MetroPac offers to run, maintain LRT, MRT

MANILA, Philippines - Metro Pacific Light Rail Corp. (MPLRC), a subsidiary of Metro Pacific Investments Corp. (MPIC), has filed its expression of interest for an interim contract to undertake the operation and maintenance of both the Light Rail Transit (LRT) 1 and Metro Rail Transit (MRT) 3 systems.

The invitation by the Department of Transportation and Communications (DOTC) for qualified private parties to submit an expression of interest covers the interim contract (4+1 years) of the O&M of LRT 1 and MRT3.

But MPIC said its proposal submitted to the DOTC is more comprehensive to include, among others, a long-term O&M, capacity expansion and rehabilitation of MRT3 and its integration to LRT as one system.

It added that in support of the government’s public-private partnership (PPP) program, the company has agreed not to interpose any objection to the bidding of the interim O&M contract for LRT1 and MRT3 on the understanding that in line with government’s transparency policy and in accordance with MPIC’s rights as a stakeholder in the Metro Rail Transit Corp. (MRTC), the rights of the latter over MRT3 will be fully disclosed in the terms of reference of the bidding for the said interim contract.

MPIC also emphasized that it has not withdrawn its proposal to expand MRT3 submitted to the DOTC last Jan. 17.

It said it maintains its position that the private shareholders of MRTC have the legal right to assert MRTC’s rights over the maintenance of MRT as well as the expansion rights over MRT, both contained in the existing build-lease-transfer (BLT) agreement.

It likewise stressed that MPIC will not object to the bidding of the LRT1/MRT3 O&M contract provided that the maintenance and expansion rights contained in the existing BLT agreement are recognized and disclosed in the TOR for said bidding.

MPIC controls about 64.07 percent of MRTC after acquiring the 28.04 percent interest of the Sobrepeña-led Fil-Estate group as well as the interest of other shareholders such as Anglo Philippine Holdings Inc., DBH Inc., and Railco Investment Inc.

Earlier, The STAR reported that MPIC is in talks with government on how to participate in the O&M of MRT3 and LRT1.

The two projects will be the first to be bid out by government under its PPP program.

MPIC chairman Manuel V. Pangilinan said that if MPIC will be able to operate and maintain for the government LRT 1, it must also be integrated with Line 3. “It is part of our obligation to integrate. But Line 3 has to be fixed first,” he said.

MPIC wants to purchase government’s stake in MRTC to give it 100 percent ownership. “We have not heard from government yet regarding our proposal,” he said.

MPIC earlier offered to acquire the shares held by state-owned lenders Land Bank of the Philippines and Development Bank of the Philippines in MRT 3 for $1.1 billion, an amount enough to settle the government’s outstanding debt to MRT Corp. bondholders.

Pangilinan explained that it makes sense not only to own MPTC but to operate and maintain the mass transit system.

Officials said MPIC will likely team up with a big local conglomerate though the former can do the MRT 3 project alone.

Company officials earlier said Hong Kong-based conglomerate First Pacific Co. Ltd., the parent firm of MPIC, will help fund the group’s bid for MRT 3.

Industry analysts believe there is still a lot of room for growth in MRT 3 given that the current number of passengers is at 500,000 a day, already above the project’s capacity of 300,000.

Should it succeed in taking over the project, MPIC plans to spend $300 million to expand MRT 3’s capacity to 40,000 passengers per hour per direction (PPHD) or 700,000 passengers a day. The budget would also cover additional light railway vehicles, signaling system upgrades, station and depot improvements.

As part of its proposal to the DOTC to acquire government’s stake in MRTC, MPIC sought the reduction of the 15-percent equity rental payments that the government pays to MRTC.

The government’s rental fees stood at $118.33 million last year. This figure is expected to hit $130 million a year beginning this year until 2014.

MPIC also sought an extension of the build-lease-and transfer agreement by 15 years or until 2040 to make it financially viable.

The company also believes that the project would be feasible if the government allows an increase in the MRT 3 fare from P12.50 to P30.