MANILA (Mabuhay) – The government will have to compensate the consortium of Ayala Land Inc. and Metro Pacific Investments Corp. for unfulfilled obligations under a concession agreement for the Light Rail Transit Line 1.
In an August 7 letter, Transportation Secretary Joseph Emilio Abaya told Budget Secretary Florencio Abad that the Department of Transportation and Communications will likely fail to meet certain obligations under the concession agreement.
Bagong Alyansang Makabayan (Bayan), a multi-sectoral alliance, provided copies of the unsigned letter to members of the media on Friday.
Abaya asked the Department of Budget and Management (DBM) to charge nearly P7.52 billion to the P30 billion Risk Management Program Fund under the 2015 national budget to cover the unfulfilled commitments.
The penalty payment includes P5.41 billion for the government’s failure to comply with obligations relating to the operation and maintenance of the existing LRT-1 system and P106.67 million for failure to increase the minimum fare.
“DOTC anticipates that it may not be able to comply with these obligations and may be liable to make payments to LRMC in 2016,” Abaya said.
The government, through the DOTC and Light Rail Transit Authority, signed a concession agreement with the Ayala-Metro Pacific consortium, Light Rail Manila Consortium (LRMC), on October 2, 2014 for the LRT- 1 Cavite Extension project.
The 32-year contract also covered the management and operation of the existing LRT-1 and the construction of a common terminal for Metro Manila’s light rail network in North EDSA.
“The penalty payments are the result of an onerous contract entered into by the Aquino government and the winning bidders. This is a form of sovereign guarantee that will be borne by the taxpayers,” Bayan Secretary General Renato Reyes Jr. said.
The amount compares with the P9.35 billion concession fee that LMRC will pay the government. The Ayala-Metro Pacific group agreed to settle 10 percent or P935 million of the total upon signing the contract and start making staggered payments in the fifth year.
“Ginigisa tayo sa sariling mantika. The private concessionaire stands to get more from this than the government. It’s already as if government is the one financing the private investors,” Reyes said.
Metro Pacific owns 55 percent of LMRC through Metro Pacific Light Rail Corp., while Ayala holds a 35 percent stake through AC Infrastructure Holdings Corp. The remaining 10 percent is owned by Macquarie Infrastructure Holdings Inc.