MRT-3 solicited bid, expiring contract draw concerns
THE government’s choice of a solicited scheme for the operations and maintenance (O&M) of the Metro Rail Transit Line 3 (MRT-3) could be challenging as the build, lease, and transfer agreement with its operator is set to expire next year, according to analysts.
“Solicited mode could bring more competition, especially with new PPP (Public-Private Partnership) Code and revised Public Service Act. The latter removes the 40% limit on foreign ownership in railways,” Rene S. Santiago, former president of the Transportation Science Society of the Philippines, said in a Viber message on Monday.
“However, it could lead to delays — especially with the Department (DoTr) of Transportation’s plan to merge the MRT-3 and LRT-2 (Light Rail Transit) privatization,” he also said, adding that the two projects should have separate biddings and concessions as the two lines have different technologies.
San Miguel Corp. was declared the original proponent for MRT-3’s O&M contract in 2022, followed by another bid submitted in September last year by Metro Pacific Investments Corp. (MPIC).
The PPP Center said it is hoping to release the study on LRT-2-MRT-3 bundling by the second quarter of the year.
The build, lease, and transfer (BLT) agreement of MRT-3 operator Metro Rail Transit Corp. (MRTC) is set to expire in 2025.
“The DoTr should clarify whether its solicited bidding proceedings will be concluded in time with the expiration of the original build-lease-transfer deal in 2025. This is a critical concern because the BLT contract obligates the government to pay at least P600 million a month in equity rental payments to its private partner,” Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said in a Viber message.
Under the BLT agreement, Sobrepeña-led MRTC is mandated to turn over the MRT-3 to the government once the contract expires in 2025, which includes the operations of rail system and assets maintenance.
Under the BLT agreement with the Sobrepeña group, the government pays P7 billion a year as equity rental payments, or about
P600 million to P900 million a month, depending on inflation.
Mr. Ridon said it would be “unacceptable” if the BLT agreement will be extended due to DoTr’s failure to meet the deadline and conclude the privatization proceedings.
MPIC is one of the three key Philippine units of Hong Kong-based First Pacific, the others being Philex Mining Corp. and PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority share in BusinessWorld through the Philippine Star Group, which it controls.