MRT III project not yet a done deal

The project is not yet in the bag, so to speak, for the private consortium that is proposing to undertake the multi-million dollar extension of the Metro Rail Transit III project.

The STAR learned that the recent approval given by President Arroyo and the NEDA Investment Coordinating Council (ICC) for the $200-million project to be undertaken by a consortium led by Fil-Estate and Ayala Corp. is conditional and will entail further negotiations between the Metro Rail Transit Corp. (MRTC) and government.

MRT III project manager Mario Miranda revealed that these negotiations could still "make or break" the deal. "From a basket of maybe 200, we are now down to five to six issues," he said, even as he described these issues as "substantial."

He said they had just briefed newly appointed Transportation and Communications Secretary Leandro Mendoza about the project and that they expect negotiations with MRTC to commence in the next few days. Miranda said there was a ‘good reception’ from Mendoza when the project was explained to him.

"It would have been better if the ICC approval was an outright approval rather than a conditional one. However, such approval narrowed down the issues to five or six," Miranda pointed out.

One of these issues still to be negotiated upon includes the pricing for the project, which will be undertaken by MRTC via a build-transfer (BT) scheme which basically makes the consortium the builder of Line No. 3 extension extending MRT 3 from Taft Ave. to North Avenue all the way to Monumento. Once the project is finished, its ownership and operation will immediately be transferred to government upon payment.

The original MRT 3 project covering Taft Ave. to North Ave. was undertaken through a built-lease-transfer scheme whereby MRTC builds the project and then leases it from the government for a period of 25 years after which ownership is transferred to the state. Miranda emphasizes that the BT scheme is more advantageous to government.

Miranda told The STAR that government is basically asking MRTC to reduce the $200-million cost of putting up the project which the consortium proposes to finance via a loan from the Japan Bank for International Cooperation (JBIC).

There were earlier indications that JBIC was interested in financing the project, but the bank wanted a clearer picture of the deal between MRTC and the government, sources said.

It was also earlier reported that the consortium is considering securitization of the future proceeds from the project to finance part of its cost. According to Miranda, this remains an option for the group.

Whether MRTC will agree to reduce the cost further remains to be seen and could be a deal breaker if no agreement is reached as to the amount, he said.

Other issues involve those pertaining to the terms and conditions of the BT contract itself, including matters pertaining to the sourcing of the coaches, among others.