Ayala, MVPoffer to fix MRT3

P12-B unsolicited proposal to be followed by modernization program

Conglomerate Ayala Corp. and businessman Manuel V. Pangilinan’s Metro Pacific Investments Corp. plan to expand their partnership in the light railway business to push for a P12-billion unsolicited proposal to rehabilitate the Metro Railway Transit (MRT3) that traverses Edsa.

“Our participation is under discussion,” AC Infrastructure Holdings Corp. president and chief executive Jose Rene Almendras said in a press briefing on Friday that discussed Ayala Corp.’s first semester earnings.

“We are really happy with what has happened to LRT1 so we feel we can make a difference in MRT3,” Almendras said.

The exact amount of economic interest that AC will take is still under discussion given that there are other partners in the LRT1 project, but Almendras said MPIC was taking a lead in this exercise.

“There are other holders of LRMC (Light Rail Manila Corp.) which may exercise their right of first refusal,” Almendras said.

In 2014, LRMC signed a con- cession agreement with the government for the P65-billion LRT1 extension to Cavite as well as the operation and maintenance agreement. LRMC is a joint venture company among Metro Pacific Investments Corp.’s Metro Pacific Light Rail Corp. (MPLRC), AC Infrastructure and the Philippine Investment Alliance for Infrastructure’s Macquarie Infrastructure Holdings (Philippines) PTE Ltd. (MIHPL).

Almendras said MPIC’s P12billion project estimate referred only to the rehabilitation of existing railways, signaling sys- tem and rolling stock. If and when the consortium bags the project, he said additional investments would be needed to purchase new trains and implement a modernization program.

MRT3, which has a daily ridership of 400,000, has been prone to breakdowns and other glitches. Compared to LRT1, which uses 35-year-old trains, however, MRT3 is a much newer elevated railway infrastructure.

“The operating environment in MRT3 may even be better than LRT because of the [latter’s] old lines, so we’re hoping to have quick wins there. But we’re not going to make promises until we see the full details,” Almendras said.

Apart from proposing a quasi-concession for MRT3, the AC-MPIC consortium is also interested to take over the economic interest held by government financial institutions.

In the last six years, MPIC has been working on several agreements with some of the shareholders of Metro Rail Transit Corp. (MRTC), operator of the MRT 3, to assign their shares to MPIC.

It was earlier estimated that 49 percent of MRTC had ceded their interest, including a 29 percent block owned by the Fil-Estate group.

The state-owned Development Bank of the Philippines and Land Bank of the Philippines, the two government financial institutions that accu- mulated debt and equity paper equivalent to an economic interest of 80 percent of the MRT 3 business in 2009, control most of the MRTC board seats. DBP and Landbank previously acquired direct equity in MRTC equivalent to 22.3 percent of common shares and likewise bought outstanding preferred shares that gave them the right to sit on the board and get the dividends from the MRT 3 operations. These government banks are thus now getting 80 percent of the economic interest in the form of equity rental payments.

The common shares taken over by MPIC, on the other hand, included stocks earlier pledged as collateral to creditors.