MANILA, December 8, 2003 (STAR) Lying idle after virtual completion a year ago, the Ninoy Aquino International Airport (NAIA’s Terminal-3) NAIA- will be in limbo at least until 2005, caught in a protracted legal tussle that has shaken foreign investor confidence in the Philippines.

As the government and the $650-million project’s German-Filipino investors slug it out in court over a contract dispute, the airport is stuck with perennial congestion.

The NAIA-3 was to ease overcapacity at Terminal I, which handles international flights except those of national carrier Philippine Airlines, which has exclusive use of Terminal II.

But the new state-of-the-art Terminal Three has been riddled with problems since its conceptual stage in 1993, three Philippine presidents ago.

It has raised concern among foreign investors, who see a pattern of contract renegotiations for huge infrastructure projects every time changes occur in the country’s political leadership.

"It is important to have predictability and sanctity of contracts, otherwise we’ll be investing on shifting sands," Henry Schumacher, executive vice president of the European Chamber of Commerce of the Philippines, told AFP.

"The Philippine government wants foreigners to invest in large infrastructure projects but here is one project which is standing idle as a white elephant," he said.

NAIA-3 was 98-percent complete a year ago when President Arroyo canceled the operating contract of Philippine International Air Terminals Co. (Piatco), the Filipino-German consortium that built the terminal.

She cited anomalous terms in the contract that she said have put the government at a disadvantage.

The Supreme Court upheld her decision, nullified the contract with Piatco, which includes German airport operator Fraport AG, and asked the government to temporarily take over the terminal’s operations.

But Piatco swiftly filed an appeal with the court and also sought a hearing in a Singapore-based international arbitration court governed by the International Chamber of Commerce in Paris.

"I’m hopeful the Supreme Court will see the light and give due course for our motion for reconsideration," Piatco’s chief legal counsel Frank Chavez told AFP. "The case is still pending and we don’t know whether it will happen tomorrow or next year or (be) overtaken by a new president" after the May elections.

Fraport has written off its entire 293 million-euro (356 million-dollar) investment in the project and filed for arbitration with the World Bank against the Philippines.

But the write-down does not mean that Fraport will give up its claims, Fraport’s executive board chairman, Wilhelm Bender, has said.

Even if the Supreme Court made a final ruling on the case soon, aviation experts believe the NAIA-3 project — undertaken by Japanese contractor Takenaka Corp. — could only be open to the public in 2005.

"Even though 98 percent of the project has been completed, it has been lying virtually idle for a year and there are 42 outstanding items that need to be addressed before it could be used, including computer systems, air conditioning generator systems, internal access road and remedial works on the floor," an expert familiar with the project said.

The delay has put the authorities under pressure to rehabilitate and expand Terminal I, which had exceeded its design capacity way back in 1990.

"We had put off repair work and other improvements to Terminal I because we thought NAIA-3 would be completed on time but now we may have to go ahead for the interest of passengers," a government official said.


MAYHEM AT NAIA: The arrival area at the Ninoy Aquino International Airport Terminal I in Parañaque City is a beehive of activity as thousands of balikbayans and overseas Filipino workers start returning to the country for the Christmas holidays. - Rudy Santos

Reported by: Sol Jose Vanzi

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