LRT-1 operator seeks arbitration versus gov’t

PHILIPPINE STAR/ EDD GUMBAN

THE government has maintained its silence over the filing by the privately owned operator of Light Rail Transit Line 1 (LRT-1) of a request for arbitration with the International Chamber of Commerce for the company’s disputes with the Transportation department and its attached agency.

Light Rail Manila Corp. (LRMC) hopes to recover around P2.67 billion in compensation claims and costs resulting from delays in the implementation of fare adjustments for 2016, 2018, and 2020, Metro Pacific Investments Corp. (MPIC) said in a disclosure to the stock exchange on May 6.

The company filed the request for arbitration against the Department of Transportation (DoTr) and the Light Rail Transit Authority (LRTA), the grantors under the 32-year concession agreement (CA) for the LRT-1.

Sought for comment, a representative of the LRTA said: “LRTA cannot yet issue a statement on the matter, as it still has not received a copy of the request for arbitration; and after which, LRTA shall confer with DoTr and the Office of the Government Corporate Counsel.”

LRMC is composed of MPIC that leads the consortium with a 55% stake, Ayala group’s AC Infrastructure Holdings Corp. with a 35% stake, and Macquarie Infrastructure Holdings (Philippines), Inc. with a 10% stake.

“The request pertains to the adjustment of the approved fare for the years 2016, 2018 and 2020 and LRMC’s claims for compensation relating to the grantors’ contractual obligations to compensate LRMC for the difference between the stipulated fare and the approved fare based on the schedule provided in the CA, following the grantors’ inaction on LRMC’s application for fare adjustments based on the CA,” MPIC said.

The request also covers “the losses, costs and expenses incurred by LRMC for the grantors’ failure to deliver to LRMC the required number of light rail vehicles that meet the stipulated technical requirements under the CA and the structural defects on the existing LRT 1 system, both of which are required to ensure that LRMC is able to provide a safe, efficient and reliable service to the public as required under the CA.”

The company also said that “despite compliance with applicable legal requirements and after exerting best efforts to amicably discuss the foregoing claims with the grantors, LRMC has not received any offer from the DoTr and LRTA.”

The settlement of such claims is “critical” to enable LRMC to continue to be “viable and provide safe, efficient and reliable services to the public,” MPIC noted.

“Notwithstanding the dispute, LRMC remains committed in providing the best possible services to the public. In fact, despite the non-performance by the grantors of their obligations and the non-payment of LRMC’s claims, LRMC has implemented significant operational improvements, rehabilitation projects, and system upgrades to the existing system and continued the construction of the Cavite Extension safely and efficiently,” it added.

MPIC’s partner in LRMC, Ayala Corp., has expressed its intention to divest. MPIC said that it is considering to increase its stake, but that its decision would depend on the next government’s plans for LRT-1.

MPIC is one of three Philippine subsidiaries of Hong Kong’s First Pacific Co. Ltd., the others being PLDT Inc. and Philex Mining Corp.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., maintains an interest in BusinessWorld through the Philippine Star Group, which it controls. — Arjay L. Balinbin

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