Palace OKs proposed gov’t takeover of MRT-3

More News from Niña P. Calleja

President Aquino has approved the Department of Transportation and Communications’ plan to take over the Metro Rail Transit Line 3, which was estimated to cost the government roughly $1 billion.

“It was approved yesterday (Monday) by the President and consented by the concerned Cabinet secretaries present in the meeting,” Transportation Secretary Jose Emilio Abaya said in a briefing on Tuesday.

Abaya said the President and the members of his Cabinet discussed and approved in principle the DOTC’s plan to buy out the private sector’s stakes in the commuter train system. Abaya said the “de-privatization” plan would cost the government about $1 billion.

The DOTC said the state takeover of the facility would spare the government from covering the 15-percent return on investment guaranteed to the MRT concessionaire.

MRT concessionaire Metro Rail Transit Corp. (MRTC), the consortium that built MRT-3, is controlled by Metro Pacific Investments Corp., the listed holding company in the Philippines of Hong Kong-based First Pacific group.

Although the government owns 80 percent economic interest in MRTC, through Land Bank of the Philippines and Development Bank of the Philippines, its voting rights are less than those held by the private concessionaire.

The consortium operating MRT-3, through special purpose vehicle MRT II Funding Corp., earlier raised funds via the issuance of MRT bonds. The bonds were bought by private corporations but were later bought back by DBP and LBP.

“We will be buying the bonds from DBP and LBP. It’s like retiring the bonds,” Abaya said. He added that the $1 billion estimated cost included the cost of buying back the bonds.

The buyout will take place next year, he said.

In the meantime, Businessman Manuel V. Pangilinan said his group would not stand in the way of the government’s planned buyout of the MRT line.

In an interview, Pangilinan said he would respect the government’s decision and would continue to support the administration’s infrastructure program.

The Pangilinan group, through Metro Pacific Investments Corp. (MPIC), owns the majority of the voting shares in MRT Corp., the private sector consortium that holds the train line’s concession contract. Despite controlling MRTC’s board, MPIC only holds a fraction of the MRT line’s economic benefits.—With a report from Paolo Montecillo

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  • marithefrancois

    while china has its imperfections its subways are really cheap. it’s metro or subway connects everything else kaya no need for a bus or taxi pag nag metro ka lalakarin mo na lang wala nang tawaran sa taxi o onsehan sa bus. kasi nga the subways are interconnected and strategic, so kelan matatapos ang cavite bulacan antipolo lines whether it is mrt lrt anong pang arti  hehehe dream big and aim high philippines please naman kasi kung wala ano na lang tayo meron? 

  • dprotector

    I think what is more important is to build more LRT in Metro Manila and also in the provinces.

  • Budsky

    Yes!!!!!!!! What’s the point of privatization if we guarantee the 15% ROI. We might as well own and run it ourselves. Business is a risk so why guarantee their returns. 

    • ed0408

       We are waiting for delPillar’s answer.

      • delpillar

        I have a reply. Please see above

    • delpillar

      This reply is also to ed0408:

      There is no problem with me if the government is taking over as long as the 1 Billion US Dollar payment is very satisfactory on the part of the investor.

      The percentage does not matter for the government whether lugi sila o hindi. The investor computed that 15% for certain time frame for their benefits, not for the government benefit. Before the contract was signed many years ago, ROI had been agreed with that oercentage. There is no doubt or no wrong about that. Wala kayong pera and this is my offering. You could have selected other investor if you did not like my contract T&C.

      Return on investment is a very popular metric because of its versatility and simplicity. That is, if an investment does not have a positive ROI, or if there are other opportunities with a higher ROI, then the investment should be not be undertaken at all.

