MPIC-Ayala group to bring in foreign partners

The Metro Pacific and Ayala groups plan to bring in foreign partners into their railway consortium ahead of the awaited bidding for the Light Railway Transit 1 extension project under the government’s public-private partnership framework.

During the stockholders’ meeting of Metro Pacific Investments Corp. on Friday, company president Jose Ma. Lim said the MPIC-Ayala tandem would be the “bidder to beat” for the PPP projects to be rolled out by the government.

In an interview with the Inquirer after the meeting, MPIC chief finance officer David Nicol said the partners were very excited on the first project (LRT1) which, if successful, would be followed up by the Metro Railway Transit 3 project.

“We got a lot of interest from Korea and Japan to join our consortium,” Nicol said, referring to the prospective contract to build the LRT1 extension.

The MPIC-Ayala group also plans to get a different foreign partner for the operation of the elevated railway.

Nicol said talks were ongoing with prospective partners from Japan, Korea and Hong Kong. “We had a sort of advanced discussions with one experienced operator,” Nicol said.

He said the prospective partners could also boost the chances of the consortium in winning the bid.

“Having one of these companies (as partner) will help bring a better bid that’s more likely to succeed, so they’ll put an effort from day one,” Nicol said.

The project will extend the existing 15-kilometer LRT Line 1 system southward by another 11.7 kilometers, starting the last southern station in Baclaran to Bacoor, Cavite.

The construction to be undertaken by the private sector partner in this PPP project is estimated to cost P30 billion. The total project cost, however, is seen to reach P59 billion because new coaches would be purchased to expand the capacity. The additional cost of P29 billion will be shouldered by the government using official development assistance financing.

The winning bidder will operate and maintain the train line for a number of years, allowing the company to recoup its investments through the collection of fares from passengers.

Nicol said it had always been a strategy within MPIC to bring in partners with expertise in various businesses, such as in the case of toll roads, water distribution and power generation.

“That reduces the execution risk … and that makes for better service and safer return for us,” Nicol said.

The newly created alliance between the Metro Pacific and Ayala groups is looking at 10 potential railway projects in Metro Manila under the master plan made by the government for urban railways.

Even outside of projects to be bid out under the PPP framework, MPIC expects growth to come in three waves over the rest of the decade with water distributor Maynilad Water Services leading the first; the toll road business under Metro Pacific Tollways Corp. (MPTC), the second; and Manila Electric Co., the third wave. The hospital group is also expected to maintain high growth.

“Growth over the next three to four years will be delivered by Maynilad, which is working on connecting the remaining 1.6 million customers in its concession area that are still not reached by its pipeline network. That represents a 20.2-percent growth in customer count,” Lim said, adding that additional billed volume was also expected from the higher consumption arising from the increase in water pressure.

The completion of several road projects in MPTC’s pipeline is seen providing impetus for 2016 and beyond.

Meralco’s plan to build 2,500 megawatts of power generating capacity in the medium term is seen boosting bottom line by 2017.