MPIC plans to buy out MRT-3 stakeholders

Infrastructure conglomerate Metro Pacific Investments Corp. (MPIC) is planning to buy out the stake of the government and other shareholders in the Metro Rail Transit Line 3 (MRT-3).

MPIC chairman Manuel V. Pangilinan told reporters yesterday the company is open to buy out the stake of the government and other shareholders of the MRT-3 system, which runs from North Avenue in Quezon City to Taft station in Pasay City.

“We said in principle we’re prepared to do that,” he said.

Pangilinan also said there have been recent discussions between the MPIC and the Department of Transportation as the firm submitted a new proposal to rehabilitate and improve the MRT-3.

Under the new proposal, the firm would invest about P12 billion to rehabilitate the train system and there would be no increase in fares for at least two years.

MPIC is working with Ayala Corp. and Macquarie Infrastructure Holdings (Philippines) Pte Ltd., its partners for the Light Rail Transit Line 1 Cavite Extension, for the new proposal to rehabilitate the MRT-3.

MPIC first submitted a $500 million proposal to rehabilitate the MRT-3 in 2011.

The proposal was thumbed down, however, as the offer involved hiking fares for the MRT-3.

Earlier, MPIC also expressed interest to buy out the government’s stake in the train system.

In 2011, MPIC said it was open to partner with local or foreign groups to acquire the shares held by government financial institutions Land Bank of the Philippines (Landbank) and Development Bank of the Philippines (DBP) in the MRT-3.

Landbank and DBP hold a combined 80-percent economic interest in Metro Rail Transit Corp. (MRTC), the private owner of the train system.

MPIC has also signed a cooperation agreement earlier, with various groups holding rights and interests in the MRT-3 to acquire a 48 percent stake in MRTC. The firm has yet to exercise that option.

Under the previous administration, the government was looking to implement the equity value buyout (EVBO) of MRTC to solve issues over the train system’s ownership and to put an end to its need to pay for equity rental payments for the MRT-3.

The buyout was never implemented amid an arbitration case filed by MRTC before a court in Singapore and as the previous administration was not able to forge an agreement with Landbank and DBP.

Pangilinan said it is important to give attention to the MRT-3 as the train system has been through a series of breakdowns in the past years.

“We all know the MRT-3 has had quite a number of issues for the past many years so, we want to resolve those issues for the benefit of commuters. I am sure the government shares that objective as well,” he said.

Manny Pangilinan's group mulls buying out MRT3 owners

Manuel "Manny" Pangilinan, the chairman of listed infrastructure conglomerate Metro Pacific Investments Corporation (MPIC), plans to buy out Manila's most congested railway system, the Metro Rail Transit Line 3 (MRT3) from its owners – a move seen as needed for the railway's upgrade and proper maintenance.

"We said in principle we're prepared to do that (buyout)... The tentative cost of rehabilitating the system is about P12.5 billion, but there'll be further cashout to take out certain shareholders of MRT, including the government," Pangilinan told reporters on the sidelines of an event in Quezon City on Tuesday, August 22.

MRT Corporation (MRTC) is the private group that was a signatory to the build-lease-transfer (BLT) agreement for the MRT3 in 1997. (READ: When the MRT was awesome)

Companies behind the MRT3 include Astoria Investments of the Ayala group, Anglo Philippine Holdings of the National Bookstore group, Railco Investments of the Ramcar Group, Sobrepeña-led Metro Global Holdings Corporation, Sheridan LRT Holdings of the Unilab group.

The government holds a 77% economic interest in MRTC through Land Bank of the Philippines (Landbank) and Development Bank of the Philippines (DBP) by virtue of its acquisition of asset-backed bonds issued by MRTC's original owners in 2009. This secured the government 11 out of 14 seats on the board but did not give it equity ownership.

Meanwhile, MPIC has an option to acquire a 48% stake in MRTC after signing cooperation agreements with the various groups that hold rights and interests in the company. MPIC, however, has yet to exercise this option.

Pangilinan said his group has yet to submit a formal buyout proposal to the government. "We don't know what the quantum of that cashout is. There will be maintenance capex, O&M (operations and maintenance) expenses and, of course, concession fees payable to the government. These things will have to be discussed with the government in due course."

Separate rehabilitation plan

Pangilinan said his firm has already informed the Duterte administration of its P12.5-billion plan to revive its unsolicited proposal for the MRT3 upgrade.

"There's a discussion. For me, that's a good sign. By no means am I indicating there is an agreement," Pangilinan said. (READ: How did the MRT3 mess start?)

During the administration of former president Benigno Aquino III, MPIC had submitted a revised P23.3-billion proposal to rehabilitate and upgrade the MRT3.

