September 14, 2015

MPI and AC unit assumes operation and maintenance of LRT Line 1

Metro Pacific Investments Corp (MPI) today disclosed that Light Rail Manila Corporation took over the operations and maintenance of the LRT Line 1 from the government last Saturday. LRMC is the concessionaire for the operations, maintenance and extension of the LRT 1 It is jointly owned by MPI subsidiary Metro Pacific Light Rail Corp (55%), Ayala Corp (AC) subsidiary AC Infrastructure Holdings Corp (35%) and Macquarie Infrastructure Holdings Philippines (10%).

As part of the 32-year concession agreement, LRMC will construct an 11.7-km extension from the present end-point of the existing 20-km LRT 1 line at Baclaran to Bacooc, 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. Nine of the existing eleven substations are also up for rehabilitation to ensure reliability of services.

Our take: Construction of the LRT 1 extension project is expected to begin in October 2015 and is slated for completion by 2019. The real benefit of an improved train system, however, will be felt by the riding public only when the new trains are delivered by the government in 2017 as part of its obligations under the concession agreement. In the meantime, LRMC should already benefit in terms of cash flows from the LRT 1 operations. – WealthSec