Roxas vows to resolve MRT 3 impasse in 2 weeks

Posted at 02/08/12 7:26 AM

MANILA, Philippines - Transportation Secretary Mar Roxas has given assurances that problem over the auction of the MRT (Metro Rail Transit) Line 3 will be resolved in the next two weeks.

The problem arose from a claim made by Metro Pacific Investments Corp. (MPIC), led by businessman Manuel V. Pangilinan, that it has the exclusive right to operate, maintain and expand the Edsa railway system because it already holds a substantial stake in MRTC (Metro Rail Transit Corp.), the consortium that built MRT 3.

But the Department of Transportation and Communications says it is in charge of MRT3’s operations because 80 percent of the MRTC’s economic interests is held by the government-owned Development Bank of the Philippines and Land Bank of the Philippines. The banks’ economic interests also include a 22.3-percent direct stake in MRTC and MRT bondholdings.

“We hope to resolve this soon. We expect a word from our legal team by end of this month,” said Roxas. “The DOTC legal department will determine if we will bid out the operation and management (O&M) contract for the MRT 3 or just the maintenance contract alone. It is the government’s view that we will bid out the maintenance contract. In addition, there are P4.5 billion in funds available for additional train vehicles for MRT 3. The contract may also include the purchase of vehicles but we don’t know yet.”

In the meantime, Japanese contractor Sumitomo Corp. of Japan will continue to maintain the railway system until it is bid out, Roxas said.

The MRTC and the government signed many years ago a BLT (Build-Lease-and- Transfer) agreement. Among other things, the MRTC had been vested with expansion rights, which meant that it is authorized to develop the MRT 3.

With this, the MPIC submitted in January of 2010 a proposal pursuant to the expansion rights granted to the MRTC under the existing BLT agreement with the national government.

“MRTC’s expansion rights under the BLT Agreement prevent the government from bidding out the MRT 3 capacity expansion project. MPIC expects the government to honor MRTC’s rights under the BLT Agreement,” MPIC Vice President for Legal Affairs Jose Jesus Laurel said last month.

MPIC had offered the government $300 million to expand the capacity of the MRT 3. It plans to double the capacity of the railway system to 700,000 passengers a day from the current 350,000 by adding more cars to one train so that trains will be carrying more cars at faster intervals.

Aside from the $300-million proposal, MPIC had also offered the government $350 million for the acquisition of equity and some of the bonds issued by the MRTC. Part of the proposal is to buy out the state-owned banks, said MPIC President Jose Lim.

Recently, DBP said it was open to selling its stake in MRTC within the year.

Aside from MPIC, the Ayala Corp. and the group of Ramon Ang expressed interest to make a bid for the O&M contract.