      Kung, if for example, ako ay Boeing Rental Plane Company CEO then gusto ng Pilipinas na magkaroon ng Airforce-One for Pres Pnoy up to 2016 pero walang pera in cash para magbayad kaagad, I can provide but with several terms and conditions na hind ako lugi up to 2016. But after a year or so, when a certain AIRBUS salesman offered a very favourable RENT-TO-OWN package (and may pera na ang gibyerno to buy using an upront cash), aba hindi pedeng kumalas sa contrata na pinirmahan nating noon. You can return the Airforce-One to me before 2016 but you have to see to it that I am properly compensated.

      Kung babalasubasin lang ako ng gobyerno at walang palabra de honor, aba mag-publish man kayo ng PPP Projects Invitation sa lahat ng dyaro and news organization worldwide, di na kayo makakaulit sa Build-Operate-then-Transfer (BOT) projects.

      Actually, the BOT of the Philippines was copied by many ASEAN countries but those countries, at the very moment, had attracted 10 to 2 folds that what the Philippine government had. The first recipe is the Honoring the Integrity of the Contract.

  • delpillar

    ganyan talaga ang gobyerno ng Pilipinas at karamihan ng Pilipino.
    Mahilig lang talaga magpadama then iiwanan ka sa kangkungan.

    Before ginawa ang mga projects ay dapat pinag-iisipan. HIndi after a while, overnight ay bigla na lang babaguhin ang decision at contrata dahil maraming disadvantageous daw.

    Kung ang contrata in the first hand ay 25 years to build-and-operate then transfer (BOT), YOU HONOR IT. Let the investor get their profits for the investment they made.

    Kung bago matapos ang 25 years na BOT programs ay gustong kunin na ng gobyerno, then it is OK, no problem. Pero bayaran nyo ng tama ang investors. “Tamang Bayad” means the investors should receive more money dahil in the first place ay di nyo tinapos at tinupad ang contrata. Meaning mas pabor sa investors yung pagbili ng gobyerno at certain amount. (NOT THE OTHER WAY AROUND). 

     I hope na ang 1 Billion US Dollars na pagbili ng gobyerno ay satisfied (very satisfied) ang mga investors. Walang halong harrasment at possible sanction sa future government project as if TAKE IT OR LEAVE IT (the 1 Billion US Dollar).

    Tingnan nyo ang Vietnam na marunong mag-Honor ng BOT projects.
    Walang nonsense na TPP pa-project project pero x10 to x20 ang FDI sa kanila.

    8 subways lines (each covering 10 to 30 km-long) sa Hanoi.
    5 Subway lines (each covering 10 to 45 km long sa Hochiminh

    The constructions started 3 months ago of the first line in Hanoi.
    All these happened in Vietnam because just like Singapore and other ASEAN nations, Vietnamese Governtment has PALABRA DE HONOR.

  • The Truth

    Great! This onerous deal needs to stop. It is similar to the Ramos administration Take-or-Pay deal power plant projects. For 20 yrs, we are the second highest, next to Japan in electricity cost. Imagine.. more expensive than the US while the average household gross salary here is at least 1/10 compared to US and 1/15 to Japan.

  • OFW_Investor

    The DOTC Sec is saying and doing the right things to get these Infra projects back on track. The rationale for the buyout is to remove the 15% guaranteed return to the private contractor. The Plan is to re-bid MRT-3 to more favorable terms without further guarantees. The Govt can go to the left , to the right or to the center what it can not do is to continue the present arrangement with the private consortium. The contract is so onerous that that even with 500,000 daily riders it cant’ still make money due to loans taken in by the operator. Go figure.

    • marithefrancois

       agree how can a full-packed jump-packed investment lose so much…onerous,… kakahiya

  • delpillar

    government employees are basically lazy and not good managers.
    hindi sila marunong mag-maintain ng mga gamit at hindi marunong magpa-roll-over ng income and profit.

    They are very poor in profit/loss (P/L) management skills.
    They only know who to squeeze up to the last drop of possible profit they can take from it.

    For short, government taking over big, complicated and somewhat  high-tech companies like MRT/LRT will be bad in the long term.

    • marithefrancois

       in the philippines most offices in the govt are like that..time for a change let us demand that we get the best service as taxpayers

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