Press Release
November 29, 2010


Who really controls the Metro Rail Transit 3 project between the government and the Sobrepena Group?

Senator Chiz Escudero wanted this answered as the Department of Transportation and Communications (DOTC) failed to confirm in the budget hearing at the senate last week the exact status of operational control of the MRT 3 prompting him to call for a senate inquiry to look into the matter.

Metro Rail Transit Corporation, owned by John Robert Sobrepena entered into a build-lease-transfer contract with DOTC to build the MRT 3 project in 1997 with a put up equity of one hundred ninety million dollars ($190m). The government has since been paying for the project.

Through the years, the group retained control of the operations and development of the MRT 3.

"This contract I think has been anomalous and grossly disadvantageous to the government in the beginning. One, there was a sovereign guarantee in the contract. But the MRT3 was an unsolicited proposal. Under the BOT law, unsolicited proposals must not have any government guarantees".

He added that MRTC assigned the development rights payment (DPR) to another company called the MRT DevCo which is not allowed under the BOT law. DPR pertains to the acquisition of commercial rights and development of the 16-hectare depot site, including all concessions to develop air and ground spaces.

"What is more questionable in this arrangement is the fact that the signatory both for the assignor (MTRC) and the assignee are one and the same and that is John Robert Sobrepena".

The company has been collecting and receiving income from DPRs but DOTC lamented that MRTC has failed to settle its outstanding debt from DRP that already totalled to more than a billion pesos.

"In other rails in the world, DPRs are actually used to supplement the income of the railway system itself so that it can subsidize lower rates to the commuters. That is why knowing who really controls the MRT 3 operation now is very important because we want to assist the DOTC in so far as the steps they have to take in the next couple of months or years as to how to deal with this particular issue".

Early this year, state-owned Development Bank of the Philippines (DBP) and Land Bank of the Philippines (LBP) acquired a controlling interest in MRT 3 by accumulating equity in and debt paper of the MRTC to realize savings for the government.

Escudero also questioned the move of MRTC to peddle its supposed remaining assets to interested parties like the Metro Pacific Investment Corporation.

"This is a BLT arrangement and under such arrangement, there are no assets to talk about that they can sell. They can only speak of economic interest in the BLT because at the end of the term it will be owned by the government. If there is anything that the Sobrepena group can sell it is only the economic interest which they already did to LBP and DBP".

With a combined 72% equity from the two state banks, Escudero said the government should now have control of the corporation. Thus, "revenue flows should be pointing towards the government coffers".

The Sobrepena group is also claiming DPRs to the MRT 3 Phase 2 project that will connect the Monumento-North Edsa line. DOTC has refuted the claim saying only Phase 1 of the project has been assigned to the Sobrepenas.

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