SAN MIGUEL CORPORATION, AKING KAMAG-ANAK

Govt to guarantee MRT 7 rail

By Alena Mae S. Flores | Aug. 25, 2014 at 12:01am

The government has agreed to provide a financial guarantee to Metro Rail Transit Line 7, allowing proponent San Miguel Corp. to start the construction of the P62.7-billion rail project within the year, Transportation Secretary Joseph Emilio Abaya said over the weekend.

Abaya said the Finance Department issued the performance undertaking for the 22.8-kilometer rail project. 

A performance undertaking, or a financial guarantee given by the government to the contractor, is a requirement for the financial closure of a project that would be partially funded by official development assistance from multilateral banks or foreign lenders.

“The performance undertaking has been signed by [Finance] Secretary [Cesar] Purisima. We have signed our implementing guidelines, so it is a matter of calling them [proponent] and giving it to them, so that’s already a go,” Abaya told reporters.

“The next step, once the performance undertaking is given to them, they should commence financial close. What I’m requesting them to do is to do it sooner than 18 months, but they’re saying they could do advanced works once they get the green light. I hope they can do it before next year,” Abaya said.

The National Economic and Development Authority board, chaired by President Benigno Aquino III, approved the MRT 7 project, an unsolicited offer from conglomerate San Miguel Corp. in November 2013.

MRT 7 involves the construction of a 22.8-kilometer rail system from North Avenue station in Quezon City, passing through Commonwealth Avenue, Regalado Avenue and Quirino Highway, to the proposed intermodal transportation terminal in San Jose del Monte City, Bulacan.

The project, first proposed by Universal LRT Corp. Ltd. nearly a decade ago, was delayed because of the company’s failure to secure a performance undertaking from the Finance Department.

San Miguel, through unit San Miguel Holdings Corp., acquired a 51-percent interest in Universal LRT in 2010.

San Miguel awarded the engineering, procurement, construction contract to the Marubeni-DMCI consortium.

San Miguel earlier said once the performance undertaking was given by the Finance Department, the processing for the financial closure could be received within the year.

The company said construction of the project was estimated to take 42 months.  Once completed, MRT 7 is expected to serve 850,000 passengers daily.