DOTC sets bid for P35B LRT 1 extension

By Rainier Allan Ronda, The Philippine Star

Posted at Feb 17 2012 07:22 AM | Updated as of Feb 17 2012 06:35 PM

MANILA, Philippines - The Department of Transportation and Communications (DOTC) will bid out by April the 12-kilometer extension of the Light Rail Transit (LRT) Line 1 to Bacoor, Cavite worth P30-P35 billion.

In a press briefing at the DOTC head offices at the Columbia Tower in Mandaluyong City the other day, Transportation and Communications Secretary Manuel “Mar” Roxas said the contract will include the operation and maintenance (O&M) of the entire length of the line from the existing line up to the extended line to Cavite.

Roxas  said that invitations to the bidding would be sent out by the middle of April.

“The scope of the contract that will be bid out is the maintenance and operation of the existing Green Line (LRT Line 1), with roughly 440,000 passengers per day, and they will also design and construct the 12-kilometer extension to Cavite,” Roxas said.

“After they finish the extension, they will operate the entire extended rail line,” Roxas said.

The extended line is projected to add 40,000 passengers to the daily ridership of the Green Line.

Corporate giants San Miguel Corp. (SMC), led by its aggressive president and chief operating officer, Ramon Ang, and Metro Pacific Investments Corp. (MPIC), led by tycoon Manuel V. Pangilinan, have expressed interest in bidding for the project.

SMC has already gotten control of the consortium that bagged the $1.2-billion LRT 7 project which will lay out a light rail system starting from North Ave. in Quezon City, running north through Commonwealth Ave. in Quezon City, up to San Jose del Monte, in Bulacan province.

Both SMC and MPIC had also expressed interest in taking management control over the EDSA-bound Metro Rail Transit (MRT).

Meanwhile, Kasangga Rep. Teodorico “Ted” Haresco commended Roxas’ move to bid out the LRT-1 extension stipulating a government sharing system as a major concern criteria.

Haresco said this was a more equitable alternative to past build-operate-transfer (BOT) programs. In the past, BOT contractors have been crying their way to the bank, earning returns on investments ranging from 18-32 percent per annum, according to an Asian Development Bank (ADB) study.

He added that this meant that within two to three years, contracted BOT operators could earn their investment back.

"This is most disadvantageous to government and its people," said Haresco. "Imagine after earning their money back, they still have a guaranteed return for the balance of 25 years, which is renewable. Under the PPP center, they could even charge the cost of their feasibility studies."

The Roxas scheme, Haresco said, would effectively make Juan de la Cruz, as the taxpayer, a major shareholder in any future BOT project. This is good in the very, very low interest rate regime of concessional loans and the Western Tsunami of some $3 trillion in investments which have nowhere to go but Asia-Pacific.

According to Haresco, state owned enterprises (SOEs) have been the hybrid of successful countries in BRICs (Brazil, Russia, India, and China). "We have Singapore, China, Malaysia, Russia, and India Sovereign Wealth business models to use as benchmarks."

He said economic policy direction should look at SOEs as a phase leading up to liberal capitalism. "We saw what happened to our previous BOT projects, where government shouldered the burden as private sector partners just sold these assets back to government after earning so much."

With this scheme, Haresco pointed out that even if the state uses capital inefficiently and grows more slowly, at least it retains enough clout over to mitigate private sector greed.

"It's better to have Bureaugarchs than oligarchs," said Haresco. "Again our country and PNoy's administration benefits with Mar Roxas at the DOTC helm."