PPP to be awarded to Ayala-MVP firm

The consortium led by Ayala Corp. and Metro Pacific Investments Corp. (MPIC) is set to be awarded the contract to expand and operate the Light Rail Transit Line 1 (LRT-1) public private partnership (PPP) project this week, a government official said.

Transportation Undersecretary Jose Perpetuo Lotilla said the bids and awards committee was set to convene after the National Economic and Development Authority (Neda) approved the sole bid of Ayala-Metro Pacific’s Light Rail Manila consortium in a meeting held last week. “It is likely that it will be awarded this coming week,” Lotilla, who chairs the transportation department’s BAC, said in a text message over the weekend.

Light Rail Manila  made a P9.35-billion premium offer, an amount which comes on top of the project cost, last May 28. It 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 broader implication of an award was that the P65-billion PPP project, which failed in its initial bidding round in August last year, can finally move forward.

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.

Both companies have been ramping up their respective infrastructure portfolios and participating in PPPs was key part of this plan, their respective officials had said.

The LRT-1 extension to Cavite is set to be the fourth PPP project for Ayala, which has previously won Daang-Hari Slex Link and also with Metro Pacific, it bagged the automated fare collection system PPP.

A separate venture between Ayala and Aboitiz Land Inc. may be awarded the P35.4- billion Cavite-Laguna Expressway in the coming days after it topped two other bids last June 13.

Light Rail Manila is expected to pay 20 percent of the premium offer as a condition before signing the concession agreement, with the remaining amount to spread out through the 32-year concession period, Lim said previously.

The LRT-1 project, however, was not free of any controversy and one complicating issue was the location of a so-called common station for the LRT-1 and Metro Rail Transit Line 3. The operation of the common station was bundled with the PPP deal.

That station’s location, which the government said would be near the Ayala group’s Trinoma shopping mall in Quezon City, prompted legal action from Henry Sy’s SM Prime Holdings earlier this month.

SM Prime Holdings sued the transportation department and LRTA, saying the decision to locate in Trinoma violated a 2009 agreement it signed with LRTA.