Transport projects to be privatized

IN line with the Aquino administration’s thrust to involve the private sector in various infrastructure projects so as to limit government spending, Transportation Secretary Jose de Jesus said on Friday night his agency will privatize the operation and management of various projects under the Department of Transportation and Communications (DOTC).

“Almost all projects that we have will be undertaken under PPP [public-private partnerships]. Our preferred mode is PPP. All DOTC projects will be privatized,” he said.

Among the big projects of the Transportation department include the Ninoy Aquino International Airport Terminal 3 (Naia 3), Metro Rail Transit Line 3 (MRT 3), Light Rail Transit and NorthRail.

For Naia 3, de Jesus said: “Once all the issues are settled, we will privatize the [operation and management] of the airport.”

On Saturday the Philippine government announced that it won its arbitration case against the Philippine International Air Terminals Co. (Piatco), the builder of the Naia 3.

The case was filed before the International Chamber of Commerce in Singapore.

The government reportedly saved almost $1.1 billion following its winning the case, and the one with the Washington-based International Center for Settlement of Investment Disputes, which in 2007 dismissed the claim of compensation of Fraport AG, Piatco’s German partner, against the Philippine government.

When de Jesus was asked if his department would now start work in privatizing Naia 3, he said: “There are still a few hurdles to clear before we can make a statement on it.”

The DOTC secretary emphasized that only when all issues are settled will the agency take over in handling the privatization plan.

“We want to settle the problem there, so we can privatize it. If everything is clean, including settlement issues, that’s when it will be privatize,” de Jesus said partly in Filipino.

He also said other airport projects would be reviewed, including the new terminals which are meant to expand the Diosdado Macapagal International Airport in Clark.

For railway projects, the DOTC will privatize LRT 1 (Baclaran in Pasay City to Balintawak in Quezon City) and LRT 2 (from Recto in Manila to Santolan in Marikina); MRT 3, which traverses the Edsa stretch; and the unfinished NorthRail system that is envisioned to transport Metro Manila commuters to north Luzon.

The LRT and MRT railway systems carry about 1.25 million passengers every day.

For MRT 3, de Jesus said the government might acquire the 75-percent stake of state-run Development Bank of the Philippines (DBP) and Land Bank of the Philippines (LandBank), which have jointly taken majority control of the 17-kilometer railway system. Their ownership is estimated to have cost them around $700 million.

“It is possible to acquire LandBank and DBP shares on MRT 3. It depends on the terms of acquisition. Eventually, our goal is to acquire ownership, then we can privatize it, at least the [operation and management],” said de Jesus.

The government subsidizes the MRT fares,  which remain unadjusted for many years now. De Jesus said MRT 3 expenses in 2009 reached P5 billion and are expected to go up this year unless fares are adjusted upward. The railway system only earns roughly P1 billion a year.

De Jesus said fares for LRT and MRT lines are being reviewed and will have to be adjusted soon. An announcement will be made later this month.

Also, the LRT 1 extension project, which extends the railway system all the way to Cavite, will also have to be reviewed, added the secretary.

“For Northrail, we are reviewing the contract with the Chinese. The worst that can happen is to renegotiate the contract,” he said.

De Jesus said earlier that contracts entered into between the Land Transportation Office (LTO) and Stradcom Corp. will be reviewed as well.

Stradcom is currently implementing the LTO’s information-technology (IT) project. The LTO-IT project is the country’s first government IT project to be implemented under the build-own-operate scheme. It covers the development of an integrated IT system that will interconnect about 250 LTO offices nationwide, integrate its critical business processes, and enable online transaction processing.

One of the most controversial contracts of the DOTC is the multibillion-peso national broadband network (NBN) deal with the Chinese ZTE firm.

The $329-million NBN project, which was supposed to be financed with an official development. –Lenie Lectura / Reporter, Businessmirror