Business World, 15 December 2014
By C.J.V. Dela Paz
INFRASTRUCTURE conglomerate Metro Pacific Investments Corp. (MPIC) told lawmakers yesterday it will again offer to upgrade and rehabilitate the country’s most congested railway system Metro Rail Transit System Line 3 (MRT-3) for P23.3 billion ($524 million).
The fresh offer, which is a scaled-down version of a P25.1-billion ($565-million) proposal submitted in 2011, will be formally submitted before the year ends, according to MPIC President Jose Ma. K. Lim.
Mr. Lim made the presentation before the House Committee on Metro Manila Development chaired by Quezon City Rep. Winston “Winnie” F. Castelo (2nd district), who arranged the hearing less than a week after the bicameral committee cut the budget for the buyout of MRT-3 owners.
MPIC’s P23.3-billion offer will include the rehabilitation of existing train cars, 25 additional coaches, a new signaling system, and settlement of the government financial institutions-held equity rental payments, according to Mr. Lim’s presentation.
The group also offered to reimburse the Transportation department for expenses associated with the latter’s purchase of 48 light rail vehicles from a Chinese locomotive manufacturer.
“We’ll submit the revised proposal soon,” Mr. Lim told reporters after the hearing, adding that his company will “look into the possibility of submitting it within the year.”
The new offer is lower than the 2011 version, which included the Automatic Fare Collection System project. MPIC, together with the Ayala group, earlier won that P1.72-billion deal that would replace the train system’s old tickets with smart cards akin to Hong Kong’s Octopus card.
Transportation Undersecretary for Legal Affairs Jose Perpetuo M. Lotilla, who also attended the committee hearing, said his department rejected the conglomerate’s 2011 proposal for various reasons, including “a requirement of a higher guaranteed return and extension of concession agreement.”
NO MORE BUYOUT?
MPIC’s proposal could be an additional option for the government in its bid to improve the train’s services, Mr. Lotilla said.
“There is also a proposal from Sumitomo, which is about $98 million. It’s the faster proposal, as it will account for a complete rehabilitation of existing train cars for over a period of 18 months. This is also a live option,” the Transport official said.
Asked if the government will junk its planned equity value buyout (EVBO) should it accept the proposal of MPIC, Mr. Lotilla replied: “Not exactly.”
“The EVBO is to clear the way in upgrading and rehabilitating MRT-3, not the solution to the MRT-3 defects. We will also need to receive first the proposal of MPIC before considering it.”
“Originally, the plan is to execute the EVBO and then bid out the O&M of MRT-3 for a longer period, so that clearly states that the EVBO is only to clear the way for the government to undertake steps without legal hurdles,” he further explained.
To recall, the Transportation department has requested a P53.9-billion allocation for the EVBO under the 2015 national budget, but the bicameral committee last week rejected the MRT-3 budget — retaining only P18.3 billion, of which P4.4 billion will be allocated for the buyout, P7.4 billion for the rehabilitation and reconstruction of the MRT-3, and P6.5 billion for the payment of taxes of MRT-3 in connection with its build-lease-transfer (BLT) contract.
Asked if the EVBO is still a live option despite the reduced allocation under the 2015 national budget, Mr. Lotilla replied: “We’ll look at it.
We’ll talk to all the stakeholders and discuss where we will get the P53.9 billion. As you see, it is a directive, an order specified in Executive Order (EO) No. 126.”
President Benigno S. C. Aquino III on Feb. 28, 2013 issued EO No. 126, authorizing the implementation of the EVBO.
Under EO No. 126, the Transportation department, Finance department, Development Bank of the Philippines and Land Bank of the Philippines are required to acquire all outstanding shares of stock and other securities issued by Metro Rail Transit Corp. (MRTC), the private group that was a signatory to the BLT agreement for MRT-3.
That directive also mandates that the parties reach a compromise agreement that will be submitted to an arbitral panel in Singapore.
MRTC, in January 2009, sought arbitration alleging the Philippine government has been remiss in its equity rental payments under the BLT agreement.
MPIC is one of three Philippine units of Hong Kong-based First Pacific Company Ltd., the others being Philippine Long Distance Telephone Co.
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