DOTC upbeat on prospects of LRT-1 project rebidding

The Department of Transportation and Communications (DOTC) expects more groups to join the rebidding for the P60-billion deal to extend the Light Rail Transit Line 1 (LRT-1) to Cavite with the bid terms, which turned off the original participants, likely to be modified and relaxed.

Transportation Secretary Joseph Abaya on Monday said international groups—including construction companies in South America and Mexico—had expressed interest in the project.

Abaya said the two companies that were disqualified during the prequalification process for submitting documents past the deadline were welcome to join the bidding again. These were Romero-led Ecorail and Luzon Rail Transit System.

The DOTC is considering setting the bid submission date for late 2013 or early 2014, once it gets the approval from the National Economic and Development Authority board for the modification of the bid terms.

Abaya cited certain areas that needed revisions. These are allowing the private sector to submit “negative” bids which will call for government subsidy, the absorption by the government of the P2 billion in real property tax yearly and guarantee on the cost of power in case of “radical” rates fluctuation.

The remaining two items involve a two-year warranty on the existing LRT-1 Line 1, which the winning bidder will operate together with the extension line for 30 years,  and a provision to increase the fare upon “100 percent completion of the infrastructure requirement.”

“Regulatory risks will be passed on to the government because it is in a better position to handle regulation,” Abaya said. “The market risk remains with the concessionaire.”

The auction of the LRT-1 extension on Aug. 15 was declared a failure after San Miguel Corp., DMCI Holdings and a consortium between Malaysia’s MTD and South Korea’s Samsung withdrew from the bidding, while a fourth group, a consortium between Metro Pacific Investments and Ayala Corp., submitted a noncompliant offer.