DOTC gets P9.35-B premium for LRT-1 extension project

It was a big payday for the government as the Department of Transportation and Communications got a P9.35-billion “premium” offer from the lone bidder in the Light Rail Transit Line 1 (LRT-1) to Cavite public private partnership (PPP) auction, now on its second bidding round.

The Light Rail Manila Consortium, comprised of Ayala Corp. and Manuel V. Pangilinan-led Metro Pacific Investments, offered the premium payment, which comes on top of the cost to develop the 11.7-kilometer railway extending the LRT-1 in Metro Manila to Bacoor, Cavite.

Light Rail Manila’s offer still needs the approval of the board of the National Economic and Development Authority, chaired by President Aquino, as the agency still has to determine whether the proposed rate of return was acceptable to the government.

This extra step is being undertaken because of the fact that just one bid was made, DOTC spokesperson Michael Sagcal said. “We are working to get this project awarded this month subject to Neda board approval.”

Assuming an award is in place, the new railway extension to Cavite could be completed by 2020, benefiting booming provinces south of Metro Manila, the department said.

The DOTC has so far awarded two PPP deals. One, for a common ticketing station for Metro Manila’s elevated railways, also bagged by a tandem between Ayala and Metro Pacific, and the modernization, expansion and operations contract for the Mactan-Cebu International Airport.

For some in the government, the exercise Thursday was a vindication of the heavily criticized PPP program, especially after the first LRT-1 bidding round in August 2013 failed as bidders pulled out.

“Even though we only got one bid, it was a quality bid. At the end of the day, what we are most concerned about is to get quality bids,” Cosette Canilao, PPP Center executive director, told reporters.

The opening of the financial offer of Light Rail Manila was triggered after the DOTC’s bids and awards committee cleared the consortium’s technical proposal, which was submitted along with other requirements last May 28.

Out of seven interested groups, which included conglomerate San Miguel Corp. and Malaysia’s AlloyMTD, only Light Rail Manila made an offer as other groups cited the deal’s unattractive financial returns even after the government revised the terms.