PHILIPPINES: Having bought out the promoters of Manila’s EDSA project, the government must decide what to do with the capital’s busiest light rail route, amid suggestions that it could be returned to the private sector.
Built by Metro Rail Transit Corp, the 168 km MRT3 line along Epifano dos Santos Avenue has been a victim of its own success. Since opening in 2000, ridership has soared past the nominal capacity of 22500 passengers/h per direction, and has topped 500000 riders per day on occasions. The government had been pressing MRTC to buy extra vehicles, but it could not do so without an amendment to the concession agreement.
Under the 25-year BOT package, the government guaranteed MRTC a 15% return on the investment of US$679m. With the government paying close to US$5m a month in interest and maintenance charges, it opened negotiations last year to buy out the concession, a move which reportedly offering a saving of US$380m or more.
Earlier this year the state-owned Development Bank and Land Bank of the Philippines jointly acquired a 75% stake in MRTC from its principal backers, including Fil Estates and Ayala Land, for around US$850m.
The government’s intention was to re-let the MRT3 concession on better terms before the national elections in May 2010. However, the financial regulator Banco Sentral ng Philippinas ruled that the two banks must dispose of their stakes by October. So in August the Ministry of Finance floated a proposal for the National Development Corp to raise funds through a bond issue to buy out DBP and Landbank.
MRT3 still needs extra rolling stock, and the Department of Transport & Communications is reportedly looking for overseas development aid to fund 73 more LRVs, doubling the current fleet at a cost of around US$22m. But as the new vehicles could not be ready before 2012, DOTC has asked the Light Rail Transit Authority to look at transferring some of its 25-year old Belgian LRVs from Line 1 as a stopgap.
