Megawide’s proposed East-West Railway to cost $1 billion

MANILA, Philippines – Megawide Construction Corporation, a front-runner in public-private partnership (PPP) projects, disclosed the cost of its proposed 9.4-kilometer elevated railway line from Diliman, Quezon City to Lerma, Manila: around $1 billion (P51.17 billion).

“We will bring in the technology for constructing an elevated metro rail transit system. We are looking into this project. It is now under the technical working group,” Oliver Tan, chief finance officer of Megawide, said in a media briefing in Pasig City on Monday, September 18.

Megawide announced in July that it has acquired the right to participate in the East-West Railway Project of the Philippine National Railways (PNR) from the project consortium composed of East-West Rail Transit Corporation and Alloy MTD Philippines Incorporated.

East-West Railway’s members are A Brown Company Incorporated, Netcore Development Limited, and Venere Holdings Limited.

“We will exercise [our option to buy up to 60% of the equity] upon incorporation of [a] special purpose vehicle,” Tan told reporters.

Under the unsolicited railway proposal, Tan said the private sector will build the stations and rail track, supply rolling stock, operate, as well as conduct maintenance for a certain period. After the agreed period, the government will then take over.

The proposed deal will have 11 stations and interconnecting facilities with neighboring rail systems.

According to the PPP Center, the project aims to ease traffic congestion.

The project is “still under evaluation” by concerned agencies and has not yet been approved by the National Economic and Development Authority (NEDA) Board.

Not interested in MRT3

While it is planning to diversify into building other public infrastructure besides airports, Megawide said it is not interested in participating in existing railway projects, like the upgrade, operations, and maintenance of the Metro Rail Transit Line 3 (MRT3).

“There is no value because it is not greenfield,” Tan said. “As builder, we can construct in a more efficient way if it is a greenfield project.”

A “greenfield project” is one where there is no need to consider prior work.

Tan explained that there is “vagueness” in the existing concession agreement for the MRT3, where the private sector does operations, while the government is in charge of the maintenance.

“Obviously, if you have two separate groups doing maintenance and operations, that would create a problem,” he said.

For Edgar Saavedra, president and chief operating officer of Megawide, the MRT3 deal “is too complex.” (READ: DBP open to unload MRT3 interests)

Tan also cited the Light Rail Transit Line 1 (LRT1) Cavite Extension deal as an example of a complex agreement, where the private concessionaire suffered from the government’s failure in turning over the promised number of operational light rail vehicles.

“If you have those kinds of arrangements, the private sector suffers in any delay in procurement, thus it will affect their overall return on investment,” Tan added.

Aside from the East-West Railway project, Megawide is also pursuing a P209-billion proposal for the 50-year development of the Mactan-Cebu International Airport, including plans for a 2nd independent, parallel runway.

“Under the build-operate-transfer law, the government has 120 days [to decide]. So by early October, we will know if we will get the original proponent status,” Louie Ferrer, chief marketing officer and corporate information officer of Megawide, said during the briefing.

The company is also looking forward to participating in the engineering, procurement, and construction bid for the Clark International Airport in Pampanga later this year, as well as the operations and maintenance tender in the 1st quarter of 2018. – Rappler.com

P51.1285 = $1