State study on LRT 1-MRT 3 bundling coming soon
The viability of bundling Light Rail Transit (LRT) Line 1 and Metro Rail Transit (MRT) Line 3 in one contract package for bidding—as the government looks for private sector operator—will be determined by second quarter of next year after the completion of a feasibility study, according to the Public-Private Partnership (PPP) Center of the Philippines.
John Dominic Zafe, project director at the PPP Center, told reporters last week that the Department of Transportation (DOTr) has tapped the expertise of the agency and International Finance Corp. (IFC) for the bundled rail project, a first for the country.
Zafe said they have already engaged with the IFC this month. The feasibility study is expected to be concluded in four to six months.
He said the project review would focus on several key aspects, including financial viability of the railways. This is because taking on two railways would mean higher cost of operations and maintenance for the chosen operator, Zafe explained.
The study will also look into the current condition of train assets to determine if more investment in equipment is needed for satisfactory operations.
The DOTr floated the idea of bundling LRT-2 and MRT-3 operations and maintenance contracts into one as the latter’s private concession ends in two years.
MRT-3 is being operated by businessman Robert Sobrepeña-led Metro Rail Transit Corp., which is set to transfer the asset to the government by 2025 with the conclusion of the build-lease-transfer deal. LRT-2, meanwhile, is under the ownership of the state-controlled Light Rail Transit Authority.
Former DOTr official Cesar Chavez said earlier that combining two railways in one deal could make the contract more attractive for private operators.
Options open
Timothy John Batan, DOTr Undersecretary for Planning and Project Development, told reporters recently that the department was keeping its options open for both unsolicited and solicited bidding processes for the railway projects, just like what it had done for the Ninoy Aquino International Airport rehabilitation project, before deciding on the final scheme.
In solicited bids, the government invites companies to look into a project through parameters it will provide, including the cost and ways by which an infrastructure will have to be operated. Unsolicited proposals, meanwhile, are initiated by private sector proponents.
In relation to this, tycoon Manuel Pangilinan-led Metro Pacific Investments Corp. (MPIC) and Japanese conglomerate Sumitomo Corp. submitted in August an unsolicited bid to take over MRT-3. MPIC owns Light Rail Manila Corp., the private operator of LRT-1.
Batan said that San Miguel Corp. had also forwarded its unsolicited proposal during the previous administration. The Ramon Ang-led conglomerate was granted the original proponent status (OPS) but has yet to undergo a Swiss challenge, the DOTr official noted. A Swiss challenge is being conducted to invite other proposals that can rival the OPS offer.
The DOTr has been ramping up its railway program, lining up several key projects to improve connectivity both in Metro Manila and in the provinces. INQ
