THE Department of Transportation and Communications (DOTC) warned Metro Pacific Investment Corp. (MPIC) about its renewed offer to increase its ownership and expand the operations of the Metro Rail Transit Line 3.
It added that if MPIC pursues this plan, it could be a ground for their disqualification from the P1.72 billion Automatic Fare Collection System (AFCS) project. This was a concession agreement they signed with the government providing for a single ticketing scheme for the country’s rail lines including MRT 3, MRT 2, and the Light Rail Transit Line 1.
“We have already rejected that, they should be careful,” DOTC Secretary Joseph Emilio Abaya said of MPIC’s expansion plan. He added that Undersecretary Perpetou Lotilla had already issued a warning to the firm of its possible disqualification from the AFCS project.
Earlier reports said that MPIC has revived its $300-million offer to expand the capacity of MRT 3 by acquiring additional coaches. It also has a separate $350 million offer to acquire equity and bonds issued by Metro Rail Transit Corp. (MRTC), the private contractor that built MRT 3.
MPIC, which is led by businessman Manny Pangilinan, has a controlling stake of 48 percent in MRTC after signing cooperation agreements with the various groups that hold rights and interests in MRT 3.
This runs right in the face of government’s plan to gain control of the operations of MRT 3 from MRTC. In March last year, President Aquino ordered the takeover in order to save on huge government subsidies to the ailing railway line.
“If they become an owner of a rail facility that will be a ground for their disqualification from AFCS… am sure their lawyers know that,” Abaya told reporters.
MRTC has a pending arbitration case in Singapore against the Philippine government over its late payment of equity rentals. It filed another case over the DOTC’s decision to award to a Chinese firm the contract to supply 48 new light rail vehicles for MRT 3.
According to Abaya, the MRT 3 buyout requires the blessing of the arbitration court.
The DOTC earlier said that the takeover of MRT 3 by the government is possible this year, with the Department of Budget and Management including the buyout price of P56 billion in the 2014 budget.
The takeover would involve an equity value buyout of all outstanding shares of stock and other securities issued by the MRTC and other entities owning the MRT 3 pursuant to a build-lease-transfer (BLT) agreement.
Abaya said the DOTC and the Department of Finance should speed up the buyout of MRTC to free government from having to deal with companies such as MRTC.