MRT owner: Gov't takeover, upgrades won't solve MRT issues

Posted at 09/02/14 6:05 PM

MANILA, Philippines – MRT Holdings Inc. said safety issues hounding the Metro Rail Transit-3 (MRT-3) won't be solved by a government takeover and system upgrades.

The spokesperson of MRT Holdings, Atty. David Narvasa, said safety problems should be addressed by hiring a qualified maintenance provider.

Narvasa added that the maintenance provider should be “financially and technically capable.”

"An equity value buyout will not address the problem of safety. The problem of safety can only be addressed by getting a qualified maintenance provider. An equity value buyout is a right given to MRTC [Metro Rail Transit Corp.] in case of default of the government,” he said.

He said a buyout, estimated to cost P56 billion, of the private shareholders of MRTC would mean that the government is in default.

“The government has to first be in default. If DOTC says they insist on an equity value buyout, are they saying they are in default?" he said.

MRT Holdings is the majority shareholder of MRTC.

MRTC built and owns the MRT while the government leases and pays rental payments to operate the train system.

In January 2009, MRTC filed an arbitration case in Singapore against the Philippine government due to its alleged failure to pay equity rentals on time.

According to Narvasa, the Department of Transportation and Communications (DOTC) did not act on MRT Holdings’ proposal to implement upgrades in anticipation of going overcapacity.

"We gave government proposals for additional trains in 2002, 2004, 2007, 2010, including a proposal where the trains would be purchased at no cost to government but all these proposals were not acted upon by government," he said.

Narvasa also criticized the awarding of a P3.8-billion contract to CNR Dalian Locomotive and Rolling Stock Co. Ltd. of China to supply 48 brand new light rail vehicles.

"The problem with these trains from China is that they may not be compatible with the existing structure of the MRT. What will be sent over is a prototype made by a company that has no experience in making double-articulated trains,” Narvasa said.

“What it has experience in is locomotives. So the issue now will be if these trains will be compatible. We want to ensure, for the safety of the people, that the trains that would be purchased are compatible with the current system," he added.

In March 2013, President Aquino signed Executive Order No. 126 stating that the DOTC and the Department of Finance (DOF) should buyout MRT-3 from MRTC pursuant to a build-lease-transfer (BLT) agreement.

The proposed government takeover is expected to result in billions of pesos in savings for taxpayers, who provide subsidies to cover the 15 percent return on investment guaranteed to MRTC.

The government spends an estimated P7 billion worth of subsidy for the MRT operations.