China giant eyes $1.3-billion LRT 1 extension

MANILA, Philippines - China’s biggest railway builder and operator has expressed interest in building the $1.3-billion LRT Line 1 South Extension project under President Aquino’s flagship Public-Private Partnership Program (PPP).

Ecorail Transport Services Inc., the original proponent for the construction of the LRT-1 Extension project, said its foreign partner, China Railway Construction Corp. Ltd. (CRCC), one of the world’s leaders in railways construction and technology, has indicated that it wants to pursue the project under the PPP.

CRCC is one of the biggest in the world with assets of more than $1 trillion. It is the operator of the world’s fastest train in Beijing and has already built 34,000 kilometers of railway tracks all over the world.

In an interview, Ecorail executive vice president Jerome Canlas said Ecorail’s advantage is its track record in railway and train construction and available financing which is readily available once the Philippine government gives the nod for the project to proceed.

“We hereby affirm our interest to cooperate with your esteemed organization to jointly pursue the above project which not only further underscores our mutual long term relationship but also progression of the framework of cooperation agreement entered into by both our organizations in Tianjin in June 2009,” CRCC executive director and vice president Hu Zhenyi said in a letter to Ecorail.

Canlas explained that cost-wise, the infrastructure development of Ecorail proposal is cheaper at $42.165 million per kilometer as against the other proposals at more than $45 million per kilometer. The proposal for electro-mechanical works inclusive of the provision for rolling stocks sufficient to accommodate the peak ridership at 25 minutes headway over a period of time is also cheaper at $409.14 million.

Ecorail is composed of experts in the fields of project financial packaging, project development inclusive of engineering, procurement and construction as well as operations and maintenance management at par with international standards.

Company officials noted that the Ecorail proposal will reduce the government’s balance of payment deficits and/or reduce subsidies, since the project will not entail government guarantees.

Length-wise, the alignment of the LRT Line 1 South Extension proposed by Ecorail is longer by more than four kilometers with its terminal point in Imus, Cavite as against the other proposals with terminal stations in Bacoor, Cavite.

The project provides the much-needed link between the southern cities and municipalities of Cavite province and northern cities of Metro Manila. The railway system is intended to provide an efficient and reliable mode of transportation to help decongest the main arteries of Metro Manila.

The project will supplement the LRT 1 by extending it from Baclaran to Imus, Cavite. It will pass NAIA and Sucat, both in Parañaque; Las Pinas, Zapote in Muntinlupa, and Talaba, Bacoor, Aguinaldo and finally Imus, all in Cavite.

Canlas said Ecorail has a ‘programmed solution’ for system enhancement and full integration provided by its designated team of specialists covering the North Line 1 Extension, the existing Line 1 and the proposed South Line 1 Extension into a ‘seamless operation’.

He said Ecorail will fully provide the financial requirements of the project without government subsidy unlike other proposals seeking official development assistance (ODA) from multilateral and bilateral funding agencies that require counterpart funds from the Philippine government.

“The tedious process will require interventions from government agencies, i.e. NEDA, DBM, COA and the Senate Oversight Committee, among others. In addition, the multilateral or bilateral agency providing the funds limit the participation of Filipino contractors as subcontractors to foreign contractors from sponsor countries,” Canlas added.

Canlas also revealed that Ecorail proposes a ‘socially-acceptable’ average fare optimization level of P 16.50 + distance-related fee of P1.90 per kilometer unlike other propositions that entirely put the burden of fare structuring to the Light Rail Transit Authority (LRTA).

As planned, Ecorail will cede the ownership of the proposed South Line 1 Extension upon its completion to LRTA that also retains ownership of the existing Line 1 and the North Extension. LRTA has the option to ‘buy-out’ Ecorail for its investments in completing the project either in the form of cash or assets of the government.