MANILA, Philippines - Malacañang is scheduled to release an executive order (EO) this month that will allow the government to buy out private investors in the Metro Rail Transit (MRT) Line 3.
Department of Transportation and Communications (DOTC) Secretary Joseph Emilio Abaya told reporters that President Benigno Aquino III's formal approval through the EO is needed before the government could move to acquire full control of the mass rail transit.
"I think it's not a matter of negotiating, it's a matter of government deciding as to how much they will be bought out. It's pretty much set so there's no room for backing out but the DOF (Department of Finance) has it figured out. There's an EO required to execute this so we are awaiting the EO," Abaya said.
Abaya earlier said the government wants full MRT-3 control so it would no longer have to pay its concessionaire, MRT Corp. (MRTC), huge fees every year.
In 2010, for instance, the government paid MRTC P7.87 billion, broken down as follows:
Buying out the private investors will also allow the government to push through with its plan to bid out the operation and management of MRT-3.
MRTC is now led by Metro Pacific Investments Corp. (MPIC) of the Pangilinan group, after buying the stake of the Sobrepeña family's Fil Estate group in the company years ago.
However, while MPIC own a substantial voting interest in MRTC, economic rights in the company is held mostly by the government, through state-run Development Bank of the Philippines (DBP) and Land Bank of the Philippines (LBP).
Fil Estate previously cashed in on MRT-3 by issuing bonds to creditors, mainly DBP and LBP, and committing the train line's cash flow to these creditors.
The banks hold about 80% economic interest in MRTC, but do not have voting rights.
The complicated MRT-3 ownership structure was a result of generous financial guarantees to the railway's proponents in the 1990s and succeeding efforts to resolve mounting debts the government had to shoulder following populist moves to keep fares down. - Rappler.com