Finance department finalizes buyout scheme for MRT3

The Department of Finance (DOF) is now finalizing a buyout scheme for its take over of the build-lease-transfer contract of the Metro Railway Transit 3.

“We have a structure that we think in terms of a buyout will be able to put us in a situation to avoid tax on the purchase. So there’s a structure that we’re pursuing right now,” Finance Undersecretary Roberto Tan told reporters yesterday.

Banks and financial institutions have already submitted financing proposals for the government but the DOF has yet to decide on the matter.

The DOF is studying which fund-raising mode would be least costly for the government.

Tan said the government needs roughly $910 million to take over the MRT-3.

The National Government has been studying ways on how to restructure the payments owed to the Japanese operator of MRT-3 Tespi Corp., a subcontractor of Sumitomo Corp.

It wants to prepay its obligations ahead of schedule instead of paying $2 billion until 2025 or the end of the contract.

An earlier study estimated that the government could save $1 billion from the early  buyout of MRT3 or half of the remaining payments due until 2025.

Under the proposed buyout or refinancing deal, the government would take over the project and again offer it to new investors.

Finance Secretary Margarito Teves earlier said offering the contract to new investors is consistent with the government’s policy to get rid of businesses that are better left with the private sector.

Teves said the proposed buyout or refinancing would save the government $380 million in savings on subsidies.

The government proposed to buy out the rail transit operator because it can no longer afford to subsidize its operations.

Previous estimates showed that government subsidies amount to $3.3 million a month for equity payment and $1.67 million for maintenance costs.

Public subsidy amounts to P48 a passenger. With a daily ridership ranging from 420,000 to 430,000, the government pays at least P20.46 million a day given the minimum fare of P10 a passenger.