Gov’t finally awards P65B LRT1 contract

October 15, 2014 at 11:52

MANILA, Philippines–The consortium led by conglomerates Metro Pacific Investments Corp. and Ayala Corp. signed Thursday a concession agreement for a P65-billion public-private partnership (PPP) deal, paving the way for the extension of the Light Rail Transit Line 1 in Metro Manila to Bacoor, Cavite.

The project, the eighth and largest PPP project awarded under the Aquino administration, aims to open up access to the southern parts of Metro Manila and to Cavite province when it is finished by 2019.

The deal also provides new revenue streams for the MPIC-Ayala consortium, which was awarded the deal through their joint venture Light Rail Manila Consortium last month.

Light Rail Manila is expected to take over the existing LRT1 railway for 32 years within 12 months from signing, MPIC president Jose. Ma. K. Lim said on Thursday. This may also trigger a long-delayed fare increase ahead of the turnover, according to the Department of Transportation and Communications, which is implementing the project.

Light Rail Manila was the sole bidder for the LRT-1 PPP, which had to be rebid a second time after last year’s failed auction. During the latest bidding exercise in May, other groups such as San Miguel Corp. and DMCI Holdings Inc. backed out, citing the project’s poor financial prospects.

Nevertheless, Light Rail Manila offered a P9.35-billion premium, which comes on top of the construction cost, to win the contract. MPIC and Ayala also bagged the automated fare collection system PPP, which would implement an electronic ticketing system for all elevated railways in Metro Manila.

With the signing also comes the hope for a world-class mass transit railway amid the poor state of some of Metro Manila’s elevated train lines, particularly the congested Metro Rail Transit Line 3. This was an outcome that consortium officials hinted at on Thursday.

Fernando Zobel de Ayala, Ayala Corp. president, said in a prepared speech that the takeover would “redefine the rail experience” for Filipino commuters. About half a million people use the LRT1 today, but upon completion of the Cavite extension, that figure could rise to about 800,000 people.

MPIC chair Manuel V. Pangilinan told reporters that they aimed to deliver better services to commuters, noting that “Hong Kong is a good model for light rail,” referring to the city’s Mass Transit Railway, one of the few commercially successful railways in the world.

“An efficient transport system is a catalyst for growth and an extended LRT1 running all the way to Bacoor will generate growth along the corridor. The LRT1 has been in operation for over 20 years and today’s event brings forth the beginning of a new age for Metro Manila commuters,” Pangilinan said in a separate statement.

“As we assume the responsibility for the operations of the train line next year, we hope to be able to deliver in due time a much improved riding experience that is safe and efficient for our daily rail commuters,” Zobel said in the same statement.

The awarding on Thursday faced several challenges, including a legal delay as the DOTC weighed the impact of a Supreme Court ruling barring the department from transferring the location of the LRT1 and MRT3 “common station” from an area near SM City North Edsa in Quezon City to the Ayala Group’s adjacent Trinoma shopping mall.