|Five foreign and local banks have expressed keen interest in helping the government raise funds to pursue plans to buy out the $865- million debt of Metro Railway Transit Corp.
Five foreign and local banks have expressed keen interest in helping the government raise funds to pursue plans to buy out the $865- million debt of Metro Railway Transit Corp., Finance Secretary Margarito Teves said yesterday.
Teves told reporters yesterday the five foreign and local banks have conveyed their interest to extend loans to the national government to pursue the buyout that could help save as much as $380 million in interest costs.
Teves, however, declined to name the five banks but hinted that they have conveyed their interest formally and informally.
The government, through the Department of Finance and the Department of Transportation and Communications, signed an agreement with Metro Railway Transit Corp. to buy out the $865 million debt.
The company, which is majority owned by the Fil-Estate Group of businessman Robert John Sobrepeña, operates a 17-kilometer light rail system along Edsa from North Ave. in Quezon City to Taft Ave. in Pasay City.
The government pays higher interest on the project, ranging from 12.5 percent to 15 percent. The project’s actual cost stood at $675 million.
Teves said the government could save as much as $380 million as it could now borrow at lower rates compared with the rates when the loans were obtained to pursue the project.
He said the government now had up to Feb. 27 next year to implement the buyout. He also said the government would privatize the operations of Metro railway-3 after a successful takeover.
President Gloria Macapagal Arroyo, through Memorandum Order 181 in August of 2005, tasked the department to head an inter-agency committee to draft a takeover strategy.
The committee is composed of representatives from the departments of finance, transportation and communications, and budget and management, the National Economic and Development Authority, the Build-Operate-Transfer Center, and the Presidential Legal Counsel.
On top of interest payments, the government shells out at least P6.8 billion every year to subsidize the operations of the project. Instead of each passenger paying P60 for the entire stretch, the government subsidizes the P45 of the total fare as each passenger only pays P15.
The government also spends another P250 million in maintenance fees every month.