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||21 August 2009
Philippines to sell back MRT 3 to private sector
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The Philippine government plans to sell the the Metro Rail Transit Line 3 (MRT 3) back to the private sector, the Manila Times quoted the Department of Finance as saying Thursday.
Finance Undersecretary Rosalia de Leon said MRT 3 might have to be re-privatised to beat a Bangko Sentral ng Pilipinas deadline for Land Bank of the Philippines and Development Bank of the Philippines (DBP) to shed their equity stake in Metro Rail Transit Corp. (MRTC) by October this year.
De Leon said the re-privatisation of MRT 3 might have to go through the private sector route instead of the national government paying out LandBank and DBP through the issuance of bonds, or IOUs by state-owned National Development Co. (NDC).
The two state-run lenders earlier bought out the shareholders of MRTC, leaving the two banks with a combined 75-percent stake in MRT 3.
“We’re offering it to the private sector. Many have expressed interest,” de Leon said. She, however, refused to identify the interested parties, saying, “They don’t want to be named yet.”
Despite the emergence of the re-privatisation route, the bond option remains on the table, the finance official said.
“Right now we are discussing with some possible options for modality of take out including NDC and we already started discussing with DBP and LandBank,” she said.
If the “take-out” plan through the private sector pushes ahead, the government will also have to guarantee 100-percent control of the MRT 3 before turning it over to the new private sector group.
De Leon earlier said the government is eyeing a 100-percent stake in the MRT-3 to make its re-privatisation easier and make the railway attractive to private buyers.
The finance official, however, said the government will have to buy MRT-3’s remaining 25 percent, which are in the form of securities held by private banks.
The remaining 25 percent in bonds are held by Philippine Bank of Communications, Bank of Commerce and United Coconut Planters Bank.
De Leon said the government would need to “take out” first the 75 percent stake of Land Bank and DBP in the MRT-3.
To avoid a costly and embarrassing international litigation arising from a case filed by the former MRT-3 owners, the government decided to step in and have the two state-owned lenders buy out the unhappy investors.
Land Bank and DBP halved the purchase cost of between $800 million and $900 million. The government then committed to buy out the two lenders through NDC, which is supposed to issue bonds to pay off the two banks.
MRTC previously was majority owned by MRT Holdings Inc., a consortium that originally consisted of Ayala Land Inc., Anglo Philippines Holding Corp., Fil-Estate Management Inc., Ramcar Inc. and Greenfield Development Corp.
Finance Secretary Margarito Teves earlier said the takeover of the MRT-3 would “just be temporary” because it will be auctioned off to the private sector within the year. “We will privatise this as quickly as possible,” he said.
He added that the takeover would benefit the riding public since it would improve the operations of the MRT-3 by dispatching more trains and connecting it with the LRT-1 that runs from Baclaran in Pasay to Monumento in Caloocan City.
Teves said government would spend some more to make the operations of MRT-3 more efficient and increase its current 413,000 daily ridership.
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