Proponent reviewing cost of MRT-7 project

MANILA, Philippines–The consortium tapped to build the Metro Rail Transit Line 7 is reviewing the P62.7-billion budget for the proposed railway line, saying earlier cost assumptions might have changed while waiting years for the government to approve certain financial guarantees.

The government, through the Department of Finance, approved two months ago the so-called performance undertaking for the MRT-7—although this guarantee was expected more than four years ago.

This means the project cost needs to be reviewed, according to DMCI Holdings Inc. president Isidro Consunji.

DMCI’s construction unit was tapped for the civil works component by San Miguel Corp.-backed Universal LRT Corp. Ltd., which won the right to develop MRT-7.

MRT-7 involves the construction of a 22.8-kilometer elevated rail line, starting from San Jose del Monte in Bulacan and ending in Quezon City. It would be the first major extension of the busy MRT-3 in Metro Manila, which operates along Edsa.

“We still need to review the costs, but I don’t think it should be affected so much,” Consunji said in an interview Wednesday. He noted that certain commodity prices like oil have gone down, although cement prices, he said, have increased.

“We are trying to finish the review in one or two weeks,” Consunji added.

Consunji said MRT-7 was unlikely to start construction this year but his group was aiming to finish the project by 2018 or earlier.

A transportation department spokesman did not reply to a request for comment.

The financial guarantee, typical for the rarely profitable railway business, was also a key requirement in securing overseas development assistance loans, which would pay for most of the project’s construction cost.

This process takes about a year although the transportation department requested that this be expedited, according to secretary Joseph Abaya.

Consunji noted that a “bigger issue” was the location of a common station for MRT and the Light Rail Transit Line 1 but he was quick to add this was a matter between Universal LRT and the Department of Transportation and Communications.

MRT-7’s concession agreement provides for the station to be located near the SM City North Edsa but the Transportation Department decided this year to transfer the proposed location to an area near the adjacent TriNoma shopping mall of Ayala Land Inc. It said that location was more advantageous to commuters.

This transfer was contested by the SM Group, which said the move breached a 2009 agreement with the government. The SM Group, through SM Prime Holdings Inc., obtained a Supreme Court order temporarily halting the transfer last July.

SMC president Ramon Ang did not specifically address the situation when asked for comment, saying the conglomerate was keen on “pushing” the MRT-7 project forward.