The Metro Rail Transit Corporation (MRTC), operator of the EDSA MRT 3, should be re-privatized as soon as possible on terms that will benefit the state, urged Development Bank of the Philippines (DBP) President and CEO Reynaldo G. David.

To date, DBP and the Land Bank of the Philippines (LBP) have 80 percent beneficial ownership in the company.

However, government-owned National Development Company (NDC) should completely take over MRTC in two months and should disposed of it before next year, he stressed.

“MRTC is a very good business model, with the highest ridership (485,066 passengers in 2009) of the 3 light rail systems in Metro Manila,” David went on. Still, its EDSA MRT3, built under the Department of Transportation and Communications (DoTC)’s US$679-million Build Lease Transfer scheme in 1994 proved to be” extremely costly” for the state.

At the time, the project’s original private proponents, the Fil-Estate Group, the Ramos Group of National Bookstore, the Unilab Group, the RAMCAR Group, the Ayala Group and Edward Dy infused a $190 million equity into MRTC.

They borrowed US$ 489 million from JEXIM and MIT and the Czech ECA, who provided the rolling stocks. The Department of Finance (DoF) guaranteed the loan. This portion, which accounted for 78 per cent of the cost, was securitized via bonds.

DoTC’s Equity Rental Payments (ERP) was pegged with a 15 per cent Return on Investment (RIR) guarantee for 25 years, from 2000 to 2025.

The farebox revenue of MRTC was estimated at $989 million in 25 years. However the state has to pay the private investors $2.4 billion for the same period the sum of the $190 million equity rental payments and the 15 per cent RIR guarantee. Including other costs, such as operations
and administration, the amount will balloon to over $3 billion. It was a lopsided exchange, David underscored.

To complicate matters, foreign funds were able to acquire a certain portion of MRTC in concert with some shareholders. Foreign groups controlled 5 out of 14 board seats and a non-Filipino assumed the position of company President, James Smith, who was hostile to the DoTC.