The revised offer, which was a scaled-down version of a P25.1-billion proposal submitted in 2011, included the rehabilitation of existing train cars, 25 additional coaches, a new signaling system, and settlement of equity rental payments held by government financial institutions.

The Aquino administration, however, sat on this proposal.

Earlier this month, Ayala Infrastructure Holdings president and chief executive officer Rene Almendras said the conglomerate will participate in MPIC's unsolicited proposal to rehabilitate the MRT3.

The terms of the joint venture partnership, however, have yet to be finalized.

The two conglomerates are also partners in the operations and maintenance of the Light Rail Transit Line 1 (LRT1) and the LRT1 Cavite Extension project under joint venture company Light Rail Manila Corporation.

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, or way beyond its rated capacity of 350,000.

https://www.rappler.com/business/179719-proposed-mrt3-buyout-metro-pacific-pangilinan

Feasibility study for Subic-Clark Cargo Railway now up for NEDA board approval

The feasibility study for the P57.2-billion Subic-Clark Cargo Railway project is now up for National Economic and Development Authority (NEDA) for approval, which, if obtained, could already pave the way for state-run Bases Conversion and Development Authority (BCDA) to start the project before the year ends.

Subic-Clark Cargo Railway Project is a 77-kilometer rail connection linking Subic Port with Clark International Airport mainly to reduce the number of trucks travelling in Metro Manila and lower the prices of goods.

The project also aims to increase Subic Port Utilization and compliment airport operation in Clark.

“NEDA is now on the process of reviewing the feasibility study. This would most likely be an ODA (Official Development Assistance) project,” BCDA President and Chief Executive Officer Vivencio Dizon said during the 6th Business Forum of The Manila Times.

Both Chinese and Japanese governments have already looked at the project for potential funding.

BCDA is targeting to start the project this year so it could complete it by 2022. Start date of projects will include pre-work and pre-planning stages such as conceptualization or feasibility studies.

Aside from this new terminal, BCDA is also implementing other infrastructure projects within the Clark area with the Department of Transportation (DOTr). These are the P105-billion Manila-Clark Railway (Phase 1), the multibillion-dollar New Clark City, and the P15.34-billion Clark International Airport New Terminal Building.

Right now, BCDA is on the process of getting Engineering, Procurement, Construction (EPC) contractor for the project, which happens to be the first to fall under the hybrid public-private partnership (PPP) scheme of the government.

Dizon said BCDA had so far attracted 10 prospective, mostly foreign, for the construction of the new passenger terminal.

Among the companies that are vying for the contract are two of the country’s major infrastructure players, Megawide Construction Corp. and Metro Pacific Investments Corp. (MPIC), as well as POSCO, a multinational infrastructure company that built South Korea’s Incheon International Airport, which is one of the best airports in the world.

Dizon noted that the auction for EPC contract will be done separately with the bidding for the terminal’s operation and maintenance (O&M) contract.

The O&M of the existing and proposed new terminal building of Clark airport will also be bid out to the private sector through PPP. Once the new terminal is constructed, the O&M will be operated by the winning private partner.

http://business.mb.com.ph/2017/08/22/feasibility-study-for-subic-clark-cargo-railway-now-up-for-neda-board-approval/

PH set to begin $13-B worth of Japan-funded rail projects

Four high-profile infrastructure projects in the Philippines worth around P676 billion ($13.3 billion) and to be funded by loans from Japan are scheduled to start construction next year, including a subway system in Manila, Philippine officials said Tuesday.

Transportation undersecretary Cesar Chavez told a forum that the loan agreement for the P230-billion first phase of the subway project will be signed when Japanese Prime Minister Shinzo Abe visits Manila in November for regional summits led by the Association of Southeast Asian Nations.

Chavez said construction of the 23-kilometer, 14-station subway is expected to be completed by 2024, but authorities are looking to see if five stations can be opened at an earlier date.

Also among the projects in which construction is set to begin in 2018 are three railway extension projects connecting Metro Manila to provinces north and south of the capital.

These include a P105-billion, 38-km track connecting Manila with Bulacan province, to its north, and P211-billion, 69-km track extending from there to adjoining Pampanga province.

On Manila's south side, a P130-billion, 72-km railway will connect it with the province of Laguna.

Finance Secretary Carlos Dominguez said that while negotiations with the Japanese side have yet to conclude, interest rates for the loans will likely stay significantly below 1 percent per annum.

Dominguez also said that there will be a likely grace period of seven to 10 years, depending on the project, while the payment period will range from 30 to 40 years.

The Philippine government is planning to spend $160 billion for infrastructure development during the six year-term of President Rodrigo Duterte, touting it as a golden age of infrastructure for the Southeast Asian country.

About 20 percent, or $32 billion, of that would be sourced from foreign lenders while the remainder would be sourced domestically.