March 24, 2008 [ Manila Bulletin Online ]
By FIL C SIONIL
The government takeover of Metro Rail Transit Corporation (MRTC), the private operator of mass rail transit, hangs as "renegotiations" of the terms and conditions of reverse privatization looms.
This becomes apparent as Development Bank of the Philippines (DBP) president and chief executive officer (CEO) Reynaldo G. David admitted the state is hardpressed in meeting the deadline to raise the money to buy out the MRTC led by Fil-Estate Corporation.
"The deadline is too tight," confessed David.
DBP has been singled out by Finance Secretary Margarito Teves to steer the fund-raising exercise to pay-off the more than $ 900 million inorder for the government to wrest management control of the mass transit operations, which after all it has been bailing out in the more than three years.
The government, by virtue of its full guarantee, financial rescued MRTC from paying its monthly obligations due to creditors to an average of $ 3.3 million and $ 1.67 million for maintenance costs in operating the mass transit.
This is anchored on the assurance given by the state on both the ridership and the borrowings of MRTC incurred in 1997. Specifically, the government guaranteed a return to MRTC should the 600,000 passengers stipulated in the build-operate and transfer (BOT) accord has not been met on a daily average.
For the takeover, it was pointed out the government has to come up with the money by the end of the month as stated under the terms and conditions of the agreement on the planned acquisition.
However, an informed source privy to the transaction, on the other hand, disclosed the government financial institutions that include the National Development Corporation (NDC), DBP and Land Bank of the Philippines, as well, "need a clear cut direction from the higher ups which among us will be the owner in paper of the company the government is taking over."
"We are looking for a clear signal exactly what to do. Who will own it," the source said, stressing that "NDC seemed to be unwilling to be the owner."
DBP and Land Bank may be a viable candidate since both institutions can go into non-allied undertakings because of their universal banking license. Although, both financial institutions balk on the idea, the source said.
According to the source, another key consideration is that the ‘take over means a reversal of the thrust of the state to let go of managing corporations best left to the private sector to operate."
"It is tantamount to reverse privatization, which comes at a time when the state is unwinding control of government assets," the source pointed out.
Latest computations indicated the mass transit’s total liabilities shoot-up to roughly above 8 million. It is feared that MRTC may, likewise, be on red with its net asset value (NAV) declining.
The source said the NAV will be the major determinant should "renegotiation" be the direction the government will take in moving this transaction forward.
In 2007, the national government’s subsidy reached some P2.1 billion, nearly doubled from P1.2 billion in 2006.
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