DOTC hopes to complete buyout of MRT-3 by early 2015

MANILA, Philippines – The Department of Transportation and Communications expects the completion of the government’s buyout of the Metro Rail Transit Line 3 (MRT-3) by the end of the year or early next year.

Transportation Secretary Joseph Emilio Abaya said that the money for the buyout has been included in the proposed 2015 budget of the agency, which in earlier reports was said to be around P53 billion.

He said that the Office of the Solicitor General is expected to come out with its legal opinion within the month, which would allow them to move forward with the planned buyout of MRT-3 from Metro Rail Transit Corp. (MRTC) of the Sobrepeña group.

In spite of some obstacles to the equity value buyout of the MRT-3, Abaya expressed confidence that the transaction would push through and would be completed as early as the end of this year.

“There’s an adversarial party who would not be happy if we execute the buyout. There are judicial processes that could come into play so we’re not in control of all of the cards. We are confident with it, government had decided to push it, we have the funds for it, and we are doing all the legal and documentary requirements. In our initial timeline everything should be ready by the end of the month. So we’re definite on pushing through with this,” Abaya told reporters after the DOTC’s budget hearing at the Senate yesterday.

Abaya said that the government would then enter into a compromise agreement with the MRTC, which it would then forward to the arbitration court in Singapore where the MRTC has sought intervention.

The MRTC recently stated that the P56 billion earmarked by the government for the buyout of its shares in MRT-3 would not be enough to cover the entire transaction.

It was argued that the amount would only cover the bonds held by the Development Bank of the Philippines and the Land Bank of the Philippines in MRT-3.

The government’s plan to buy out MRT-3 comes as the mass transit system is faced with various problems including long lines for commuters, the repeated breakdowns and even derailment of one of the trains.

A lot of the problems have been attributed to the poor maintenance of MRT-3, which is being undertaken by a private contractor.

The contract of the current maintenance provider, APT Global, has expired but Abaya said that this has been extended on a monthly basis.