Govt shuts out private sector from MRT 3

THE government has dashed all hopes of private-sector participation in the proposed expansion and modernization program of Metro Rail Transit Line 3 (MRT 3).

The decision affects separate proposals of San Miguel Corp. (SMC) and Metro Pacific Investments Corp. (MPIC) that earlier bared plans to upgrade and modernize facilities of the line stretching 16.9 kilometers across Makati City, Mandaluyong City, Pasay City and Quezon City.

According to Transportation Secretary Joseph Emilio Abaya, the SMC and MPIC proposals will no longer be pursued as the government has decided to buy out the interest of the private sector at MRT-3.

“SMC has a proposal and MPIC has its [own] proposal but our direction right now is for the buy-out to happen,” Abaya said of the plan on Friday.

Under the plan, the government will stop paying the Metro Rail Transit Corp. (MRTC) equity rental, maintenance cost and guaranteed debt payments as well as insurance expense and other items in a transaction seen costing the national coffers close to $1 billion.

Malacañang approved the plan last December and told the Department of Transportation and Communications to begin the buy-out transaction.

MPIC gained control over the MRTC when it acquired bond holdings of the Fil-Estate Group and offered to spend $300 million to expand and modernize the line and $350 million more to acquire equity and some debt notes issued by the MRTC.

SMC, on the other hand, offered to purchase new light rail vehicles for MRT-3 in exchange for revenues.

The buy-out plan will be executed under the leadership of Finance Secretary Cesar V. Purisima and will enable President Aquino to issue an executive order formalizing the agreement.

With the buy-out, the government would no longer be burdened by billions of pesos worth of fees paid the MRTC each year.

The buy-out would compel state-owned Land Bank and Development Bank of the Philippines to finally unload their MRT-3 shareholdings and heed a mandate from the Bangko Sentral ng Pilipinas to unburden themselves of their participation in the light-rail. –Jun Vallecera / Reporter, Businessmirror