DOTC seeks more time to negotiate LRT project

MANILA, Philippines–The government said it needed more time before awarding the P65-billion Light Rail Transit Line 1 (LRT-1) Cavite extension public-private partnership project, with a senior official saying the government was still negotiating with sole bidder Light Rail Manila Consortium, led by Metro Pacific Investments Corp. and Ayala Corp.

The Department of Transportation and Communications (DOTC) said an award could be ready “within two weeks” as it was still in “negotiations” with Light Rail Manila, as provided for under the build-operate-transfer rules in case of a single bidder, Transportation Secretary Joseph Abaya told reporters Thursday.

An award was expected as early as this week, DOTC Undersecretary Jose Lotilla said over the weekend, as the National Economic and Development Authority, chaired by President Aquino, had already approved Light Rail Manila’s bid, which involved a P9.35-billion premium offer.

But Abaya noted the government was “mandated” to conduct negotiations.

“That’s the current [situation]. If we can increase the offer of P9.35 billion, why not?” Abaya said, in response to queries on the nature of negotiations.

David Nicol, chief financial officer of Metro Pacific, noted that the company’s offer, which comes on top of the project cost, was “fair” for the DOTC, the riding public and sponsors.

“Why would we change that?” Nicol said in a text message.

Light Rail Manila was the only group to make an offer out of at least seven interested parties, including San Miguel Corp. and DMCI Holdings, which cited the project’s unattractive financial returns.

The project mainly involves the construction of the 11.7-kilometer railway extending the LRT-1 in Metro Manila to Bacoor, Cavite, by 2020, Metro Pacific president Jose K. Lim said previously. The winning bidder will also operate the entire LRT-1, including the existing 20.7-km railway, which serves about half a million people daily, for a period of 32 years.

Gross revenue at the LRT-1 hit P2.5 billion last year, according to the Light Rail Transit Authority, meaning its operation would provide new revenue streams for both Ayala and Metro Pacific.