Government Plans to Bid Out MRT-3 and LRT-2 Contracts As a Bundle

Two separate companies currently handle operations and maintenance of Metro Manila’s Metro Rail Transit (MRT) Line 3 and the Light Rail Transit (LRT) Line 2. But if plans of the Department of Transportation push through, only one will end up handling both lines by 2025. 

That’s because the government agency said it plans to bid out the operations and maintenance contracts of the two railway lines as a bundle to make it more palatable to potential investors. 

“Our direction is to bundle the two contracts,” said DOTr Undersecretary for Railways Cesar Chavez on Sunday (July 30). “We are talking about the 2025 and beyond timeline. That is why we have to decide now up to 2025 or 2024 if we will bundle the two deals.”

ALSO READ

Two New Railway Lines Have Been Proposed for Metro Manila

Finally, Ice-Cold Air-Conditioning: A Closer Look at the New State-of-the-Art LRT-1 Trains

“That is our direction now. So when we offer it to the private sector, it will be under the Public-Private Partnership (PPP) Program,” he added.

Bundling up the two O&M contracts would mean that the management of MRT-3 will be transferred to the Light Rail Transit Authority (LRTA), which operates LRT 2. Currently, the build-lease-transfer (BLT) agreement for the MRT-3, which was executed in the early 2000s with MRT Holdings Inc. of the Sobrepeña Group, will lapse in 2025. 

The government is spending anywhere between P600 million and P900 million per month in equity rental payments to operate the MRT-3. There were talks of a contract buyout during the administration of the late President Benigno “Noynoy” Aquino III, although there was no follow-through. The government now wants to allow the concession agreement to lapse naturally. 

The LRT-2, meanwhile, whose east extension up to Masinag from Santolan, Pasig was recently completed, is being operated by the LRTA. 

“We have ongoing discussions and once we have a decision, we will go to Neda,” Chavez said, referring to the National Economic and Development Authority. 

He noted that auctioning off the two deals as a bundle will allow the government to share the risk with the private concessionaire, given that one contract is “a good cake” and the other “not so good cake.” 

The government will come to a decision by July next year, Chavez said.