Infrastructure giant Metro Pacific Investments Corp., whose unsolicited offer to rehabilitate and operate the Metro Rail Transit Line 3 has been set aside by the Department of Transportation, is not shutting the door to its participation in an open tender process.
“It pretty much depends on the terms, so we have to review,” Metro Pacific chair Manuel V. Pangilinan said in a recent interview.
Pangilinan’s view was sought after Transportation Secretary Arthur Tugade said they intended to bid out the operations and maintenance contract of the MRT 3 through a solicited process.
Solicited projects use a different bidding procedure and are typically part of the list of priority projects. Unsolicited projects, on the other hand, require a Swiss or competitive challenge. Moreover, unsolicited offers should contain no direct government guarantees.
Pangilinan admitted that they were surprised by the announcement of the DOTr, considering that Metro Pacific was awarded last year an original proponent status for its MRT 3 offer.
An original proponent status is a form of endorsement from the implementing agency, in this case the DOTr, that an unsolicited offer had met its requirements. The proposal is then passed on to the National Economic and Development Authority for final approval. The approval will pave the way for a Swiss challenge, which allows rival bidders to challenge the original proponent. The advantage of the original proponent is that it has the right to match better offers to win the project.
Pangilinan, during the interview, conceded that the government had full discretion in this process.
“At the end of the day, they decide,” he said.
Metro Pacific, which has been eyeing the MRT 3 since 2011, offered to spend P12.5 billion to rehabilitate the rail system over a 30-year concession. That figure could balloon to P20 billion when considering an equity buyout of its shareholders. It said the project would come at no cost to the government.
A key part of the offer involves halting the deterioration of the train line over a period of six months. In addition, it also plans to buy out other shareholders in the MRT 3’s private sector owner, Metro Rail Transit Corp. The state-owned Development Bank of the Philippines and Land Bank of the Philippines hold about 77 percent of MRTC’s economic rights, acquired through bondholders, and about a fifth of its voting shares.
Uncertainties over Metro Pacific’s offer first emerged when the DOTr, late last year said it wanted to bring back the MRT 3’s original Japanese maintenance provider via a long-term government-to-government loan.