The Government Wanted So Much For The MRT3 Buyout? #PublishingArticles

MRTC is owned by MRT Holdings II Inc., which, in turn, is owned by MRT Holdings Inc. The government, meanwhile, holds an 80-percent economic interest in MRTC, by virtue of the bonds that the state bought from the private concessionaire. So, the DOTC Secretary’s playing the game of chance when he totally spread the word of MRT3 buyout. Is he actually sincere of this buyout, or his intention - to buy the remaining bonds from the 2015 budget?

The implementation of the equity value buyout (EVBO) of Metro Rail Transit Corp. (MRTC) could start in the first week of January, with the House of Representatives set to approve the P53.9-billion budget for the government’s takeover. There is no economic value in buying out the MRT3 for P53.9 billion because the government is buying non-voting preferred shares. They cannot complete the buyout for this money alone but the Senate decided to earmark P9 billion of the P53.9 billion to the repair of the MRT3. Some P6 billion was allocated for the payment of taxes for loans contracted by the MRT3, and the balance went to other social services.

But to effectiveness of the buyout, the government and MRT Corp. (MRTC), the private concessionaire of the train system, must enter into a compromise agreement first. But, through the compromise agreement with the MRTC, the DOTC should initiate such meeting to put forward of this plans. Entering into a compromise contract would effectively end the ongoing arbitration case in Singapore. The case was lodged against the government in 2008 due to its failure, as the operator of the line, to pay billions of rentals payment to the owner of the rail system.

Budget Secretary Florencio Abad would be required to submit details and line items for these lump sums. We have inserted a special provision mandating that before funds could be released to the projects in lump sum and unprogrammed funds, the Department of Budget and Management must submit a special budget containing the details of the projects. The line item special budget should be submitted to Congress, the Palace and the Commission on Audit.

The taxpayer’s money could be used for this buyout but it won’t give positive results at the end. The government is only wasting their time, effort and money to pursue this MRT3 buyout.

In the past, mostly, the MRT3 transactions were quite unplanned and nothing seemed trustworthy. The Department of Transportation Commission (DOTC) Secretary Joseph Abaya couldn’t decipher the solutions that made this MRT3-story quite longer than expected. They have to talk Bob Sobrepena for the buyout which in turn could hasten the MRT3 development.

Why the government wanted so much for the buyout? The buyout would not make the lives of MRT commuters any easier. It would not even translate to improved MRT3 services or repair of its rails. The government would simply lose money in the amount of P53.9 billion for shares that do not carry voting powers.