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What will happen now that the DOTC Secretary is very much confident about the MRT3 buyout? That the 2015 budget will be used for this purpose?

Last, September 2014, the DOTC Secretary spread the word with finality and conviction. He answered all the queries that the Filipino people, media, and politically inclined individuals; even though train breakdowns are making negative image to the present administration.

Even MRTC’s Bob Sobrepena opened up to the media about the true status of MRT Holdings and the DOTC. Secretary Jun Abaya defended his decision-making techniques why he has done such actions.

The DOTC is acting to the best of his knowledge but in fact he’s applying the delaying tactics until the budget for 2015 will be approved. As such, he could buy the remaining bonds to its private counterpart. Likewise, the completion of MRT3 ownership is needed for upgrading the development of MRT3-EDSA. Thus, the operations and management will be only for the government. But for the government, the acquisition budget is the rightful price for the takeover, as computed through the formula provided in the 25-year build-lease-transfer (BLT) contract.

The The Department of Transportation and Communications (DOTC) Secretay Jun Abaya has higher confidence to say, “There is a fixed formula in the BLT, which also provides how to execute the buyout; so there is no room for negotiations. We are buying everything out, including the bonds and the remaining equity interest in private hands. The objective, at the end of the day, is for the government to own 100 percent of the MRT3 line.

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 within the month.

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.

However, the DOTC and MRTC must agree with the terms of the acquisition, which includes the price of the takeover.

How about if the MRTC will not approve for this buyout? Is there another story for the DOTC’s side?

As always, let’s wait and see.

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