LRT-1 operator seeks arbitration against government


Delayed tariff adjustments prompt international court claim

THE government has maintained its silence on the filing by the private 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 Department of Transport and its attached agency.

Light Rail Manila Corp. (LRMC) expects to recover about 2.67 billion pesos in compensation claims and costs resulting from delays in implementing tariff adjustments for 2016, 2018 and 2020, Metro Pacific Investments Corp said. (MPIC) in a press release. on the stock exchange on May 6.

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

Asked for comment, a representative of the LRTA said: “The LRTA cannot yet issue a statement on the matter, as it has not yet received a copy of the request for arbitration; and after which, LRTA will speak with DoTr and the OfIfthat of the Government Corporate Counsel.

LRMC is made up of MPIC leading the consortium with a 55% stake, AC Infrastructure Holdings Corp. Ayala Group with a 35% stake and Macquarie Infrastructure Holdings (Philippines), Inc. with a 10% stake.

“The request relates to the adjustment of the agreed rate for the years 2016, 2018 and 2020 and LRMC’s claims for compensation relating to the contractual obligations of the licensors to indemnify LRMC for the difference between the stipulated rate and the agreed rate on the based on the schedule provided in the CA, following the licensors’ inaction on LRMC’s request for CA-based rate adjustments,” MPIC said.

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

The company also stated that “despite compliance with applicable legal requirements and after making every effort to amicably discuss the above claims with the licensors, LRMC has not received any offers from the DoTr and the LRTA.”

The resolution of these claims is “essential” to enable LRMC to continue to be “viable and to provide safe, efficient services.Ifefficient and reliable services to the public,” MPIC noted.

“Notwithstanding the dispute, LRMC remains committed to providing the best possible services to the public. Indeed, despite the licensors’ failure to perform their obligations and the non-payment of LRMC’s receivables, LRMC implemented significant operational improvements, rehabilitation projects and upgrades to the existing system and continued building the Cavite extension safely and efficiently,” he added.

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

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

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