Gov't eyes compromise with MRTC for takeover of MRT 3
MANILA, Philippines – The Department of Transportation and Communications (DOTC) hopes to reach a compromise with the Metro Rail Transit Corporation (MRTC) to get one step closer to a government takeover of the MRT 3 along EDSA.
MRTC is led by infrastructure conglomerate Metro Pacific Investments Corporation (MPIC).
“We hope to sign a compromise agreement between the DOTC and MRTC that we intend to submit to the arbitration panel,” said DOTC Secretary Joseph Emilio Abaya.
The agreement, which he hopes will be reached within the 3rd quarter, involves the government buying out MRTC's shares in MRT 3.
MPIC owns 48% interest in MRTC since it entered into an agreement with Fil-Estate Corporation in November 2010 involving its interests and rights in Metro Rail Holdings Inc, Metro Rail Transit 2 Inc, and Monumento Rail Transit Corporation.
Meanwhile, government financial institutions Land Bank of the Philippines and Development Bank of the Philippines (DBP) control an 80% interest with no voting rights in the company.
Landbank has already issued a board resolution regarding the proposed equity value buyout, said Abaya. DBP is yet to make a similar move.
The DOTC is waiting for an opinion from the Office of the Solicitor General (OSG) regarding the full government takeover of MRT 3.
“We are awaiting a comment from OSG again as to the buy out afterwhich we will sign a compromise agreement with MRTC then we submit to the arbitration panel,” he said.
In January 2009, MRTC filed an arbitration case in Singapore against the Philippine government claiming the government was not punctual in paying equity rentals.
Another case was filed against the government for awarding a P3.8-billion ($86.7 million) contract to Chinese company CNR Dalian Locomotive & Rolling Stock Company of China to supply of 48 new light rail vehicles for MRT 3.
The DOTC is confident it will be able to completely buy out shares since a majority of the MRTC board are from the government.
MPIC opposes the planned buyout. It has revived its $300-million offer to expand the operations of MRT 3 and another offer worth $350 million to acquire equity and bonds issued by MRTC.
MRT 3 currently operates double its original capacity – with 600,000 passengers a day when it was originally designed for 350,000.
In March last year, President Aquino signed Executive Order No 126 stating that DOTC and the Department of Finance (DOF) should purchase MRT 3 pursuant to a build-lease-transfer (BLT) agreement.
The Department of Budget and Management even allocated P56 billion ($1.3 billion) for the complete government takeover in the 2014 national budget.
The takeover will result in billions of pesos in savings for taxpayers used mostly to cover the 15% return on investment guaranteed to MRTC.
The government spends about P7 billion ($160 million) on subsidies for the MRT 3 operations. – Rappler.com