Thursday, June 19, 2008 [ manilatimes.net ]
By Darwin G Amojelar, Reporter
AFTER seven years, Universal LRT Corp. (ULC), a consortium which proposes to undertake the multibillion-dollar Metro Rail Transit project (MRT 7), and the government finally signed on Wednesday a contract agreement to build the railway system and develop the project’s real-estate and commercial component.
Projected to cost $1.235 billion, the proposed 20-kilometer MRT 7 will run from San Jose del Monte station in Bulacan to SM City station in North Avenue to link the line to LRT Line 1 and MRT 3.
The line will begin its route from Tala, Caloocan City, passing through La Mesa dam reservoir, Fairview, Batasan, Diliman, Philcoa, and ending at EDSA-North Avenue.
It will serve an estimated two million commuters in the northern parts of Quezon City and Caloocan City. Apart from the elevated transport system, ULC will also build at no cost a 17-kilometer, six-lane asphalt access road in Marilao, Bulacan, that will lead to its depot in Tala.
The contract agreement was signed by Eli Levin, ULC chief executive officer and managing director, and government representatives Eduardo Ermita, executive secretary, and Leandro Mendoza, secretary of the Department of Transportation and Communications (DOTC).
“I’m so happy we reached this important milestone in the saga of MRT 7. Back in 2002, we already signed a MOU [memorandum of understanding] with DOTC in which it was envisioned that the line will be operational at the end of 2007,” Levin told reporters.
Levin said $320 million of the project’s total cost will come from the equity of various investors while $900 million to $1 billion will be sourced through borrowings.
The consortium is led by the group of Salvador Zamora 2nd and the La Costa Development Co., which owns majority of the ULC or about 52 percent. Zamora is president of Hinatuan Mining Corp.
Levin said the group plans to borrow funding from multilateral institutions, naming the International Finance Corp., Asian Development Bank and Macquarie Bank of Australia, among others.
Other investors in the project include the listed investment holding firm SM Investments Corp., which owns 20 percent of the consortium, the Velasco group, 20 percent and Levin group, 10 percent.
Besides the railway project, Levin said ULC will develop the real-estate component, which is estimated to cost $2.2 billion. The firm’s plan is to develop 900,000 square meters of commercial space throughout the concession period.
The private investors will also develop two million square meters of residential space, he added.
“We have six months to finalize the financial undertakings… one year for financial closing and start construction by 2010,” Levin said.
He added that ULC targets late 2012 to complete and operate the MRT 7.
Under the contract, the ULC will post an estimated $120-million performance bond, or 10 percent, on the rail and road system investment, and a 10-percent, or about $220-million, three-year rolling performance bond on the scheduled real estate and commercial development component of the project.
The bonds would be forfeited in favor of the government in case the proponent fails to fulfill its obligations.
To recover the investment of the investors, the government will pay $108 million per year capacity fee payment for 20 years.
The investors will also get 70 percent of the net passenger revenue after the operation and maintenance expenses and 80 percent sharing in advertising and commercial development over the stations and real estate development income.
The government also commits to fare adjustments.
Meanwhile, the government will get a 30-percent revenue share on net passenger fares, 20 percent on advertising and commercial development fees and 20 percent on income derived from real estate development.
_____________________________________________________________________
