October 08, 2014

LRT project awarded to AC-MPI consortium

Further to last month’s announcement on the awarding of the Light Rail Transit-Line 1 (LRT1) extension project to Light Rail Manila Corp (LRMC), Metro Pacific Investments Corp (MPI) and Ayala Corp (AC), through separate disclosures, said that LRMC and the government signed yesterday the 32-year concession agreement for the LRT1 project.

Under the concession agreement, LRMC will operate and maintain the existing 20-km LRT1 line and construct an 11.7-km extension from the present end-point at Baclaran to the Niog area in Bacoor, Cavite. A total of eight new stations will be built, which traverses the cities of Paranaque and Las Pinas up to Bacoor.

LRMC will invest P35b in the project, representing 50% of the estimated project cost. The turnover of the existing LRT 1 operations should take place on or before October 2015 while the project completion is targeted by October 2019.

Our take: As we noted in our 15 September Daily Wealth Take, LRMC could take over the operations of the existing LRT-1 and begin work on the extension project by next year (on or before October 2015).

This means that the consortium will have access to cash flows from the existing operations while constructing the project. More importantly, the award should boost investor confidence on MPI and AC as the project can be tied in with the Automatic Fare System project which they earlier won from the government.

AC is also counting on potential synergies with its property arm, Ayala Land Inc (ALI) whose properties are strategically located near the project. – WealthSec