The government is planning to bid out the operations and maintenance (O&M) contracts of the Metro Rail Transit (MRT) Line 3 and the Light Rail Transit (LRT) Line 2 as a “bundle.”
This, according to Department of Transportation (DOTr) Undersecretary for Railways Cesar Chavez, saying such an arrangement will make the deal more palatable to potential investors.
“Our direction is to bundle the two contracts. We are talking about the 2025 and beyond timeline—that is why we have to decide now up to 2025 or 2024 if we will bundle the two deals,” he said in a chance interview.
Bundling up the two O&M contracts would require the MRT-3 Management, the current operator of the train line, to be transferred to the Light Rail Transit Authority (LRTA), the operator of the LRT 2.
“That is our direction now. So when we offer it to the private sector, it will be under the Public-Private Partnership [PPP] program,” Chavez said.
The Build-Lease-Transfer (BLT) agreement for the MRT 3, executed in the early 2000s with MRT Holdings Inc. of the Sobrepeña Group, is set to lapse in 2025.
The government is spending anywhere between P600 million and P900 million per month in equity rental payments to operate the MRT 3.
Talks of a buyout started during the administration of the late President Benigno Aquino III, but it never came to fruition. Now, the government only wants to allow the concession agreement to lapse naturally.
It is known as the most problematic of the three overhead train lines in the Philippines.
The LRT 2, meanwhile, is being operated by the LRTA. Its east extension up to Masinag from Santolan, Pasig was recently completed.
“We have ongoing discussions and once we have a decision, we will go to Neda [National Economic and Development Authority],” Chavez said.
He noted that auctioning off the two deals as a bundle will allow the government to “share the risk with the private concessionaire” given that one contract is “a good cake” and the other “not so good cake.”
Chavez said the government should decide by July next year.
