Tuesday, 9 February 2010

NDC takes ownership of ailing MRT-3

Joyce Pangco Pañares
Manila Standard

PRESIDENT Gloria Arroyo has ordered state-run National Development Co. to acquire the shares of two state banks in Metro Rail Transit Corp. worth $750 million to speed up the government’s takeover of the 17-kilometer MRT-3 line.

She said NDC will buy the shares owned by Land Bank of the Philippines and Development Bank of the Philippines, and by using the proceeds from a bond float or money raised from loans that come with a sovereign guarantee.

Finance Undersecretary Rosalia de Leon said NDC would need about $300 million for the first stage of the acquisition, which was expected be completed in the first quarter.

The MRT-3 line runs to Taft Avenue in Pasay City from North Avenue in Quezon City and operates under a deal that expires in 2025.

But the build, lease and transfer agreement had been mired in conflict, including questions over the expansion of the train system and the government’s 48-peso subsidy to every passenger using the line. That conflict prompted the state’s takeover of the train system.

DBP and Land Bank own 80 percent of MRT Corp., the company operating the train system, while the remaining 20 percent is held by other banks that had bought MRT bonds for a stake in the company.

DBP president Reynaldo David said his bank and Land bank held equal stakes in Metro Rail Transit Corp., which was formerly owned by the Sobrepeña-led consortium that built the line.

“NDC on its own, or in partnership with other entities, is hereby directed to acquire economic interest in MRT Corp. in the form of shares,” Mrs. Arroyo said in Executive Order 855.

“NDC is also authorized to issue bonds or request loan facilities in order to acquire and purchase the shares, provided that the cost to NDC of such borrowings will not dilute the savings of the national government envisioned from such acquisition.”

The President authorized the Finance Department to issue a sovereign guarantee for NDC’s borrowings, and at the same time ordered NDC to do due diligence on how much the purchase price of the shares should be. The Commission on Audit should verify the price, she said.

“The purchase price shall be mutually agreed upon among the NDC, Land Bank and DBP, with the end view of obtaining savings for the government,” Mrs. Arroyo said.

She ordered the Finance and Budget Departments to ensure that NDC’s borrowings are repaid, and to facilitate the acquisition of the shares by gaining Monetary Board approval.

She ordered officials to “review and amend” the build, lease and-transfer agreement on the MRT- line so NDC could operate the railway and to privatize it if necessary.

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