The Philippine Star | December 31, 2014

MANILA, Philippines - The Department of Transportation and Communications (DOTC) is pursuing the complete government takeover of the Metro Rail Transit line 3 (MRT-3) even if the P54-billion allocation for the acquisition of the mass transit system was not included in the P2.6-trillion national budget signed by President Aquino last Dec. 23.

Transportation Secretary Joseph Emilio Abaya said there are other options to push through the equity value buyout (EVBO) to allow the government to take over the mass transit system along EDSA as directed by President Aquino even if it was not included in the 2015 General Appropriations Act (GAA).

“We’re not left with just one option, there are other options. There’s an EO, which is basically a directive from the President to execute this,” Abaya said.

According to Abaya, the DOTC is coordinating closely with the Department of Budget and Management (DBM) and the Department of Finance (DOF).

In March 2013, President Aquino issued EO 167 directing the DOTC and the DOF to implement the EVBO in order to put an end to the ongoing arbitration case between the DOTC and Metro Rail Transit Corp. (MRTC) in Singapore.

The buyout would terminate the concession agreement, transfer full ownership of the mass transit system along EDSA to the government. The government pays billions of pesos in equity rental payments to MRTC annually.

Government financial institutions led by the Land Bank of the Philippines and the Development Bank of the Philippines 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.

MRT Holdings II chairman Robert John Sobrepeña repeatedly stated that the company has not received any offer from the DOTC.

During a hearing at the House of Representatives, Sobrepeña said the P54 billion would be enough just to pay off Land Bank and DBP. He said at least P90 billion is needed to pay off all MRT-3 investors.

“Of course the reality is some guys obviously don’t welcome this. But how could I renege on a Presidential directive just because Congress decided not to give us as much fund. There is a clear directive from the President,” Abaya said.

The government has spent a total of P147 billion for the EDSA rail line. This includes P85 billion in rental payments to MRTC, P32 billion in loans incurred by the company which are state-guaranteed, P20 billion in MRTC taxes and P10 billion in maintenance fees, the official said.

According to Abaya, the government wants to buy out all the private shareholders so as not to disrupt through a temporary restraining order (TRO) from the courts the planned expansion and improvement projects for the mass transit system along EDSA.

Once the buyout is complete, the DOTC would bid out an operations and maintenance (O&M) contract for the mass transit system to tap private sector efficiency and customer service orientation for operational needs.

A total of 11 projects worth close to P10 billion are being undertaken to improve the operations and decongest the MRT-3 that caters to about 550,000 passengers per day, way above its design capacity of 350,000 per day.

The biggest project is the P3.76 billion MRT-3 capacity expansion project for the acquisition of 48 brand new trains that was awarded to CNR Dalian Locomotive and Rolling Stock Co. of China to increase the system’s capacity by 66 percent to 800,000 per day and reduce the waiting time for the arrival of trains for each station to 2.5 minutes.

The second biggest project is the three-year maintenance contract worth P2.2 billion replacing the current operator Autre Potre Technique (APT) Global to make sure that the mass transit system operates under safe running conditions and to maintain cost at a minimum level.