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MANILA - The government and the proponent of the Metro Rail Transit Line 7 are in talks for a revision of the concession agreement covering the project, an official of the Department of Transportation and Communication said on Monday.
"They wanted to improve the provision of the contract. They are working with the proponent to improve the provision of the concession," Transport Undersecretary Rene Limcaoco said, referring to the Department of Finance and San Miguel Holdings Corporation.
The project has been delayed for almost four years because of the failure of the proponent to secure a performance undertaking from the DOF. A performance undertaking is crucial so the MRT 7 proponent can secure financial closure for the project.
In 2008, the DOTC and proponent Universal LRT Corporation signed a contract to build the railway system and develop the project’s real estate and commercial component. The project, which was estimated to cost $2.2 billion, was supposed to start construction in 2010 and commercial operations by 2012.
ULC had said $320 million of the project’s total cost will be financed by equity, and the remaining $900 million to $1 billion by borrowings.
The company was eyeing a loan from the Japan International Cooperation Agency to partly finance the project.
In October 2010, SMHC executed a share sale and purchase deal to acquire 51 percent of ULC from the group of Salvador Zamora II.
MRT-7 will run from San Jose del Monte City, Bulacan to SM City North Edsa, linking up with the Light Rail Transit Line 1 and MRT 3.
MRT-7 will begin at Tala, Caloocan City, passing through Lagro and Fairview, Novaliches, Batasan, Diliman, Philcoa, before ending at Edsa corner North Avenue.
The railway will serve an estimated two million commuters in the northern parts of Quezon and Caloocan cities.
Apart from the elevated transport system, ULC will also build at no cost a 17-kilometer, six-lane asphalt access road in Marilao, Bulacan that will lead to its depot in Tala.
Besides the railway project, ULC plans to develop 900,000 square meters of commercial space throughout the concession period.
The government's move to revisit the contract comes amid a plan by the San Miguel group to build a new international airport. According to CIMB Group of Malaysia, San Miguel, which owns Philippine Airlines, is eyeing Bulacan as possible location of the proposed airport.
CIMB earlier bought from San Miguel a substantial stake in Bank of Commerce.
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