PAMPANGA, Philippines – State-run Development Bank of the Philippines (DBP) is open to sell its entire economic interest in Metro Rail Transit Line 3 (MRT3), a move that can pave the way to a new private owner and operator.
DBP president and chief executive officer Cecilia Borromeo said on Monday, September 11, unloading the bank’s MRT3 interests is in its books, unless the Department of Finance (DOF) said otherwise.
“The DOF is taking the lead now, being an institution under the supervision of DOF, we defer to DOF. But yes, it is in our books and we will be very interested to unload it. But we are taking the cue from the DOF,” Borromeo told reporters on the sidelines of a transportation event in Clark, Pampanga.
DBP and Land Bank of the Philippines own 77% economic interest in Metro Rail Transit (MRT) Corporation – the owner of MRT3 – by virtue of its acquisition of asset-backed bonds in 2009. This interest secured the state-run banks 11 of the 14 board seat but does not give them equity ownership. (READ: Pangilinan-Ayala group eyes MRT3 takeover by early 2018)
“There are various ways of unloading it, of course there is an option for we will have a haircut or loss and we will want to avoid that. But there are other options that will make us haul [earnings]. That is what we are trying to pursue together with the DOF,” Borromeo.
In 2013, former President Benigno Aquino III issued an executive order, authorizing MRT3’s acquisition from its private sector owner MRT Corporation. This was to head off the arbitration case filed in 2009 by the MRT3 owner against the government due to, among others, failure to pay equity rental payments on time.
The order, however, was not realized.
New MRT3 owner soon?
Now, the administration of President Rodrigo Duterte may either buy out MRT3 assets from its private owners then bid out the operations and maintenance of the railway system or accept the group of Jaime Augusto Zobel de Ayala and Manuel “Manny” Pangilinan to take over MRT3.
If everything goes as planned, the consortium headed by Pangilinan and Ayala expects to take over the operations, maintenance, and rehabilitation of MRT3 by early 2018.
It was last July 14 when Metro Pacific Investments Corporation (MPIC), together with Ayala Corporation and Macquarie Infrastructure Holdings Philippines Private Limited, formally submitted an unsolicited proposal for Manila’s most congested railway system.
LRMC was the special purpose vehicle that MPIC, Ayala, and Macquarie used for the Light Rail Transit Line 1 (LRT1) Cavite Extension Project. The group had said it will most likely use a new corporate vehicle for the MRT3.
LRMC is 55% owned by MPIC, 35% by Ayala’s AC Infrastructure Holdings Corporation, and 10% by Macquarie. (READ: Groups of Ramon Ang, MVP set sights on MRT3 upgrade)
The MRT3 is currently being maintained by Korean-Filipino firm Busan Universal Rail Incorporated (BURI), while the system’s rail replacement is being handled by the government.
The MRT3, which runs along EDSA from North Avenue in Quezon City to Taft Avenue in Pasay City, serves more than 500,000 passengers per day, way beyond its rated capacity of 350,000. – Rappler.com