Philippines, Japan on track for new MRT deal

January 10, 2018 - 4:37 PM
MRT decouples 2
Commuters are forced to walk on rails after an MRT coach decoupled from the first two cars on Thursday, November 16, after leaving the Ayala Station on its way to Buendia Station. Photo courtesy of Ivan Villegas.

MANILA – The Philippine and Japanese governments are on track to ink a deal for a new maintenance contract for the Metro Rail Transit-3 (MRT-3).

In a statement, the Department of Transportation (DoTr) said the Philippine and Japanese governments have exchanged notes verbale regarding official development assistance (ODA). The arrangement with Japan involves obtaining ODA financing under the Japan International Cooperation Agency’s (JICA) Special Terms for Economic Partnership (STEP).

The DoTr said that with projects under Japanese ODA, terms include 0.10% interest per year, with a 40-year payment period, and 12 years grace period for the principal.

JICA will then conduct from this month until next month a feasibility study, which will refine the project’s scope of works, followed by relevant government approval. Signing of the loan agreement and procurement of the rehabilitation and maintenance provider will follow in March to April, and by the second quarter, the Japanese provider will start its mobilization.

The Japanese government will nominate a rehabilitation provider. The DoTr said that Japan “has given assurances that it will nominate a provider that is highly qualified, and has a robust and reliable track record.”

The DoTr said in November that it was in high-level discussions with the Japanese government “to pave the way for DoTr’s direct engagement” of previous MRT maintenance provider Sumitomo Corp. and its technical partner Mitsubishi Heavy Industries, under a Government to Government (G2G) Official Development Assistance (ODA) platform.

The agency said that the joint venture of Sumitomo and Mitsubishi Heavy is being considered due to their previous experience of designing and maintaining the MRT.

DoTr in November terminated its contract with Busan Universal Rail, Inc. (BURI), citing BURI’s alleged failure to ensure efficient and available trains and failure to procure the proper spare parts.

The government is also currently evaluating the unsolicited proposal of Metro Pacific Investments Corp. (MPIC) for the rehabilitation and takeover of the MRT system. MPIC is one of three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the investment management and holding company of Indonesia’s Salim family.

MPIC’s other units are Philex Mining Corp. and PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.