Conglomerates renew interest in LRT 1 expansion

MANILA, Philippines - The country’s top conglomerates have expressed renewed interest in participating in the country’s largest Public-Private Partnership (PPP) project to date following the government’s move to revise the concession deal.

San Miguel Corp. (SMC), Metro Pacific Investments Corp. (MPIC), DMCI Holdings Inc. and Ayala Corp. are now looking to bid for the previously failed auction of the P60-billion Light Rail Transit Line 1 (LRT 1) Cavite extension project, executives said.

“We will look at what the conditions are but the revised terms look good,” DMCI chief finance officer Herbert Consunji said in a phone interview.

“Yes, we would,” MPIC chief finance officer David Nicol said in a text message when asked if the Pangilinan-led infrastructure conglomerate will join the LRT 1 bidding anew.

SMC president and chief operating officer Ramon S. Ang said the diversified conglomerate is also interested in the LRT 1 project.

Early this week, Transportation Secretary Joseph Emilio Abaya said the agency revised the concession agreement for LRT 1. The changes addressed five major issues: real property tax, power rates, warranty on the structure, fare adjustments, and the negative bid.

“We’re just waiting for government to reissue the new bid documents,” Noel Eli Kintanar, executive vice-president of the Ayala conglomerate’s AC Infrastructure Holdings Corp., said yesterday.

“I think [the revision] addresses many of the issues that led the bidders not to put in a bid,” Kintanar said.

In August, only MPIC submitted a bid without partner Ayala Corp. (AC). The auction was declared a failure, with three other pre-qualified groups MTD-Samsung Group, San Miguel Infrastructure Resources Inc. and DMCI withdrawing their participation

Kintanar said AC is still hoping to work as a team with MPIC.

“We continue to look at the project,” Kintanar said, adding that LRT 1 is one of the busiest transit lines in the world with an interesting passenger volume.

Under the revised concession terms, the government agreed to shoulder the real property taxes estimated at about P2 billion, to pay the difference in the sudden spike in power rates, the five percent increase in fare prior to the 100 percent completion of the project, and allowing bidders to submit a negative bid.

In case of the negative bid, Abaya earlier said the the government would have to pay the winning concessionaire. Aside from the real property tax, the government would also have to pay the excessive increase in power rates as well as the higher fares per passenger.