San Miguel pushes for speedy resolution of common station deadlock

MANILA, Philippines – San Miguel Corporation (SMC), which bagged the Metro Rail Transit line 7 (MRT7) project, is pushing for the immediate resolution of the impasse on the proposed Light Rail Transit (LRT) and MRT common station.

In April, Transportation and Communications Secretary Joseph Emilio Abaya gave assurances that that an agreement between SMC and the Light Rail Manila Consortium (LRMC) for the proposed second common station in front of SM North EDSA will soon be signed.

But as part of the concession agreement for the P65-billion ($1.46-billion) LRT1 Cavite extension project to be undertaken by LRMC, the Department of Transportation and Communications (DOTC) transferred the proposed P1.4 billion ($31.39 million) common station to the TriNoma Mall instead of the originally proposed location of SM North EDSA.

SM balked at this, insisting that the common station should be constructed in front of SM North EDSA, not TriNoma. SM said the DOTC should respect the contract stating that the common train station should be in front of its mall along North EDSA. (READ: SM Prime: Put LRT-MRT station in front of SM North)

The dispute between SM and DOTC is affecting the financial closure for the MRT7 project, according to San Miguel Holdings Corp. (SMHC) Chief Financial Officer Raoul Eduardo Romulo. The project, which costs P63 billion ($1.41 billion) MRT7, involves a proposed 22.8-kilometer rail system from North Avenue corner EDSA in Quezon City; passing through Commonwealth Avenue, Regalado Avenue, and Quirino Highway; up to the proposed Intermodal Transportation Terminal in San Jose del Monte, Bulacan. (Editor’s note: SMHC’s Chief Financial Officer is Raoul Eduardo Romulo, not “Romero” as earlier wrote. This has been corrected.)

 “Hopefully we can gear up and get the MRT7 project rolling as well, depending on the resolution of the problem with the common station. That is one of the major problems. If the common station will remain a common station or not, we don’t know,” Romulo said.

Predicament

SMC has been given until February 2016 to complete the financial closure for the massive infrastructure project, Romulo said.

“We’re still putting the financial group together,” he added.

Lenders would not extend loans for projects that are surrounded by controversies, Romulo said.

“It doesn’t make sense for us to do that right now because there are questions the lenders will ask that we cannot answer. Like where will it end, if the ridership is divided. Will MRT7, MRT3, and LRT-1 be separated,” he said.

Romulo said SMC is not a party to the legal challenge posed by SM versus DOTC over the controversial common station.

“Our concession agreement mandates and requires us to be there (in SM). If we move out of that, that is a violation of our concession agreement,” Romulo said.

On top of the common station impasse, SMC would also have to adjust the project cost since it was pegged in 2008 prices.

Despite the predicament, Romulo said the company is doing its best to meet the February financial closure deadline for the project.

“As it is now, we’re looking to try to comply as best as we can. Given the handicaps we’ve also been saddled with, it has not been an easy transaction,” Romulo said. – Rappler.com

$1 = P44.60