THE Light Rail Manila Corp. (LRMC) on Thursday signed a 32-year concession agreement for the operation and maintenance of the P65 billion LRT-1 Cavite Extension Project with the Department of Transportation and Communications (DOTC) and the Light Rail Transit Authority (LRTA).
“The signing ceremony today marks the end of the bid process and it also signals the start of the long and difficult work ahead. We’re absolutely confident that we’re able to deliver the safe, efficient and comfortable riding experience that our customers deserve,” Fernando Zobel de Ayala, president and chief operating officer of Ayala Corp. said in his speech at the signing of the concession agreement.
LRMC is a joint venture company of Matro Pacific Investments Corp.’s Metro Pacific Light Rail Corp. (MPLRC), Ayala Corp.’s AC Infrastructure Holdings Corp. (AC Infra), and the Philippine Investment Alliance for Infrastructure’s Macquarie Infrastructure Holdings (Philippines) PTE Ltd. (MIHPL).
“I cannot imagine a better group to partner with for a project at this scale and complexity. We likewise love to have in the team the Macquarie group as the investment partner in this endeavor. They have an excellent world class technical team onboard,” Ayala said.
LRMC was formally awarded the project by the DOTC and LRTA after the consortium submitted the lone bid with a premium of P9.35 billion.
“An efficient transport system is a catalyst for growth and an extended LRT-1 running all the way to Bacoor will generate growth along the corridor. The LRT-1 has been in operation for over 20 years and today’s event brings forth the beginning of a new age for Metro Manila commuters,” MPIC and PLDT Group Chairman Manuel Pangilinan said in a speech at the signing rites.
“MPIC with our partners Ayala Corp. and Macquarie Infrastructure with Bouygues Travaux and Alstom behind LRMC, together with the proven expertise of RATP Dev, a global metro operator, look forward to providing an improved and extended LRT-1,” he added
“We stay firm on our commitments to deliver a safe, reliable, and world-class rail system comparable to commuter railway hubs in our region and bring value for what commuters pay for. These will encourage more people to opt for the LRT-1 as their preferred mode of commuting and thus relieve the increasingly heavy traffic routes, rising fuel prices and concern for air pollution,” Pangilinan said.
Under the concession agreement, LRMC will operate and maintain the existing LRT Line 1 and construct an 11.7-km extension from the present end-point at Baclaran to Bacoor, Cavite.
A total of eight new stations will be built along this route, which traverses the cities of Parañaque and Las Piñas up to Bacoor, Cavite.
The extended rail line, where LRMC will invest P35 billion, is envisioned to help ease the worsening traffic conditions in the Parañaque-Las Piñas-Cavite corridor.
It is also expected to enhance commercial development around the rail stations.
“We have 12 months to take over the operations and 48 months to deliver the expanded system,” Jose Ma. Lim, president and chief executive officer of MPIC told reporters at the signing of the concession agreement.
The company plans to borrow money to finance 70 percent of the project, according to Lim
Pangilinan explained that of the total project cost of P65 billion, some P35 billion will be shouldered by the private consortium and the remaining P30 billion would be the portion for the government.
“We’re talking with local banks, because this is a peso-revenue business,” Pangilinan said.
LRMC has forged partnerships with three leading French companies to deliver a world-class rail transit system. Both Bouygues Travaux Publics and Alstom Transport are well known for their impressive track records in constructing mass rail transit systems in France and other parts of the world. The RATP Group, operator of the Paris Metro, has been tapped as LRMC’s technical partner.
DOTC Secretary Joseph Emilio Abaya said the signing on Thursday of the concession agreement for the LRT Line 1 Cavite Extension is proof of government’s firm determination to bring the very much needed transport services for people despite the many obstacles along the way.
“It’s no secret that there was a failed bid last year and we have to revisit the terms of this contract to arrive at the point that is genuinely fair to both the government and the private sector. It’s also no secret that there are legal challenges that we have to smoothen out before finally awarding this project to LRMC,” Abaya said.
He added: “But I think that having made it to this point shows that DOTC is strongly committed for the infrastructure development of this country.”
Following the signing of the concession agreement, the Grantors and LRMC are expected to complete certain requirements and obligations before LRMC officially takes over the existing operations, which should take not later than one year from the signing of the concession agreement.
The International Finance Corp., the Development Bank of the Philippines, Pinsent Masons LLP, and C&G Law (Gatmaytan, Yap, Patacsil, Gutierrez and Protacio) acted as transaction advisers to the Grantors in the bidding of this project.