Philippines, Japan sign P4.37b supplemental loan pact for Bohol airport expansion

October 8, 2018

The Department of Finance (DOF) and the Japan International Cooperation Agency (JICA) have signed a supplemental agreement extending a 4.376-billion yen loan to the Philippines to help fund the second phase of the New Bohol Airport project, which would cover expansion of its runway and passenger terminal building.

Finance Secretary Carlos Dominguez III and JICA chief representative Yoshio Wada signed on Monday the supplemental loan agreement and formally exchanged documents for Phase II of the New Bohol Airport Construction and Sustainable Environmental Protection Project in Panglao Island, a statement from the DOF said.

Witnessing the signing of the supplemental loan accord for the new airport were Transportation Secretary Arthur Tugade and Minister Makoto Iyori, economic affairs minister in the Embassy of Japan.

In line with the “fast and sure” approach adopted by Manila and Tokyo in the implementation of big-ticket infrastructure projects, Dominguez noted that the Philippine government acted swiftly in processing the necessary requirements for the supplemental loan, which, from the time the National Economic and Development Authority (NEDA) Board approved it on June 19, 2018 up to the Oct. 8 signing, took only a short period of four months to be formalized.

“Under government conditions, this is amazing speed,” Dominguez said after the signing of the supplemental loan accord.  “I look forward to this becoming the benchmark of efficiency for the other projects in the pipeline” under President Rodrigo Duterte's centerpiece program "Build, Build, Build."

He said that if the government acts “with the same dispatch on all public projects, I am confident we will sustain the pace of growth we need to bring the benefits of inclusive growth to our people.”

Dominguez thanked Japan for again helping fund the second phase of the New Bohol Airport Project,  also known as the Bohol Panglao International Airport.

Dominguez said this project is “a perfect example” of a hybrid Public-Private Partnership (PPP) project in which the government takes over the initial phase of the project and later bids out its operations and maintenance aspect to the private sector.

“If some future government or some future administration needs money, they can actually sell that asset. So while we can get good financing, we are building up our asset base. That's like the savings of the people which can be tapped if some future administration needs it,” Dominguez said.

Through JICA, Japan also provided funding support in the amount of 10.782 billion yen (approximately P5.18 billion or $237 million) for the first phase of the New Bohol Airport, which began construction in 2015 and is dubbed the country’s first international “eco-airport.”

“This project will have a substantial impact on the economic performance of Central Philippines,” Dominguez said.

Wada said the airport project will “accelerate the economic growth of Bohol and contribute to its transformation as another key economic center in the region.”

Tugade thanked the Department of Finance (DOF) under Dominguez’s leadership for ensuring that projects like the Bohol airport are thoroughly deliberated and properly funded.

“This project shows that if we can work together, then we can really accelerate things in a platform of being certain, in a platform of comfort and a platform of safety,” Tugade said.

The supplemental loan of 4.376 billion yen (about P2.10 billion or $40.61 million) carries an interest rate of 0.1 percent per annum for non-consulting services and 0.01 percent per annum for consulting services. The maturity of the loan is 40 years inclusive of a 12-year grace period.

Japan’s funding support for the New Bohol Airport helped ensure that the structure is environment-friendly and complied with domestic and international standards for operational safety and efficiency.

This project included improvements on the on-site wastewater disposal system and support for sustainable tourism development.

The Department of Transportation (DOTr) said that with most of the work on the original project nearing completion, the ceremonial opening of this airport will likely happen later this year.

The second phase of the airport project covered by JICA’s supplemental loan will include the extension of the runway from the current 2,000 meters to 2,500 meters to enable the airport to accommodate large commercial aircraft, and the expansion of the passenger terminal building from 8,500 square meters (sq. m.) to 13,300 sq. m., in anticipation of the possible congestion that could arise should tourism traffic to the area rise faster than expected.

Using local funds, the DOTr is planning to enhance the capacity of the airport by extending the runway to 2,800 meters, constructing a separate cargo terminal and a parallel taxiway, and building a fuel depot plus a fuel hydrant system.  DMS