The multimillion-dollar proposal of infrastructure conglomerate Metro Pacific Investments Corp. (MPIC) to upgrade the facilities of the Metro Rail Transit (MRT) Line 3 was not, in reality, acted upon.
The holding company of most of the businesses of tycoon Manuel V. Pangilinan made a statement at the local bourse late Monday, claiming to have not received any written letter from Transportation Undersecretary Jose Perpetuo M. Lotilla with regard to the firm’s $650-million proposal to improve the services of the MRT.
It was never clear to the company whether its proposal was approved or rejected, the filing said.
The infrastructure giant also slammed the government for its supposedly erroneous statement, stressing that the proposal provides that the market risks shall all be absorbed by the firm, not the state.
“The proposal does not contemplate any guaranteed return. It simply contemplates
the adoption of a parametric formula that will be followed by the government for purposes of regulating the tariff while MPIC assumes market risk for ridership,” the firm said.
Earlier, Lotilla, who heads the legal division of the transportation agency, said he has forwarded a letter to the company, informing the group that its proposal was rejected due to its economic implications.
He explained that the infrastructure company is asking the government to pay a guaranteed fare. This simply means that the government will absorb all the risk should there be a shortfall in revenues.
Likewise, the firm is asking for a 15-year extension of the build-lease-transfer contract held by MRT Corp. (MRTC), the concessionaire of the line that connects the northern and southern corridors of Metro Manila, he said.
In any case, the Pangilinan-led corporation said it “is willing to submit the proposal to a price challenge to ensure that the government gets the best terms possible for the benefit of the riding public.”
The local flagship of the Hong Kong-based First Pacific Co. Ltd. earlier entered into a partnership agreement with the owner of MRT Line 3 that would allow the firm to invest $650 million to improve the services of the train system.
The venture would effectively expand the capacity of the railway system by adding more coaches to each train, allowing it to carry more cars at faster intervals. The multimillion-dollar expansion plan would double the capacity of the line to 700,000 passengers a day from the current 350,000 passengers daily.
Aside from the $300-million proposal, the firm also offered the government $350 million for the acquisition of equity and some of the bonds issued by the MRTC. The $650-million offer was presented twice to the Department of Transportation and Communications since the plan was birthed in 2011.
MPIC has a 48-percent option in MRTC, which is owned by MRT Holdings Inc. of the Sobrepeña family.
Transportation officials has repeatedly said the government will continue to pursue the P53.9-billion buyout of the train system’s private concessionaire to put an end to the ongoing arbitration case in Singapore between the government and the concessionaire.
This will also terminate the concession agreement and end the government’s obligation to pay billions of pesos in equity rental payments to MRTC.
Once the buyout is completed by 2016, the transport agency may then bid out an operations and maintenance contract for the line, thereby tapping private-sector efficiency and customer-service orientation for operational needs, while retaining regulatory functions for passenger protection with the government. This venture, however, is being opposed by MRTH, warning the government that it may face legal liabilities should it insist on taking over the train system without negotiating the terms with the “owners” of the facility.
Since 2004 the train system has been operating at overcapacity. Currently the line serves nearly 550,000 passengers per day. It even reached, at one point this year, the 650,000-daily passenger mark. It has a rated capacity of 350,000 daily passengers.