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Philippine gov’t buyout of overhead railway seen in Q3
Publication Date : 04-08-2014
The Philippine government is seeking the approval of an international court to execute a compromise with the operator of the Metro Rail Transit Line 3 to finally pave the way for a 56-billion-peso (US$1.28 billion) takeover of the overhead railway within the third quarter, a senior government official said.
Philippine Transportation Secretary Joseph Abaya said a so-called equity value buyout of the MRT-3’s operator, Metro Rail Transit Corp., was progressing despite thorny legal issues, including the latter’s suit filed in an arbitration court in Singapore. The buyout was ordered by President Aquino last year to end the huge rental fees guaranteed to its private operator.
Abaya said the gov't still needed further legal opinion from the Office of the Solicitor General and a board resolution from the state-run Development Bank of the Philippines, which controls most of the railway’s economic interest along with Land Bank of the Philippines. MRTC is owned by a private consortium led by the Sobrepeña family’s Fil-Estate group.
“After that, we can sign a compromise agreement with MRTC,” Abaya said. “That compromise requires the arbitration panel’s blessing.” Abaya said they did not expect problems in getting the approval of the MRTC board, saying a “majority of the board is government.”
Abaya said the buyout of the MRTC could be completed within the third quarter, based on his discussions with the Bureau of the Treasury.
National Treasurer Rosalia de Leon confirmed in a text message that the government was trying to meet the third-quarter target.
“That’s on the Philippine side,” Abaya said, noting that the timing would also depend on how the case would progress abroad. “But when you have a compromise agreement between opposing parties, that should be easily approved.”
The department earlier awarded a contract to China’s CNR Dalian Locomotive and Rolling Stock Co. Ltd. to supply 48 new train cars for MRT-3. This was in response to heavy congestion at the railway line, which was operating well above its intended capacity of 350,000 people a day.
The new trains are expected to be delivered in batches starting the first half of 2015, the department announced in an earlier statement.