The consortium pushing for the proposed $1.235 billion Metro Rail Transit (MRT) 7 project said that it was time for the government to make the final decision whether to approve the much-awaited rail project.
Eli Levin, managing director of the Universal LRT Corp. (British Virgin Islands), Ltd., said that the consortium’s strategic investors and the financial institutions that will loan them funds for the project, were getting frustrated over the undue delays being suffered by the project due to government’s recent efforts to adopt revisions in the draft agreement.
“It’s the moment of truth. They have to decide on the project,” Levin told transportation reporters in a briefing he gave last week in the consortium’s office in Makati City to update media about the status of the proposed project.
“The contract is there and all they have to do is sign,” Levin said.
Levin said that after the holding of a Swiss challenge or a 30-day wait for an entity to contest the proposal with a lower-priced bid last July during which there were no challengers, the National Economic Development Authority-Investment Coordinating Council (NEDA-ICC) has come up with a recommendation late last September for an additional performance undertaking on the proposed real estate and commercial development component of the project.
The performance undertaking, it was learned, included the provision that the failure of the consortium to implement the real estate and commercial projects would give the right to government not to pay the capacity fees for the rail component of the project.
Levin said that the consortium had declined to accede to this revision, pointing out that such a provision would result to the withdrawal of the financial backing of the banks which will extend them loans for the rail component of the project. He hinted that the move of the NEDA-ICC to make revisions to the draft agreement was frustrating since the body had already given its “no objection clearance of the draft contract” way back Aug. 16, 2006 which had cleared the way for them to publish their proposal for the Swiss challenge.
Levin said that the belated obstacles being put by the NEDA-ICC was jeopardizing the whole project which it had itself found to have major economic benefits for the country.
“The contract has been negotiated on for years, not months. You can just imagine the process of the negotiations, on every word of the contract,” Levin said.
It was also learned that the consortium had submitted the unsolicited proposal for the project way back in 2001.
“The economic benefits which was computed by NEDA at a level of 21.8 percent means that the economic benefits pay for the project in five years,” Levin said.
The proposed MRT 7, if approved by the government, is being touted as the Arroyo administration’s flagship infrastructure project that would address the transportation needs of the population of Quezon City, Caloocan North and Bulacan and decongest Metro Manila.
The proposed rail line starts from SM City at the corner of North Avenue and EDSA, runs through Commonwealth Avenue up to Quirino Avenue and terminate at the City of San Jose del Monte in Bulacan. The project also includes the construction of a 40-km highway that will then connect the line to the North Luzon Expressway.
Aside from the $1.23-billion infrastructure development cost, an additional investment of $500 million will be poured into real estate development that includes the housing, commercial areas leading to the creation of a new satellite city in San Jose, Del Monte.
The Universal LRT Corp. is a consortium of companies led by EL International Holdings, a member of the EL Group of Companies of Hong Kong; and made up of EEI Corp., TCGI Engineers, Tyco subsidiary Earl Tech, Alstom Phils., Merlin Capital, Siemens and China Railway as members. The SM Group of tycoon Henry Sy, Sr., also owns 60 percent of MRT-7’s real estate and housing project and 25 percent of the railway project.