Despite the agreement in principle, however, the government has not ruled out the possibility of bidding out the project depending on the outcome of the negotiations for Phase 2 and the renegotiation of the build-lease-transfer contract for Phase 1.
MRTC chairman Robert John Sobrepeña told reporters yesterday MRTC would definitely oppose government’s plan to bid out the $250-million project and would raise questions on the legality and viability of conducting a new auction for the contract to undertake the project.
Should the Department of Transportation and Communications (DOTC) bid out MRT Phase 2, Sobrepeña said government would be in violation of its contract with MRTC.
Under MRTC’s build-lease-transfer (BLT) contract with the government, Sobrepeña said MRTC was also given the franchise for Phase 2 which extends the existing line from North Avenue all the way to Monumento.
"Phase 2 is already covered by our BLT contract with the government," Sobrepeña explained. "If government decides to bid it out, we will oppose it and it will only delay the project."
The final form of the renegotiated BLT contract, however, is still up in the air as MRTC and DOTC are still on the negotiating table trying to decide what to do with the project.
The only thing sure thus far, according to Sobrepeña, was that Phase 2 would still be covered by some form of government guarantee although not necessarily the same 15 percent guaranteed returns that MRTC managed to win for itself when it negotiated for Phase 1 of the project.
"The only question now is what form this guarantee will take," Sobrepeña said.
Complicating the matter, however, is government’s worsening deficit problem that has forced it to consider the conversion of the BLT contract into a build-transfer (BT) contract instead of leasing MRT to MRTC for 25 years as originally agreed.
By taking over the MRT, government is hoping to improve its financial position since the DOTC could immediately take over the facility and there would be no need for government to provide MRTC the much-criticized 15-percent guaranteed returns. It would also allow for a more efficient settlement of maturing loans used to fund the project.
The renegotiation of the BLT contract, according to Sobrepeña, could conceivably cover the completion of Phase 2. Although MRTC would be willing to consider giving up its lease for the completed portion of the MRT, he said Phase 2 was a different matter.
"If government wants us to immediately transfer MRT to them instead of 25 years later, it would really depend on what the terms of the BT contract will be," he said. "But we will question the legality and viability of bidding out Phase 2."
When completed, Sobrepeña said the system would immediately double MRT’s ridership from the current 300,000 passengers a day to 600,000 passengers.
"If government would just let us complete Phase 2, it would ultimately mean a reduction in subsidy on transport fares because the additional volume will make up for it," he said.
According to Sobrepeña, patronage of the MRT has far surpassed original estimates. On its first year, MRT was expected to ferry only an average of 100,000 passengers a day. The 300,000 passenger-mark, he said, was not expected to be reached until Year 3.