Case study 5: MRT 3 PROJECT, Manila, Philippines

Project Description

Epifanio de los Santos Avenue, commonly known as EDSA, is the most heavily traveled arterial road in Metro Manila, Philippines. The large volume of car and bus traffic creates serious traffic congestion especially during peak hours. To alleviate the worsening traffic condition and air pollution along EDSA, the Metro Rail Transit Line 3 (MRT3), which involved the design and construction of civil and electro-mechanical structure and associated components along EDSA, was built under the Build-Lease-Transfer (BLT) scheme by a private sector consortium.

The 16.9-km MRT3, which started operations in December 1999, has a total of 13 stations extending from North Avenue in Quezon City to Taft Avenue in Pasay City. The North Avenue to Buendia segment was completed in December 1999 while the Buendia to Taft Avenue segment was completed in July 2000.

Legal/Contractual/Partnership Arrangements

On 7 November 1991, the Department of Transportation and Communication (DOTC) and EDSA LRT Corporation Limited, which changed its name to Metro Rail Transit Corp. Limited (MRTC) on 28 December 1995, entered into and executed an Agreement to Build, Lease and Transfer a Light Rail Transit System along EDSA. Under the said BLT Agreement, MRTC, a private sector consortium of Filipino-owned companies, is responsible for the design, construction, testing, commissioning and maintaining the system. Upon completion, MRTC is obligated to lease the system for 25 years to the DOTC, who will operate the system, with MRTC (through Sumitomo) providing the maintenance. At the end of the 25-year lease period, the ownership of the system will be transferred to the government.

Financing

The MRT consortium and its partner put up US$ 190 million in equity and US$ 465 million in loans from several foreign and local banks to cover the US$ 655 million project cost.

Other Responsibilities and Obligations of the Philippine Government

The government’s responsibilities and obligations included the following:

•  Payment of all real estate taxes assessed on the Project Site and on the buildings and other improvements thereon, except those assessed on the commercial development, which shall be for the account of Metro Rail or the assignees of the Development Rights, as the case may be;

•  Provision of peaceful possession and use of and necessary access to the Project Site;

•  Relocation, as and when necessary, of any utilities, including utility lines ad piping, the relocation of which is necessary because of a physical conflict of the work in order for Metro Rail to perform the work in accordance with the Project Scope and Work Schedule;

•  Provision of assistance to Metro Rail in ensuring that where and when necessary there is installed and connected a power transmission line from the outgoing gantry of the switching facility within the Depot boundary and in ensuring that power is obtained at electric substations used for the Project; and

•  Arrangement of all traffic rerouting and other traffic management measures in accordance with the Work Schedule.

Other Responsibilities and Obligations of the Proponent

The proponent’s other responsibilities and obligations included the following:

•  Provision of all light rail vehicles (LRVs), equipment, communication/signaling cables, other necessary equipment and spare parts, and perform all necessary civil works, including the laying of tracks and the construction of the stations, the electric substations, the depot and other facilities, required for a complete operational rail transit system;

•  Importation and transport of equipment to the project site, obtaining permits for building and construction works, and visas and work permits for foreign personnel, the recruitment of local labor and compliance with applicable laws; and

•  Cause the award of subcontracts to Philippine contractors and suppliers of materials and services, provided that, in Metro Rail’s opinion, the quality, delivery times, costs, reliability and other terms are comparable to those offered by foreign contractors or suppliers.