Finance chief: Govt has many options for MRT-3 buy-out

The government could easily find funding to buy out the private sector's stake in Metro Rail Transit Line 3 (MRT-3) amid a strong fiscal position, a Cabinet official told reporters Monday. “Our fiscal position is very good. We can fund it out of the GAA (General Appropriations Act), if we want to,” Finance Secretary Cesar Purisima said. “We can fund it through the GOCCs (Government Owned and Controlled Corporations) that are involved already -- Landbank [of the Philippines] and DBP (Development Bank of the Philippines). Or we we can take them out, if we need to. We have many options,” he added. Executive Order (EO) No. 126, signed by President Benigno S. Aquino III last February 28 but released last Friday, instructed the Finance Department to “raise funding through the issuance of new borrowings, domestic or foreign.” Purisima, however, clarified that the government still has to firm up details of the proposed equity buy-out involving the proponents of the MRT-3. “At this stage, we just have the authority, we haven't really mapped out exactly how we are going to execute this. But I don't see any funding constraints…When the price is right we will execute,” he said. National Treasurer Rosalia B. De Leon said the government was supposed to meet yesterday to discuss the terms including the price it intends to acquire the shares. The government already holds an 80 percent economic interest in Metro Rail Transit Corp. (MRTC), the corporate vehicle of the consortium operating the MRT-3. Purisima said the government's acquisition of MRT-3 would result in the much-needed expansion of the MRT-3. The rail transit, which spans from North Ave. in Quezon City to Taft Ave. in Pasay City, services over half a million commuters daily, over its 350,000 design capacity. “This will lead to more investments in the line. As can be seen, the line is quite full and we need to expand the number of carriages and the capacity,” Purisima said.   The buy out “is a necessary step to be able to do that. That's the reason why President Aquino issued EO to authorize us to do whatever is necessary to be able to unwind the contract and then invest in the MRT-3,” he noted. After the government takes over the MRT-3, the Transport and Communications Department will privatize the line operations and maintenance of the train service through a public-private partnership.      But the proposed takeover means the government would no longer need to pay MRTC huge fees every year. The government annually pays MRTC for equity rental payments, maintenance cost, debt guaranteed payment, insurance expenses, among others.   It shall also  result in billions of pesos in savings for taxpayers, who provide subsidies mainly to cover the 15 percent return on investment guaranteed to MRTC. The government reportedly shells out about P7 billion worth of subsidy for the MRT 3 operations. Aside from the huge savings, the upgrades on operations and maintenance of MRT3 would be easier as  the government  will no longer need to get the consent of the other MRT 3 owners. - SOA/KBK, GMA News