MANILA, Philippines - President Aquino has approved the government’s buyout of the private sector stake in Metro Rail Transit Line 3 (MRT-3), government officials yesterday said.
The buyout would require $1 billion but it was deemed
necessary to settle the ownership issue of the commuter train before the Aquino administration offers this again to private investors under its public-private partnership (PPP) program.
The national government would be studying where it would source at least $1 billion needed to buy out the private sector stake in Metro Rail Transit Corp. (MRTC), the private contractor of MRT-3, according to National Treasurer Rosalia de Leon.
De Leon assured the public that government has the funds to buy 100 percent economic interest in MRT-3.
Transportation Secretary Joseph Emilio Abaya said Aquino approved the buyout plan upon the recommendation of the Cabinet in a meeting on Tuesday.
During the meeting, Abaya said the President directed the Department of Justice (DOJ) to initiate the investigation on the anomalies involved in the acquisition of the stake in MRT-3 by the Development Bank of the Philippines (DBP) and Land Bank of the Philippines (Landbank) without voting interests during the time of former President and now Pampanga Rep. Gloria Macapagal-Arroyo.
“We see this happening, however, there are clear intentions from the President directing DOJ to start the process of investigating and eventually, if warranted, filing charges for both original sins and secondary sins,” he said.
Abaya explained that the proposed takeover would help state-owned government financial institutions (GFIs) unload their interest in MRT-3 after receiving several warnings from the Bangko Sentral ng Pilipinas (BSP) regarding its investments in the mass transport system.
“Likewise, the DBP and Landbank have been put on warning by BSP because they simply say this is not your core competencies and neither a banking function,” he added.
The plan to buy out the private sector’s stake in the MRT-3 would mean the government would no longer need to pay MRTC huge fees every year.
The Department of Transportation and Communications (DOTC) annually pays the MRTC for equity rental payments, maintenance cost, debt guaranteed payment, insurance expenses, and others.
Abaya said the proposed government takeover would result in billions of pesos in savings for taxpayers, who provide subsidies mainly to cover the 15 percent return on investment guaranteed to MRTC.
The government shells out about P7-billion worth of subsidy for the MRT 3 operation.
MVP: No problem
MPIC chairman Manuel V. Pangilinan said in a separate interview that the company would respect government’s decision should it decide to de-privatize MRT-3.
He pointed out that the government would also have to deal with other shareholders of MRTC.
In 2003, the MRT line’s private concessionaire MRTC, then owned by the Sobrepeña family, decided to cash in on its investment in the train line by issuing asset-backed bonds for future equity rental payments.
In 2008, the government, through Landbank and DBP, bought into MRTC by acquiring the MRT bonds issued by MRT III Funding Corp. issued by the Sobrepeñas’ Fil-Estate Group.