By Lorenz S. Marasigan | Business Mirror | January 10, 2015
DESPITE hitting a roadblock at the House of Representatives, the Department of Transportation and Communications (DOTC) will continue to pursue the multibillion-peso takeover of the Metro Rail Transit (MRT) System, a Cabinet official said.
Transportation Secretary Joseph Emilio A. Abaya said his office is studying the options on how to execute the P54-billion acquisition of MRT Corp. (MRTC), owner of the assets of the train line, after the lower chamber had decided earlier this quarter to strike out the budget allocated to implement the buyout.
“We have to see the final form of the budget, and we’ll see what our options are,” he said, refusing to divulge his agency’s approach in executing the takeover. “We’re not left with just one option, there are other options. We’ll see. We have to check what is there.”
He said his persistence, despite the flak from several lawmakers, is driven by the order of President Aquino for his agency to take the reins of the most congested train line in Metro Manila.
“It’s going to be more of a legal approach to things,” he said. “How could we not pursue the buyout? We have been directed by the President to execute this.”
In 2013 Mr. Aquino issued Executive Order 126, directing the DOTC, the Department of Finance, the Development Bank of the Philippines and the Land Bank of the Philippines to execute the takeover of MRTC. It will be pursued through the acquisition of all outstanding shares of stocks and other securities issued by the private concessionaire and entities that own the MRT.
The government aims to fully own the line by 2016, but it recently stumbled upon several roadblocks, such as oppositions from the private owners of the MRTC and Congress’s decision to slash out the buyout’s allocation from this year’s budget.
But for the transportation secretary, there is still ample time to execute the buyout.
“I think we still have enough time. Of course, the reality is some guys obviously don’t welcome this; but clearly, how could I renege on a presidential directive just because Congress decided not to give us the fund? What is clear to me is that there is a directive from the President,” he said.
In order to implement the P54-billion takeover deal, the government must strike a compromise deal with the private owner of the train line, which is wholly owned by MRT Holdings II Inc. of businessman Robert John L. Sobrepeña.
Signing a compromise deal would effectively end the ongoing arbitration case in Singapore that was lodged against the government in 2008 owing to its failure, as the operator of the line, to pay billions of equity rentals payment to the owner of the rail system.
Should the buyout be completed in 2016, the transportation agency may then bid out the operations and maintenance contract of the line, thereby tapping private-sector efficiency and customer-service orientation for operational needs, while retaining regulatory functions for passenger protection with the government.
Currently, the government is rolling out a P9.7-billion rehabilitation plan for the MRT, which serves 550,000 passengers daily, way beyond its rated capacity of 350,000 passengers per day.
It includes the procurement of additional coaches; general overhauling of trains; ancillary systems upgrade; platform edge doorstep; signaling system upgrade; steel-rail replacement; communications-system upgrade; traction motors replacement; and the improvement of the overhead catenary system.
The rehabilitation venture also includes the installation of a security fence and noise
barrier; consulting services; upgrade of conveyance facilities; a footbridge for the North Avenue Station; weather-protection cladding; Internet connection; passenger-information system; and passenger hand straps.
Separately, the local flagship of the Hong Kong-based First Pacific Co. Ltd. is proposing to shoulder the upgrade costs of the train system and free the government from paying billions of pesos in equity rental payments.
Metro Pacific Investments Corp. President Jose Maria K. Lim said his group will soon submit its $524-million proposal to the Department of Transportation and Communications, which has already rejected a $565-million offer.
The lower budget for the offer, Metro Pacific Business Development Officer John B. Echauz explained, stemmed from the removal of the automated fare collection system and another component from the proposal.
The unified-ticketing system project was auctioned off by the transportation agency in 2013, and was awarded last year to the consortium between Metro Pacific and Ayala Corp.
The total $524 million also included the $30-million working capital and the $229-million budget for the settlement of the government’s equity rental payment.
The group of businessman Manuel V. Pangilinan earlier entered into a partnership agreement with the corporate owner of the MRT, a move that would have allowed the Pangilinan group to invest some $600 million to improve the services of the train system.
The venture would effectively expand the capacity of the railway system by adding more coaches to each train, allowing these to carry more pasengerss. The multimillion-dollar expansion plan would double the capacity of the line to 700,000 passengers a day.
It was submitted in 2011, but then-Transportation Secretary Manuel Roxas II rejected the proposal.