NEDA lays down final terms for MRT 7 project

The government has laid down its final terms for the implementation of the $1.2-billion Metro Rail Transit 7, which will traverse North Avenue to Commonwealth Avenue, documents from the National Economic and Development Authority showed. A letter from NEDA addressed to Secretary Leandro Mendoza of the Department of Transportation and Communication dated Dec. 27 indicated that the government has given four conditions to Universal LRT Corp., which submitted the unsolicited proposal for the project, for the development to push through. A NEDA official who refused to be named said ULC would have to agree with these conditions for the project to proceed. “Otherwise the government will have three options: do the project; don't do it; or do it with other partners," the official said. The government's terms are: a. An estimated $120-million performance bond or 10 percent on the rail and road system investment; b. A 10-percent, or about $220 million, three-year rolling performance bond on the scheduled real estate and commercial development component of the project. c. That ULC will be required to contractually undertake to accomplish the committed real estate development as programmed in the business plan. The real estate component of the project is expected to cost as much as $2.2 billion. d. Step-in rights for the government anytime during the project life should ULC fails to implement the real estate and commercial development based on its business plan. NEDA said the bonds required by the government would be forfeited in favor of the government in the event that the proponent fails to fulfill its obligations. The proposed MRT 7, which will serve commuters to and from north of Metro Manila and Bulacan has been a subject of a Swiss Challenge, but no other parties submitted proposals for the project. Costing $1.2 billion, the mass transit component of the project has a 22-kilometer elevated track, running from Tala, Novaliches, to North Avenue corner EDSA, passing through Lagro, Fairview, and Commonwealth Avenue before joining MRT Line 3 on North Avenue. ULC investors include the Sy family of SM group, Siemens Group, International Finance Corp., Yuchengco Group, George Go group, China Railway and a Japanese investor. To clinch the MRT 7 deal, ULC has offered to develop real estate from which the government is expected to earn $2.5 billion on land development. It also proposed that an advance of $108 million be made by the government annually for the first 10 years of the concession period, while collecting revenues of $4.40 billion during the 25-year period. - Cheryl Arcibal, GMANews.TV