MANILA, Philippines - The Department of Transportation and Communications (DOTC) is looking to execute the takeover of the Metro Transit Line 3 (MRT-3) by pursuing the buy out of the train line’s private shareholders by early next year.
During a forum yesterday, DOTC Secretary Joseph Abaya said the agency would pursue the directive of President Aquino to undertake the equity value buy out (EVBO) of the private shareholders of the MRT-3.
“Execution might happen early next year,” he said.
To execute the EVBO, the DOTC would need to get the approval of the Department of Finance (DOF) as well as government financial institutions (GFIs) Land Bank of the Philippines and Development Bank of the Philippines (DBP).
The GFIs hold an 80-percent economic interest in Metro Rail Transit Corp. (MRTC). Private shareholders led by MRT Holdings II Inc. have a 100 percent stake in MRTC.
“Our legal group has sat down with the GFIs. Feedback is they are now comfortable with the suggestion. What is important is we come face-to-face and indeed everyone is comfortable with the track to take,” Abaya said.
He said a meeting with the DOF and the GFIs would be held within the month to present the plan and secure the finance department’s approval.
“The real challenge now is talking to GFIs and DOF. When you execute this and pay them, it will reflect loss on their books. They’re also concerned that if they reflect that loss, there is the COA (Commission on Audit) issue,” he said.
Once the approval is secured, he said the EVBO could be undertaken.
The funding would come from the 2016 national budget, with the amount estimated to be above P40 billion.
“We are convincing Congress to make sure it is in the 2016 budget so the budget doesn’t become an issue. Even if we get to agree, if there is no budget, something vital isn’t there to execute. We have to make sure all components are there to execute,” Abaya said.
After the buyout is complete, he said the decision to bid out the operations and maintenance of the mass transit system to tap the private sector would be up to the next administration.