Lone bidder MPIC offers P9.35B premium to build Cavite LRT

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THE lone bidder for the P65-billion Light Rail Transit Line 1 (LRT-1) Cavite Extension project of the Department of Transportation and Communications (DOTC) has offered to pay the government a concession premium of P9.35 billion for the right to build, operate, and manage the new rail line.

The Light Rail Manila Consortium led by Metro Pacific Investments Corp. (MPIC) on May 28 submitted the lone bid for the LRT-1 extension project.

The consortium is made up of Metro Pacific’s Light Rail Corp. with a 55 percent share; Ayala Corp.’s AC Infrastructure Holdings, with 35 percent; and Macquarie Infrastructure Holdings Pte. Ltd., with 10 percent.

Already approved by the National Economic and Development Authority (NEDA), the LRT-1 Cavite extension project is the biggest infrastructure project under the government’s public-private partnership (PPP) program.


“This is a premium,” MPIC president and chief executive officer Jose Ma. Lim said, referring to the P9.35 billion that the consortium is offering to pay the government for the right to undertake the project.

“The terms of the bidding have been very much improved, including the terms of the concession fee, the treatment of tax liabilities, the provisions of a mechanism to compensate for the delay in tariffing or the rate increase, as well as the conditions of the existing line. All in all, it’s a more viable project,” Lim said.

“I think before we are supposed to start the concession we have to wait for the approval of NEDA, and when we have a concession agreement signed we actually take over one year from the date of signing,” Lim added.

The DOTC welcomed MPIC’s premium payment offer.

“The government is willing to give a subsidy through a viability gap funding. But it’s a good thing that the proponent saw it in a different light. They see more potential than the government sees. At least now we’re receiving P9.4 billion,” DOTC Secretary Joseph Emilio Abaya told reporters on the sidelines of the opening of the financial documents submitted by MPIC.

“What I’m curious to learn here is — I’m not sure if they will really share it with us — but how come they see P9.3 billion in concession fees here as compared to the others that saw it is not viable? I would be very interested if they are willing to share it with us so that down the road, when we package our railway systems, we could analyze it in the same light. I doubt if they’d share that. It’s probably their trade secret and they don’t want to share it with the other bidders,” Abaya added.

Two other groups that had earlier expressed interest in the project — SMC Infra Resources Inc. and DMCI Holdings Inc. — backed out of the bidding last week.

Ramon Ang, president and chief operating officer of San Miguel Corp. (SMC), said that in their assessment, the project was not viable and the return on investment would take as long as 25 years to materialize.

The project was originally priced at P60 billion but the NEDA Board later approved an increase in the project cost to P64.9 billion due to the addition of several components to the project’s terms. The life of the concession is 32 years.

“We have to go back to the NEDA Board and the NEDA Investment Coordinating Council for the confirmation of the sole bid. That’s in accordance with the Build-Operate-Transfer Law and its IRR (implementing rules and regulations). Once the NEDA Board approves it, the DOTC can award the project this month,” PPP Center executive director Cosette Canilao told reporters.

“That shows how responsive the government has been in terms of structuring this project, and even though the government only got one bid, it’s a quality bid,” she added.

The South Extension Project will extend the existing LRT Line 1, which covers 21 stations from Roosevelt Avenue in Quezon City to Baclaran in Pasay City. The Cavite project extends the service line by 11.7 kilometers, covering 10 more stations that will pass through the cities of Parañaque and Las Piñas up to Bacoor, Cavite.

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