LRT-1 Cavite extension may be delayed anew

MANILA, Philippines — The start of construction of the project extending Light Rail Transit Line 1 (LRT-1) to Cavite may be delayed anew, according to its operator, who reckons that forgone revenues reached P400 million this year due to the stalled approval of its fare hike plea to the government.

Light Rail Manila Corp. (LRMC) president and chief executive officer Juan Alfonso said preparations to commence construction of the LRT-1 Cavite extension project are ongoing, but there are chances that it may be moved to the second quarter of next year from the previous target of first quarter. 

“I think by January it will be more clear when it will really start.  A lot of the right of way issues have been resolved, but for example, there are utilities that still need to be relocated, so once those are fairly complete then we can start construction. The right of way is already there, but sometimes it is not free and clear so there are still obstacles that are being fixed right now,” Alfonso said.

“We have two targets. The first is the first quarter, and then if it cannot be done, then by the second quarter, depending on how fast the development is, most of which is right of way clearing. But definitely we’re targeting to start within the first half of 2019,” he added.

Once built, the extension will stretch LRT-1 over 33 kilometers, from Roosevelt in Quezon City to Niog, Bacoor in Cavite City.  Travel time from Bacoor to Central Station in Manila will be down to 45 minutes, and to Roosevelt Station in one hour and 10 minutes, even during rush hours.

Alfonso said target completion of the project is by the last quarter of 2021 or early 2022.

“Assuming the pathways are clear, we still have the chance to meet that target,” he said. 

Right of way issues have hounded the project in the past, as it was supposed to have been completed by this time based on the original concession agreement in 2014.

Alfonso said LRMC has already secured a loan facility from various banks for the project’s funding and assured it would proceed even though the government has not acted on its pending fare hike appeal. “We’re hopeful we get the fare increase that we applied for last year, but no matter what the pace of that is, we already have commitments from our lenders. Hopefully we get the rate increase soon but even though it will not be granted, it’s a go. It’s going to happen,” he said.

According to Alfonso, estimated foregone revenues by LRMC due to the absence of the fare hike has reached P400 million for this year.

“That’s what we’re talking with them (government) right now, how to compensate for that. Our agreement calls for compensation if the fares are at certain level and is not raised, its in our agreement that there’s a fare deficit. We haven’t been compensated for fare deficits,” Alfonso said.

“It’s about P100 million a quarter. That was for 2018. There’s a P100 million difference in the revenue that we should have been getting with the increased fares versus what we got. The fares since 2015 should have been increased already,” he added.

Composed of Metro Pacific Investments Corp.’s Metro Pacific Light Rail Corp.,
Ayala Corp.’s AC Infrastructure Holdings Corp., and Macquarie Infrastructure Holdings (Philippines) PTE Ltd., the LRMC consortium was awarded the public-private partnership project to operate, maintain, and extend the LRT-1 in 2014.

Under the 32-year concession agreement, it is allowed to raise fares every two years. LRMC has asked the Department of Transportation for a P5 to P7 increase in LRT-1 fare.