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With funds OKd, gov’t all set to take over MRT-3

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With funds OKd, gov’t all set to take over MRT-3

/ 04:18 AM October 17, 2014

MANILA, Philippines–The Department of Transportation and Communications is proceeding with the full takeover of the Metro Rail Transit Line 3 via an estimated P54-billion equity value buy-out plan at the start of 2015, a senior government official said on Thursday.

Transportation Secretary Joseph Abaya said the plan would likely push through following the approval by Congress of its funding and with expectations that a compromise agreement with MRT-3’s owner, Metro Rail Transit Corp., would be signed before the end of 2014.

“Eventually, a compromise agreement will be done within the year as long as there is no change in policy,” Abaya told reporters at the sidelines of the Philippine Coast Guard’s 113th anniversary on Thursday.

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“What is critical is the 2015 [budget], because the P54-billion funding is in 2015,” Abaya said. “If the budget is passed, then we can expect to start the equity value buyout plan in the first week of January.”

The buyout was ordered by President Aquino last year, partly to allow the government to end paying huge rental fees guaranteed to MRT-3’s private owner while solving thorny issues over the railway’s ownership.

Abaya noted that the EVBO process was clearly outlined and that there was “no room for negotiations” with MRT Holdings, the main shareholder of MRTC. While MRTC is owned by the private sector, most of the economic interest is held by the government through Development Bank of the Philippines and Land Bank of the Philippines.

MRT Holdings, led by the Sobrepeña family, is currently at odds with the government on its buyout plan, claiming it would make more sense for the DOTC to invest in upgrades instead.

The transportation department was indeed investing in the railway line’s rehabilitation, as it identified about P9.7 billion worth of projects through the next three years for upgrades like new trains and ancillary systems.

The plan is unfolding as the MRT-3 continues to draw sharp criticism from commuters. Years of neglect and daily operations stretched beyond the limits—the railway line carries over half a million passengers per day against its capacity of 350,000—have made MRT-3 prone to constant breakdowns.

Under Executive Order No. 167 s. 2013, the DOTC and the Department of Finance are tasked to implement the EVBO, to put an end to the ongoing arbitration case in Singapore between the DOTC and the MRTC.

This will also terminate the concession agreement, end government’s obligation to pay billions of pesos in equity rental payments to MRTC yearly and transfer ownership over the MRT-3 to the government, the DOTC said.

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Abaya said in a previous interview that the buyout would also give the department “flexibility” with its plans involving the MRT-3.

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TAGS: Budget, buyout, compromise agreement, MRT 3, rail transport
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