MRT-7 project seen to take off this year

MANILA, Philippines - The Department of Transportation and Communications (DOTC) expects the construction of the P63-billion Metro Rail Transit line 7 (MRT-7) to start before the end of the year as diversified conglomerate San Miguel Corp. (SMC) finally obtained a performance undertaking from the Department of Finance (DOF) after several years of delay.

Transportation Secretary Joseph Emilio Abaya said the government is hopeful that the construction of the mass transit system would commence within the year and that SMC could do the financial closing soon.

“We asked them (SMC) to do it (financial closure) sooner than 18 months. They are saying they could do advance works once they get the green light. We hope before next year they can start construction,” Abaya said.

He added that Finance Secretary Cesar Purisima has already signed the performance undertaking for the project

“A performance undertaking has been signed by Secretary Purisima. We have signed our implementing guidelines it is just a matter of calling them and giving it to them,” he said.

The project to be funded by official development assistance (ODA) fund from Japan Bank for International Cooperation (JBIC) needs a performance undertaking from the finance department representing a financial guarantee for the project.

The proposed train project would start at Tala, Caloocan City and pass through Lagro and Fairview, Novaliches, Batasan, Diliman, Philcoa before ending at EDSA corner North Avenue and is expected to serve two million commuters.

The construction of the proposed 22.8-kilometer train line with 14 train stations from San Jose del Monte in Bulacan to the corner of North Avenue and EDSA in Quezon City has been delayed for almost four years because of the failure of the proponent to secure a performance undertaking from the DOF.

In 2008, the Department of Transportation and Communications (DOTC) signed a contract with Universal LRT Corp. Ltd (ULC BVI) to build the railway system and develop the project’s real estate and commercial component.

The project worth $2.2 billion was supposed to start construction in 2010 and commercial operations by 2012. ULC BVI had said $320 million of the project’s total cost would be financed by equity while the remaining $900 million to $1 billion by borrowings.

However, SMC’s wholly-owned subsidiary San Miguel Holdings Corp. (SMHC) executed a share sale and purchase deal in October of 2010 to acquire 51 percent of ULC BVI from the group of Salvador Zamora II that holds the concession for MRT-7.

DMCI Holdings Inc. through construction arm DM Consunji Inc. entered into a joint venture with Marubeni Corp. of Japan in May 2012 for the engineering, procurement, construction contract for the Metro Rail Transit System and Intermodal Transportation Terminal of the MRT-7.