Saturday, 27 February 2010

MRT-7 line wins design changes, $200m extra

Joyce Pangco Pañares
Manila Standard

The Transportation and Communications Department has recommended the approval of the design changes and increase in project cost of the $1.2-billion MRT-7, a 20-kilometer train system running from North Avenue in Quezon City to San Jose del Monte in Bulacan.

Transportation chief Leandro Mendoza said the National Economic and Development Authority had yet to approve the changes, which would likely increase the project cost of the train system by more than $200 million.

“We have recommended its approval, although we are still waiting for the Neda Board decision,” Mendoza said.

President Arroyo said the Neda board should make a decision as soon as possible as the project would serve an estimated 2 million commuters.

“Neda should look into that and address the issue immediately. We had to elevate it to the Neda board because if the increase is more than 10 percent, we have to return the project to them,” Mrs. Arroyo said.

The President on Thursday inaugurated an elevated railway loop that connects the Light Rail Transit Line 1 from Monumento to Balintawak to the MRT Line 3 from Pasay to North Avenue in Quezon City.

“Our concern really is if the passengers will be willing to pay a higher fare to cover the additional costs [of MRT-7]. Because we cannot subsidize this, unlike our other rail systems, because this is an unsolicited project and it was the private sector which proposed this,” she said.

The proponent, Universal LRT Corp., earlier said about $320 million of the project’s total cost would come in the form of equity, while $900 million would come from borrowings from multilateral institutions such as the International Finance Corp., the Asian Development Bank and the Macquarie Bank of Australia.

Construction of MRT-7 was supposed to start last month after ULC bagged the contract.

MRT-7 will have 14 stations traversing North Avenue, Elliptical Road, Commonwealth Avenue, Quirino Avenue, and San Jose del Monte.

Under the original contract, the government would pay the proponent about $108 million a year in capacity fees for the next 20 years.

Investors will also get 70 percent of the net passenger revenue minus operation and maintenance expenses, and 80 percent sharing in advertising and commercial development income.

The government will receive a 30-percent revenue share on net passenger fares, 20 percent on advertising and commercial development fees, and 20 percent on income derived from real-estate development.

Also on Thursday, MRT general manager Reynaldo Berroya said the government would privatize the MRT Line 3 before the end of June, after the Bangko Sentral ordered government banks to divest themselves of their stake in the venture.

Land Bank of the Philippines and Development Bank of the Philippines both acquired 22 percent in preferred shares and 78 percent in securitized shares of the Metro Rail Transit Corp. last year for more than $900 million.

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