MPIC sees no further delays in awarding of LRT-1 Cavite project

Posted at 07/30/14 1:32 PM

MANILA, Philippines – Metro Pacific Investments Corp. (MPIC) is expecting the awarding of the Light Rail Transit Line 1 (LRT-1) Cavite extension project to go smoothly despite a pending case filed by the SM Group in relation to a proposed common station linking the LRT and the Metro Rail Transit (MRT).

The LRTA Board has approved the awarding of the P65 billion project to the tandem of MPIC and Ayala Corp., but the Department of Transportation and Communications (DOTC) has yet to issue the Notice of Award and Concession Agreement.

MPIC president Jose Lim said the firm is now waiting for the notice from the government.

“We have passed through all the hurdles, we have gotten the NEDA approval, the DOTC and LRTA Board resolution, it’s just a question of them giving us formal notice,” he told ANC on Wednesday.

SM Prime Holdings has a pending case against the DOTC over the transfer of the common station to the property near Ayala’s Trinoma Mall. SM argued that it has an agreement with government signed in 2009 to build the common station in front of SM City North EDSA.

According to Lim, he does not see SM’s case interfering with the LRT-1 extension project, but noting that it may delay the construction of the common station, which in turn may affect traffic of the extended train to Cavite.

“The construction of that common station is not part of our concession agreement. We do have the right to review specifications to make improvements if we can justify that…There could be a delay in the construction of the common station, which obviously would have an impact on our own traffic because we rely on a 15 percent increase in traffic by a certain date assuming that the plans push through,” he said.

Connector road

Aside from the LRT-1 extension project, the biggest public-private partnership (PPP) project under the Aquino administration so far, MPIC is also involved in other government projects including the P18 billion North Luzon-South Luzon Expressway connector road project.

The toll road project may face delays, however, after legal issues were raised regarding the partnership between MPIC and state-run Philippine National Construction Corp. (PNCC).

MPIC, however, said it is open to subjecting its unsolicited connector road project proposal to a “Swiss Challenge.”

“We have always been ready for a Swiss Challenge and we are prepared to do so…I think a decision is forthcoming because the President has put a high priority on completion of this road,” Lim said.

Lim noted that issues raised in its contracts, including Maynilad’s concession agreement with state-owned Metropolitan Waterworks and Sewerage System (MWSS), is “new” to the firm, comparing the more “forthright” approach of PPP projects in Thailand.

“When you deal with [Thai government], you know exactly what to expect, no surprises in terms of the interpretation of the contract and so forth. This development in the local scene is actually new to us,” said Lim adding that in the past administration, MPIC relied on government to faithfully comply to contracts.

“It’s only in this administration that the interpretation on the rules of the water concession has been questioned and now even the building blocks for power and tollway concession agreements are being scrutinized as well,” he said.

But Lim stressed that this is so because of the government’s “desire to provide the public with the best rates, with the least amount of cost for services provided.”

Lim, meanwhile, said that MPIC is currently not in talks over a possible partnership with Lucio Tan to buy back San Miguel Corp.’s 49-percent stake in Philippine Airlines.

“We have no formal discussions internally about seriously considering this,” he said.

Lim said that the aviation industry at this point is "still very speculative" because the government has yet to decide on an airport strategy.

"That is key to determining what will be the growth in passenger traffic in the country," he said.