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The government is now scrambling to pay up to ₱4 billion in outstanding obligations to Light Rail Manila Corp. (LRMC) in hopes of maintaining the confidence of the Pangilinan-led Metro Pacific group in Light Rail Transit Line 1 (LRT-1).
Acting Transportation Secretary Giovanni Lopez said the government is “looking for ways” to settle its “undisputed” debt of up to ₱4 billion to LRMC, after years of failing to hold up its end of the bargain with the LRT-1 operator.
Since LRMC took over the operations and maintenance of LRT-1 a decade ago, Lopez said the government has paid only around ₱500 million, or 12.5 percent of the total obligations.
But with just over a month before the new year, Lopez said the plan is to pay ₱500 million more.
This renewed effort by the Department of Transportation (DOTr) comes after Metro Pacific Investments Corp. (MPIC) announced it is exploring the sale of its LRMC stake.
LRMC has been incurring losses in recent years, partly due to the government’s failure to fulfill its obligations, even as the operator continues to uphold its commitment to invest in upgrading and expanding LRT-1.
Last week, MPIC Chairman Manuel V. Pangilinan said the company is considering divesting its 38.5 percent stake in LRMC after investors flagged the mounting losses.
Lopez acknowledged that Pangilinan’s move was “out of frustration” since the DOTr has rejected LRMC’s fare hike petitions several times.
Under the concession agreement, LRMC may seek a fare adjustment once every two years.
However, LRMC has been allowed to increase fares only twice, resulting in a fare deficit of ₱2.17 billion.
On top of this, ridership has also been a point of contention for LRT-1, as the railway has yet to recover its pre-pandemic traffic of around 500,000 passengers.
Last year, the average daily ridership in LRT-1 was 323,987.
If it were up to him, Lopez said he believes the DOTr is willing to talk with LRMC to allay its concerns. But he noted that the potential sale is a “management prerogative” and is permitted under the concession agreement.
If the company proceeds with its plan, he noted that written prior consent from the government is required for the transfer of MPIC’s interest to another party.
The DOTr chief said this would require a new contract for LRT-1 operations, given the new participant in the consortium, which will first go through a prior review to determine its financial capacity and expertise to operate the rail line.
Nonetheless, Lopez reminded MPIC that, notwithstanding LRMC’s current financial state, contracts involving public-private partnerships (PPPs) are always “imbued with public interest.”
“This means that, in some way, if not prioritized, they should at least balance profit with service to the public. They should know that, and I’m quite confident that they are pretty aware of those principles,” he said.
Lopez earlier observed subpar maintenance and unclean stations across LRT-1, which has since prompted LRMC to commit to additional upgrades.
