DOTC doubts Sobrepeña’s cheaper MRT3 offer

Mick Basa

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DOTC doubts Sobrepeña’s cheaper MRT3 offer

Mark Fredesjed R. Cristino

The Department of Transportation and Communications says MRTH II should first drop its case against the government

MANILA, Philippines – The Department of Transportation and Communications (DOTC)  is wary of the proposal of Metro Global Holdings Corporation (MGHC) chair Robert John Sobrepeña to proceed with the government takeover of the Metro Rail Transit line 3 (MRT3) at a bargain price.

“If they are really sincere, they should first drop their injunction case against DOTC’s efforts to add much-needed trains on MRT3,” DOTC spokesperson Michael Arthur Sagcal told Rappler in a text message Thursday, December 18.

Sagcal was referring to the injunction case filed by Metro Rail Transit Holdings II (MRTH II) with the Court of Appeals, after the Makati Regional Trial Court junked its appeal to stop the DOTC from acquiring 48 light rail vehicles (LRV) from a Chinese supplier.

The regional court said only the Supreme Court can stop government infrastructure projects.

Sagcal said MRTH II should “drop” the case first, “otherwise it will be tantamount to blackmail.” 

The DOTC spokesperson said dismissing the case would dispel DOTC’s distrust over MRTH II, as the procurement of LRVs are meant to increase the railway’s capacity to 900,000 per day.

In a statement, the DOTC said the prototype unit of the LRVs is expected to be delivered and tested in September 2015, followed by an additional 3 to 4 LRVs every month until the order of 48 units are all delivered in 2016.

“The project will increase the number of train sets from 3-car configurations to 4-car configurations, and lessen intervals between trains from 3 minutes down to 2.5 minutes,” the DOTC said.

On Wednesday, Sobrepeña told the Senate subcommittee on transportation that if the government wants to proceed with the equity value buyout (EVBO), they are willing to close the deal at a price less than half of the Department of Finance’s computation of more than P50 billion ($1.12 billion*).

Sobrepeña sits as chair of MGHC, one of the shareholders of MRTH II, the parent company of MRT3 concessionaire Metro Rail Transit Corporation (MRTC). MGHC, formerly known as Fil-Estate Corporation, has booked net losses of P2.45 billion ($54.73 million) for the first 9 months of this year, according to its disclosure to the Philippine Stock Exchange.

Sobrepeña’s proposal comes with a compromise, which includes MRTH’s takeover of the maintenance of the 17-kilometer railway system, funded by revenues from passenger fare payments. Fares will be increased, but still lower than bus fare rates.

If the DOTC agrees, Sobrepeña has also offered to drop their arbitration case against the Philippine government which they filed in Singapore in 2009.

However, Sagcal said, “It would be irresponsible, to say the least, for any government official to allow, much less endorse, such an iniquitous situation.”

Jose Perpetuo Lotilla, DOTC Undersecretary for legal affairs, told Rappler that DOTC officials have not seen Sobrepeña’s proposal.

While the MRT3 is owned by private entities, the government has gained economic interest over the railway system after the Land Bank of the Philippines and the Development Bank of the Philippines bought bonds from the MRTC.

MRTC’s current chairman and president is Tomas de Leon Jr, who is also a Land Bank director.

But as bond holders and despite securing majority of the MRTC’s board of directors, the government has no voting rights in the concessionaire’s operations, which means  decision-making still rests with the private owners. –


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