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