$1.2B MRT-7 project opened to rival bids

A transport department committee has formally recommended that the $1.23-billion Metro Rail Transit 7 project be opened to Swiss challenge, or competing proposals, from groups other than its proponent, the Universal LRT consortium. Transport secretary Leandro Mendoza on Saturday received and approved the recommendation to allow competitive proposals to be made for possibly the single largest infrastructure project of President Gloria Arroyo. MRT7 is a 23-kilometer rail line that will run along Commonwealth Avenue, Regalado Avenue, and Qurino Avenue extension up to San Jose del Monte, Bulacan. It will have 14 stations and connect to the EDSA MRT. Mendoza signed February 24 the resolution submitted by the seven-person bids and awards committee chaired by Elmer Soneja. The recommendation paves the way for the transport department to issue invitations for competitive proposals on the mass rail transit project. The bid invitations would be published for three consecutive weeks and bid documents would be made available for 10 days. Interested parties would have 60 days to submit proposals and the DOTC would have 30 days to evaluate them. Universal LRT Corp., which made the original unsolicited proposal to construct the 23-kilometer rail line on a build-operate-transfer basis, will have 30 days to match the offer of interested parties. If there are no challengers, government will finalize a contract with Universal LRT, a consortium led by EL International Holdings, a member of the EL Group of Companies of Hong Kong. Universal LRT chief executive officer and managing director Eli Levin has said he doubts their proposal will be matched, given the magnitude of the investment and stringent requirements of government. “There will be a $309 million equity investment and $926-million debt financing," he said. Debt will include $126 million in untied loans to finance the civil works and $800 million to be sourced from export credit agencies. A number of foreign banks have already expressed interest to facilitate the loan. The equity funding of $309-million would be spread evenly among contractors, multilateral institutions such as the Asian Development Bank and World Bank, and the real estate developer. “If we can have the final contract signed by June this year then we could start construction at the end of 2008 and finished it by mid-2012," said Levin. The MRT-7 project has a real estate component to allow government to recover subsidies to be provided on the project. The consortium plans to construct 2,500 residential units and 300 office units every year on 174 hectares in Bulacan. Universal LRT will also build a 22-kilometer access road and 20-hectare bus and train depot. Fares for the rail line, designed to decongest the East Avenue and Commonwealth corridor, will be pegged at an average of P27 and will go up every year. Under the proposed contract, government will support the MRT7 project by advancing $108 million to Universal LRT for 10 years. Funding will come from taxes to be paid by the township project. Revenue from the property over the 25-year concession is estimated to reach $4.4 billion. -GMANews.TV