MVP urged to reconsider potential exit from LRT-1

MANILA, Philippines — Light Rail Manila Corp. (LRMC) president and CEO Enrico Benipayo is hoping that tycoon Manuel V. Panglilinan would have a change of heart on the potential exit of the Metro Pacific Group from Light Rail Transit Line 1 (LRT-1).

“I hope I’ll be able to convince our chairman. We’re meeting him,” Benipayo said.

“As we did with our other shareholders like Ayala and Sumitomo, I think both of them have bought in the plan to turn the corner for LRMC. So it makes more sense for our shareholders. So hopefully, we’ll be able to proceed with that plan, with the buy-in of our chairman of course,” he said.

Pangilinan, chairman of Metro Pacific Investments Corp. (MPIC), said last week the company has started evaluating the possibility of divesting in LRMC, the operator of LRT-1.

He said his group is considering getting out of light rail as they continue to lose money from LRT-1.

In a virtual press briefing in Hong Kong last Thursday, Pangilinan clarified that no decision about the sale of MPIC’s stake in LRMC has been reached.

“Nothing’s final,” he said.

However, the tycoon expressed disappointment over the delays in the fare adjustments.

“The basic tenet of public-private partnership (PPP) is you’re asking for other people’s money to build that particular project. So it is not government money. And when you borrow other people’s money, that money was given to that particular proponent by its owners, and its owners expect a return from that because they borrowed the money themselves,” Pangilinan said.

“When you borrow people’s money, you have to pay for the use of that money. It’s as simple as that. If you’re not willing to, then use your own money. Then you don’t have to worry about these returns and calculations about tariffs and everything else. If you can’t put your mind around that concept, which is the very heart of PPP, then you should undertake it by yourself. Because if you use your own money, nobody will question it,” he said.

The government’s denial of fare hikes coupled with the slow recovery from pre-pandemic ridership have resulted in losses from operating and maintaining the railway.

LRMC is a joint venture company of MPIC’s Metro Pacific Light Rail Corp., Ayala Corp.’s AC Infrastructure Holdings Corp., Japan’s Sumitomo Corp. and the Philippine Investment Alliance for Infrastructure’s Macquarie Investments Holdings (Philippines) Pte. Ltd.

“As part of management, obviously we’ve had a lot of difficulties during the past 10 years,” Benipayo said.

“The most important point that I’d like to mention is despite the challenges that LRMC has been encountering for the past 10 years, primarily due to some obligations of the government that they were not able to fulfill, then definitely we’re not in a good financial position at the moment. But we’re about to turn the corner,” he said.

LRMC is allowed to ask for a fare increase once every two years to recoup investments under the concession with the DOTr.

In the past 10 years of operating and maintaining the 40-year-old railway line, LRMC’s fare adjustment in April was only be the second time the operator has been allowed to implement fare adjustments for LRT-1.

Still, LRMC has managed to complete its projects, including the extension works to Cavite.

Benipayo, however, hinted that Pangilinan’s statement last week “a bit pushed DOTr to act.”

“The following day, I received a message coming from the DOTr secretary himself. I cannot disclose at this point, but what I can say is, it’s something positive,” he said.