Winning bidder awaits LRT-1 rate hike

Light Rail Transit (LRT) Line 1. FILE PHOTO

The winning bidder of the Light Rail Transit Line 1 Cavite extension public private partnership (PPP) deal is waiting for a long-delayed rate increase for the railway line, saying this was a crucial requirement before banks would lend it money to finance its share of the P65-billion project.

Metro Pacific Investments Corp. president Jose Ma. K. Lim told reporters last week that they hoped to achieve financial close sooner, given that the Light Rail Manila Consortium, mainly comprised of MPIC and Ayala Corp., would start construction of the Cavite extension “immediately” upon takeover or within the next 12 months.

Light Rail Manila’s share of the PPP deal was seen at P35 billion, which would be mainly financed by bank debt, Lim said. Under the PPP deal, the consortium will build an 11.7-kilometer extension to Bacoor, Cavite, which is slated to open by 2019, and will operate the expanded 32.4-km LRT-1 for a period of 32 years.

“The rate increase is quite important for financial closing,” Lim said. “We don’t know when the government will implement [the increase]. They were supposed to do that last Aug. 1 but they have not yet implemented it.”

Any rate increase for public mass transit systems is a politically sensitive issue, officials of the Department of Transportation and Communications earlier said in explaining the delays for a scheme that was approved in 2011. That scheme, based on an “11+1” formula, meaning a boarding charge of P11 plus P1 for every kilometer travel, will increase “average rates for the average rider” by P5 per trip.

Passengers currently pay a maximum of P20 for a one-way trip for the existing 20.7-km LRT-1. The government spends billions of pesos a year to subsidize money-losing elevated railways in Metro Manila.

As noted, the final decision for a rate increase rests in the hands of the government. If it decides to hold off an increase, it would have to compensate Light Rail Manila for the difference, according to Ferdinand Inacay, Metro Pacific vice president for business development.