Metro Rail Transit Corporation | Wikipedia audio article
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Metro Rail Transit Corporation | Wikipedia audio article

October 11, 2019


The Metro Rail Transit Corporation is a private
consortium responsible for the maintenance of the Manila Metro Rail Transit System. It is also the original contractor for the
MRT-3 project. It runs the MRT-3 in coordination with the
Department of Transportation.==Formation and Purpose of Metro Rail Transit
Corporation==The contract for building and leasing for
the EDSA Rail Transit III, Phase I Project was first awarded in 1992 to a consortium
of international sponsors headed by Mr Eli Levin, who was involved in installing the
first light rail transit system in Manila in the mid-1980s. Mr. Levin incorporated EDSA LRT Corporation
Ltd. (“ELCL”) in Hong Kong as the initial contractual
counterparty to the DOTC. Legal and other problems beset the project
through the first quarter of 1995, which were all subsequently resolved with a Supreme Court
decision that asserted the validity of the Project. In June 1995, a newly formed consortium of
reputable Philippine companies purchased a majority stake in ELCL through EDSA LRT Holdings,
Inc. (“ELHI”), a Philippine-registered company. It was also approximately at this same period
that the consortium engaged JP Morgan to help organize the financial structure of the Project
and its highly complex financing plan. The Philippine owners obtained control of
roughly 85% of ELCL’s voting stock. ELHI also formed and owns in its entirety
a development company (“MRT DevCo”) that acquired the development and commercial rights to develop
the 16-hectare depot site and in the 13 stations, as well as the right to develop the air space
above the 13 stations. In December 1995, ELCL’s name was changed
to Metro Rail Transit Corporation Ltd. (“Metro Rail”) and ELHI was correspondingly
renamed MRT Holdings, Inc. A Philippines subsidiary of Metro Rail, Metro
Rail Transit Corporation (“MRTC”), was later formed for the purpose of designing, constructing,
testing, commissioning, and maintaining the EDSA Rail Transit III, Phase-1 system. An Accession Undertaking and an Assignment
and Assumption Agreement was executed which gave MRTC all rights and obligations to the
Project agreements during the debt repayment period and establish MRTC as the Project borrowing
entity.==The BLT Agreement==
The BLT Agreement was signed by DOTC and Metro Rail on August 8, 1997 and amended on October
16, 1997. It constitutes a restatement of similar agreements
dating back to the first such contract, which was signed on November 7, 1991. That agreement was restated on April 22, 1992,
and the restated agreement was supplemented on May 6, 1993, and amended on July 28, 1994
and May 1996. Another restatement was signed on October
3, 1996. All the terms in those prior agreements were
superseded by the provisions of the BLT Agreement. The BLT Agreement governs the relationship
between Metro Rail and DOTC during the Project’s two major phases, construction and revenue
service. During the construction phase, Metro Rail
was obliged to construct the Project (Phase 1) and to complete that construction by a
certain date (the “Date Certain”). The construction was to be accomplished in
accordance with the specifications and drawings approved by the DOTC and the completed system
capable of achieving certain capacity requirements. Metro Rail was also obligated to provide all
equipment that was to be used in the system, including the rail vehicles. The DOTC’s obligations during the construction
phase included granting Metro Rail access to the Project site (including relocating
squatters and other persons from the Depot area) and ensuring that certain work to be
performed by the Department of Public Works and Highways (“DPWH”) was completed properly
and on time. In addition, the DOTC accepted the responsibility
for certain events that could delay completion of the system. Should such events occur, DOTC would be responsible
for paying the costs of the event and the delay it causes, and the date by which Metro
Rail is obliged to complete construction would be adjusted. After completion, Metro Rail was obligated
to lease the system to DOTC, who would operate the system, with Metro Rail providing the
maintenance. DOTC was required to make payments of Rental
Fees to Metro Rail, and these were broken down into several different portions. One significant part was intended to repay
the loans taken out to finance the Project (“Debt Rental Fees”).==Project Funding Components==
A breakdown of the key funders and tranche funding components of the MRT-3 Phase-1 Project
were as follows:==The Key Management Team Members: Construction,
Operations and Financial Management==From September 1995 to March 2002, Metro Rail
oversaw the construction, financing and operational management of the Project. On December 15, 1999 Metro Rail commenced
operations (soft opening) of the MRT-3 Phase-1 System operating 10-stations from Buendia
to North Avenue. The Project was formally inaugurated on July
15, 2000 (all 13 stations) as scheduled and within the DOTC-approved budget. JP Morgan and the management team of MRTC
negotiated with the support of a team of technical experts and other advisors in arranging project
financing totaling US$675.5-million from the Japan Bank for International Cooperation (formerly
Japan Export-Import Bank or JEXIM), Investicni a Postovni Bank of the Czech Republic, a consortium
of Foreign Currency Deposit Unit (“FCDU”) banks led by Citibank, Bank of the Philippine
Islands, Far East Bank, ING Bank, Metrobank and the Philippine Government under a Sovereign
Credit basis whose blended all-in financing cost amounted to only 4.72% p.a. over the
entire life of the loan facilities.==The Rail Vehicle Supply Agreement==
The Rail Vehicle Supply Agreement or “Vehicle Contract” was executed between Metro rail
and CKD Tatra on October 14, 1996 and has since been the subject of five amendments. It covers the purchase and commissioning by
Metro Rail and the production and shipment by Tatra of 73 Rail Vehicles to be used in
the EDSA MRT-3 Phase-1 rail system. Simultaneous with the execution of the Vehicle
Contract, Metro Rail and Sumitomo entered into an Assignment and Assumption pursuant
to which Metro Rail assigned and Sumitomo assumed most but not all of Metro Rail’s
rights and responsibilities under the contract. The Assignment is part of the single point
of responsibility structure under which Tatra becomes a subcontractor of Sumitomo, who then
becomes responsible to Metro Rail for Tatra’s performance.==Maintenance Agreement==
The Maintenance Agreement that was entered into between Metro rail and Sumitomo Corporation
(the “Provider”) sets forth the terms on which the Provider will provide maintenance
and repair services (the “Services”), for a period of ten (10) years, for the System. As compensation for Services, Metro rail agreed
to pay a base fee (the “Base Fee”) adjusted in accordance with a price escalation formula
(the ”Annual Maintenance Fee”), for each year such Services are provided. The Base Fee in the first year is approximately
US$15.3-million stepping up to approximately US$18-million on the 6th year. In addition to the Annual Maintenance Fee,
Metro Rail also agreed to reimburse the Provider for the cost of carrying out any special repairs
to the System. The Provider subcontracted, with Metro Rail’s
consent, all services with respect to the remainder of the System to be carried out
by Mitsubishi Heavy Industries, Limited. In 2012 MRT Line 3 (MRT-3) Philippines received
a barrage of complaints from loyal passengers due to severe lack of support and maintenance
from its administrators. Technical problems became more and more frequent
thanks to old outdated facilities, lack of additional trains, lack of technical knowledge,
decaying rails and the train itself. “People have to wait for one hour just to
get inside a cramped broken train”, says a Senator who tried to ride himself. A Fare hike was also pushed in 2015 almost
doubling the fare cost for commuters with the intention of collecting additional revenues
to fund the improvement of its services.==See also====External links==
Official MRT-3 website

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