MRT-3 concession period seen at shorter 10-15 years

The next operator of the Metro Rail Transit Line 3 (MRT-3) could end up with a shorter term of at least 10 years, as its role will be limited to managing the railway as the government pays for the cost of its rehabilitation.

This means the next concessionaire of MRT-3 would control the rail line until up to 2040, assuming government finishes the bidding in 2025.

Transportation Undersecretary Timothy John Batan said the government is eyeing to shorten the concession as it will only cover the operations and maintenance of the railway.

The government is shouldering the rehabilitation of the MRT-3 through loans extended by Japan. The Department of Transportation (DOTr) expects to spend P29.6 billion to improve the MRT-3, backed by a supplemental loan of about $130 million signed in 2023.

However, things may change down the line depending on the results of the feasibility study that the Asian Development Bank (ADB) is conducting. Batan said the ADB, as transaction advisor, would come up with recommendations on how to privatize MRT-3.

Batan said the DOTr listens to its transaction advisors for public-private partnerships (PPP), acknowledging the expertise of multilaterals like the ADB in finding the best possible deals.

“For MRT-3, since it is mostly O&M [operations and maintenance], we are considering 10 to 15 years, subject to the ongoing project preparation study by the ADB,” Batan told The STAR.

The DOTr is expected to bid this year the contract to manage MRT-3, as the concession with Sobrepreña-led Metro Rail Transit will expire in 2025.

Tycoons Manuel V. Pangilinan and Ramon Ang are studying the possibility of jointly competing for the project. Both earlier had their unsolicited proposals junked by the DOTr as the agency prefers to solicit additional pitches for the privatization.

Metro Pacific Investments Corp., which Pangilinan chairs, is willing to go as far as raise its stake in the operator of Light Rail Transit Line 1 (LRT-1) to strengthen its bid to take over MRT-3. The group is planning to buy the 35 percent share of the Ayalas in the LRT1 operator.

PPP Center deputy executive director Jeffrey Manalo expects the bidding for the operations and maintenance of the MRT-3 to be quicker than usual, as it has to comply with the requirement of the PPP Code to finish approval in 120 days.

Prior to this, the government evaluates PPPs at an average of 150 days.

Manalo also said Transportation Secretary Jaime Bautista, as the department head, can begin the bidding anytime if the project will cost less than P15 billion.

If it breaches P15 billion though, the project has to get approval from the National Economic and Development Authority Board with endorsement from the Investment Coordination Committee. Either way, Manalo believes the privatization of the MRT-3 will be done fast given its urgency.