DOTC: OSG opinion on gov’t MRT3 takeover should be out soon

Mick Basa

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DOTC: OSG opinion on gov’t MRT3 takeover should be out soon
The Solicitor General's opinion is needed for government to enter a compromise agreement with MRTC and facilitate the needed upgrade of the troubled rail system

MANILA, Philippines – The Department of Transportation and Communications (DOTC) hopes to receive within September the opinion of the Office of the Solicitor General (OSG) on whether the government should proceed with its plan to takeover the Metro Rail Transit line 3 (MRT3).

The government plans to buy out the stakes owned by the private company Metro Rail Transit Corporation to facilitate the much-needed upgrade of the beleaguered railway system.

DOTC Secretary Joseph Emilio Abaya said the OSG’s opinion is important before the government enters a compromise agreement with the MRT3 owner MRTC.

“Hopefully, within the month, we get the OSG opinion on board. We’ll get a compromise agreement from MRTC. From there, we forward that to the arbitration court,” Abaya told reporters on Tuesday, September 23, following the Senate hearing on DOTC’s proposed budget for 2015.

However, several parties have opposed the buyout. They include MRTC owner Metro Rail Transit Holdings (MRTH), which says the government has to be in default first before it could invoke an equity value buyout (EVBO). 

MRTH spokesperson David Narvasa had said that the more than P50-billion ($1.22 billion) bid to buy the MRT3 falls short of the total equity value of the railway system. (READ: MRT3 shareholder: Gov’t budget for buyout not enough)

Metro Pacific Investments Corporation (MPIC), another shareholder of the MRTC, also opposes the nationalization of the MRT3 and revived its $300-million offer to expand the railway’s operations.

But Abaya said there is no stopping government from pursuing the EVBO, and that the DOTC had included its plan for this in the proposed 2015 budget.

Abaya added that if the DOTC had been talking to the right party about matter – the MRTC, through its chairman Tommy de Leon, who is also the national director of the Land Bank of the Philippines.

“By the year ends, or by very early next year, if everything runs smoothly, it could be executed,” Abaya said. “If we play it right, and if they see things that this is all for public interest and public good, then hopefully everything will fall into place.”

In March 2013, President Aquino signed Executive Order No. 126 stating that DOTC and the Department of Finance (DOF) should purchase MRT3 pursuant to a build-lease-transfer (BLT) agreement.

The Department of Budget and Management even allocated P56 billion ($1.3 billion) in the 2014 national budget for the complete government takeover of the railway system.

The government spends about P7 billion ($160 million) on subsidies for the MRT3 operations.

For next year, DOTC is requesting government a hefty P52.9 billion ($1.19 billion), making it one of the top 10 agencies with the biggest requested budget for 2015.

Under its proposed 2015 budget, DOTC allocated P1.92 billion ($43.9 million) for MRT operation and maintenance and P4.66 billion ($106.5 million) as “subsidy” for the train system.

*US$1 = P44.51

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