DOTC chief: Gov't winner in MRT-LRT privatization

ABS-CBN News

Posted at May 11 2011 02:34 PM | Updated as of May 12 2011 08:02 AM

MANILA, Philippines - Transportation and Communications Secretary Jose "Ping" de Jesus on Wednesday assured that the government will not be at the losing end of a deal privatizing the right to run the Metro Rail Transit (MRT) and Light Rail Transit (LRT) in the "interim."

In an interview with radio dzMM, de Jesus said that while government will cough up P15 billion to pay for the services of the private sector, the amount is what it will actually spend if it were the one operating the mass rail systems.

He reiterated that the government will only bid out the 4- to 5-year operation of MRT-LRT, and will still own the assets. "The revenues will still accrue to the government. We will continue to own the assets."

The service contract is in preparation for the formal auction of the rail lines, he added. “This is just an interim [arrangement]. We will [still] bid out the entire integrated concession of MRT and LRT. The winning bidder will do the expansions.”

The contract, in the meantime, will not preclude the government from adding coaches or expanding the systems, de Jesus said. “That’s part of our capital expenditure until its full privatization.”

This is what the Public-Private Partnership (PPP) program is all about, he added. “This is a joint partnership."

Contract a payout: Recto

Senator Ralph Recto earlier lambasted the government over its plan, saying the P15 billion price tag on the MRT-LRT contract is actually a “payout” to the winning bidder and not the other way around.

Recto said this was apart from the perks, such as tax holidays, the bidder will get.

The MRT-LRT contract is the first PPP project the government will bid out this year.

The contract has already attracted 13 bidders, de Jesus said. The auction is on July 11.

New fares

The privatization of MRT-LRT will be better for consumers because it will lead to more efficient operations, de Jesus had said.

It is also is part of government efforts to free up state funds, in favor of vital social services.

The government currently shells out P7 billion to P8 billion in subsidies to keep fares affordable for more commuters. It wants to cut this substantially by hiking fares, although the measure has been shelved indefinitely amid rising commodity prices and transportation costs.

The Light Rail Transit Authority (LRTA) also assured that the winning MRT-LRT bidder would not earn from any increase in fares.

LRTA spokesperson Hernando Cabrera said the P15 billion is all the private company would get over the period of the contract, since revenues from operations will still go to government coffers.