally, I am quite convinced that Al Mal is the best contractor for the development of the DMIA.”

“We have been looking for a contractor for the past two years and all, except Al Mal, failed in financial capability,” he said, pointing out that M.A. Kharafi and Sons, Al Mal’s mother company, has been listed by Fortune Magazine as among the world’s richest.

CIAC executive vice president Alex Cauguiran said that while the plan was to bid out only the construction of Terminal 2, Al Mal also wanted to take over the existing Terminal 1 and have control over 1,500 hectares of the 2,500-hectare civil aviation complex in this freeport.

Cauguiran added that Al Mal demanded that no premiere airport be operated within a 150-kilometer radius of the DMIA for 45 years, extendable for another 25 years.

“This would deprive other provinces the same chance to host a premiere airport that we fought for before the DMIA was developed,” he said.

Al Mal’s proposal was first junked in December 2008 but was later revived after the CIAC failed in its initial bidding for the project.

Apart from Al Mal, which Mangio has allegedly pushed, other proposals for the Terminal 2 project have come from a Malaysian consortium with partners from the United States and the Middle East, and a South Korean consortium with local partners.

Because of Mangio’s alleged insistence to consider Al Mal for the DMIA’s development, Sangil said the construction of Terminal 2 has been delayed. “The timetable was disrupted,” he said.

Mangio, however, said Sangil has been blaming him for his removal as a member of the CIAC board last December.

“But I had no control over rules and regulations. There is a prescription against one person being a member of both the boards of CIAC and BCDA. Later I found out the President had signed the appointment of Raffy Angeles as his replacement in the CIAC board,” Mangio said.

He alleged that Sangil worked for his appointment to the BCDA board since the directorship is not co-terminus with the term of President Arroyo.

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