Gov’t expects to close buyout of MRTC soon

The government is “close” to executing its buyout plan aimed at the operator of the Metro Rail Transit Line 3 (MRT-3) elevated railway, which runs through Edsa at the heart of Metro Manila, Transportation Secretary Joseph Abaya said last week.

Abaya told reporters in an interview that the P56-billion buyout of Metro Rail Transit Corp.  was pushing through following a multi-agency government meeting led by the Department of Transportation and Communications, Finance and Budget.

The buyout was ordered by President Aquino last year and was meant to clear thorny issues on the operations of MRT-3, one of the most heavily used lines in the capital district, while helping the government end huge rental fees guaranteed to its private operator under a previous contract.

Those  issues, complicated further by an arbitration case filed by MRTC in Singapore, may soon be put to rest, Abaya said.

“We had a meeting and it is close to being resolved,” Abaya said while noting that financing for the takeover was ready.

MRTC is owned by a private consortium, led by the Sobrepeña family’s Fil-Estate Group. Metro Pacific Investments Corp., led by businessman Manuel V. Pangilinan, has an option to acquire control of MRTC by way of a cooperation agreement signed in 2010 but it has yet to exercise this, a company spokesperson said.

Given the way the project is structured, the private sector owns most of the voting rights of MRTC but the government, mainly through Land Bank of the Philippines and Development Bank of the Philippines, owns 80 percent of the railway’s economic interests.

The DOTC noted that the buyout would also give it flexibility with plans involving the MRT-3.

MRTC’s private shareholder earlier went to the Makati City Regional Trial Court to halt a deal between the DOTC and a Chinese manufacturer for the supply of the needed train cars for the congested railway, which handles about 560,000 passengers per day from the original capacity of 350,000.

Sobrepeña’s group, through MRT Holdings II, filed the injunction to protect its rights under a build-lease-transfer agreement to supply the trains as the government did not seek its consent when bidding out the train supply contract, it alleged.

The court eventually ruled against MRTC and allowed DOTC to proceed with the issuance of a notice to proceed to China’s CNR Dalian Locomotive & Rollin Stock Co. Ltd., which won the deal to supply 48 new train cars for MRT-3 in a public auction in June last year.

The new trains are expected to be delivered in batches starting the first half of 2015, Abaya said.