Government bent on MRT-3 buy-out

MANILA, Philippines - The Department of Transportation and Communications (DOTC) is set to meet with the Department of Finance (DOF) next month to discuss how to pursue the planned equity value buy-out (EVBO) of the Metro Rail Transit Line 3 (MRT-3).

In a roundtable discussion at The Philippine STAR office, Transport Secretary Joseph Emilio Abaya said the agency is scheduled to have a meeting with Finance Secretary Cesar Purisima by the first week of February to discuss how to execute the EVBO of the MRT 3.

To execute the EVBO, the DOTC needs to secure the approval of the DOF and of government financial institutions Land Bank of the Philippines (Landbank) and Development Bank of the Philippines (DBP).

GFIs led by the Landbank and the DBP 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.

Abaya said the GFIs have reservations in pursuing the EVBO as this would mean booking a loss in the banks’ books.

“If we just go that way, both Landbank and DBP will book a loss. Will there be COA (Commission on Audit) issues? That is where the reservations are. We’re also coming up with other methods. We’re meeting with Secretary Purisima first week of February because that might be really a mountain we couldn’t succumb so we look at other alternatives to execute,” he said.

After the approval of the DOF and GFIs is secured, the EVBO could be implemented with funding to come from the 2016 national budget.

Abaya said the government still intends to execute the EVBO before the end of the Aquino administration.

“It will save a lot of headaches for the next secretary,” he said.

The decision to offer the operations and maintenance of the train system to the private sector meanwhile, would be up to the new leadership.

Abaya said earlier he is hopeful the new administration would consider the benefits of the public private partnership model in making the decision in whether to bid out the operations and maintenance of the MRT 3 to the private sector.