Metro Pacific, Sumitomo join forces to take over MRT 3

By Miguel R. Camus

September 6, 2023 03:14:00

Manuel V. Pangilinan-led Metro Pacific Investments Corp. joined forces with Japanese conglomerate Sumitomo Corp. to upgrade and privatize operations of the Metro Rail Transit Line 3 in Manila as it signaled renewed appetite for regulated businesses.

This was part of a broader push into railways and transport infrastructure as the industry giant announced a partnership on Monday with Malaysian railway pioneer Hartasuma Sdn Bhd to upgrade the Light Rail Transit Line 1 and potentially build the Philippines' first cable car system.

Metro Pacific, which is in the midst of an effort to delist from the Philippine Stock Exchange, owns some of the country's biggest energy and water utilities.

It also remains keen on increasing its stake in the LRT-1 joint venture firm, Light Rail Manila Corp. (LRMC), by buying out partners such as Ayala Corp., should they decide to sell.

The company turned to less regulated sectors such as agriculture and logistics after the Duterte administration rewrote the concession deals for Metro Manila's water companies, including subsidiary Maynilad Water Services.

Pangilinan said on Monday such concerns had eased given the Marcos administration's support for private sector infrastructure investments.

"In many respects, the regulatory environment has changed as well. It's more accommodating than in the past so it gives us a bit of more optimism about the rail industry," Pangilinan told reporters on Monday as they announced their partnership with Hartasuma.

Metro Pacific had submitted past proposals to take over the operations of the 17-kilometer MRT-3, the country's busiest railway line that links several key cities in Metro Manila, but these were rejected by previous administrations.

"We took a second look at it," Pangilinan said on Monday, without providing details.

Juan F. Alfonso, CEO of LRMC, said on Monday Metro Pacific submitted an unsolicited proposal with Sumitomo to rehabilitate and operate the MRT-3.

"We gave our proposal [to the Department of Transportation] two weeks ago," he said, adding that their offer will involve significant spending to upgrade stations, railways and trains.

Metro Pacific is also partnering with Hartasuma for a similar effort to rehabilitate decades-old coaches at the LRT-1, the oldest light rail system in Southeast Asia, and other upgrades for around P3 billion.

Pangilinan said he was also impressed by the latter's business and said Metro Pacific was keen on investing in Hartasuma itself.

But their goal, for the moment, was to introduce new transport modes such as monorails and even cable cars, which are more inexpensive than traditional trains.

"We have been in this business for almost three decades. I think we can add value to the present rail system in the Philippines. We've always been looking at the Philippines market but you always need the find the right [time] and the right partner," Hartasuma executive director Tan Sri Ravindran Menon told reporters on Monday.

He said they specialize in high-capacity commercial cable cars to serve congested areas and also cable cars designed for tourist locations. Possible cable car routes include parts of the LRT-1 alignment in Manila, Baguio, Tagaytay and Antipolo.

Mohamed Rizal Mohamed Sapari, Hartasuma chief business development officer, said they also aim to establish a "rail excellence center" in the Philippines, which will boost railway expertise of local workers and pave the way for train manufacturing in the country.

"There's a lot of opportunities. In Malaysia, we have started and we have done it. We first made in Malaysia passenger coaches and LRT I think we can do it also in the Philippines," he said.