MANILA, Philippines - The Aquino administration is looking into the possibility of a complete takeover of the Metro Rail Transit (MRT) Line 3 along EDSA by buying out the interest of private companies in the country’s main rail transit system.
In a press conference, Transportation Secretary Joseph Emilio Abaya said the proposed buyout of private sector companies in the Metro Rail Transit Corp. (MRTC) wherein it has an 80-percent economic interest without voting rights was already presented to President Aquino.
“It has been brought to the President. In essence, the Cabinet or agencies concerned are in agreement that it will make cost more reasonable or lower,” Abaya stressed.
He pointed out that the Department of Transportation and Communications (DOTC) would have to confer with the Department of Finance (DOF) headed by Secretary Cesar Purisima to determine how to go about with the buyout of the private companies.
The proposed government takeover, he said, would result in billions of pesos in savings for taxpayers, who provide subsidies mainly to cover the 15-percent return on investment guaranteed to MRTC.
“Clearly one policy which is pending is whether the government should buy everything out which will allow us to refinance which I think is a too high 15-percent return enjoyed by MRTC,” he clarified.
Once the takeover is completed, he explained that the government would bid out the operation and maintenance (O&M) aspect of MRT 3
through a public private partnership (PPP) scheme.
“In this way we could refinance and make it less costly of shifting funds from the left pocket to the right pocket and make everything now in the hands of the government and all decisions will emanate from policies of government rather than dealing with private interest,” he added.
However, he said the government which shells out about P7 billion worth of subsidy for the MRT 3 operations has yet to compute the cost of the proposed buyout of partners.
In 2008, the government through the state-run Development Bank of the Philippines and Land Bank of the Philippines bought into MRTC by acquiring the MRT Bonds issued by MRT III Funding Corp.
In 2003, the MRT line’s private concessionaire MRTC then owned by the Sobrepeña family, decided to cash in on its investment in the train line by issuing asset-backed bonds for future equity rental payments.
As a result, the government now owns around 80 percent of the economic interests in MRTC. However, its presence in the board is not felt because it does not have voting rights for its 80 percent stake while Metro Pacific Investments Corp. (MPIC) has economic interest equivalent to 20 percent..
The acquisition of the stake in MRTC was completed during the term of President Arroyo wherein the DOF was headed by former secretary Gary Teves.
“The only issue raised by former Secretary Mar Roxas was that the buyout might whitewash the sins of the past,” Abaya said.
The 17-kilometer MRT 3 from North Ave.in Quezon City to Taft Ave. in Pasay City ferry 540,000 passengers a day or way above its original design capacity of 350,000 passengers a day.
Last week, Abaya announced that the DOTC has awarded the contract for the maintenance of the MRT 3 to PH Trams-CB&T JV. The interim maintenance provider of the MRT 3 is for six months while it conducts the procurement process for a regular maintenance provider for the train line.
The contract between the MRTC and Japanese firm Sumitomo has been extended four times.
PH Trams-CB&T JV was awarded the contract as it offered the lowest monthly maintenance cost of $1.15 million compared to two other firms which submitted proposals such as Sumitomo TES-P Inc. and Miescor Railway/Genials JV.
Meanwhile, Sumitomo Corp. of the Philippines said it is studying its options whether or not to bid again for the operation and maintenance of MRT 3.
“We know the business very well since we were the O&M contractor for 12 years until last Friday. But still prudence dictates that we step back and take a more objective look at the opportunity,” said a top official of Sumitomo who requested that his name not be used.
He said Sumitomo kept MRT running despite challenges in terms of old coaches and lack of spare parts.
“We have a name to protect so we made sure MRT was convenient and safe for our riders. Up to our last day as contractor last Friday, we kept all the 73 coaches running well. We turned over the whole system completely and properly, with the process lasting up to the early hours of Saturday,” he said.