BEST OPTION? Metro Pacific Investments Corp. has revived its proposal to the DoTC to acquire the government’s stake in the MRT train line in the wake of the cancellation of the bidding for the operations and maintenance contract for the LRT line 1 and MRT train lines.
Metro Pacific Investments Corp. (MPIC) will ask new Transportation Secretary Manuel “Mar” Roxas II to reconsider the group’s proposal to acquire the government’s stake in the Metro Rail Transit (MRT) train line for $1.1 billion.
The company, controlled by business executive Manuel V. Pangilinan, said its proposal was still the best option for the government, which is looking for ways to improve mass transportation services without denting its finances.
“It’s a proposal that’s still on the table with them. We’d like to think [it’s the best option],” Pangilinan said.
He said the group planned to make a new pitch for the buyout to Roxas, who assumed office earlier this month.
Under the proposal, MPIC will reacquire bulk of the shares in MRT held by the state-owned Land Bank of the Philippines and Development Bank of the Philippines for $1.1 billion.
The shares represent MRT securities backed by equity rental payments made by the Department of Transportation and Communications (DoTC), giving the government a majority economic interest in the train line.
However, the shares, which are receivables of the DoTC that were securitized and sold by the MRT line’s original stakeholders to foreign investors, do not hold voting rights in MRT Corp.
MPIC said it would also spend $300 million for the improvement of the MRT services by adding more trains and expanding facilities once it holds a 100-percent stake in the train line. MPIC already controls the MRT board but only enjoys a fraction of the economic rights.
In exchange for its investments, MPIC asked that it be given the rights to manage the MRT line until 2025. MPIC said it would raise train fares to about P30, double the current maximum of P15.
The DoTC under former Secretary Jose de Jesus earlier tried to bid out a combined operations and maintenance (O&M) contract for the Light Rail Transit (LRT) line 1 and MRT train lines.
Under the proposed deal, the government would have paid the winning bidder P14 billion over contract’s four-year duration to operate both the LRT and MRT train lines.
But Roxas, who replaced De Jesus, has expressed reservations on the viability of the O&M contract. Instead of earning from privatizing state assets, he said the government would end up spending money.
He said this ran counter to the administration’s policy of promoting public-private partnerships (PPP), a method of funding big-ticket infrastructure projects by passing on the bulk of the financial burden to the private sector. Companies are then allowed to charge fees from the public to recover their investments.