HONG KONG — Metro Pacific Investments Corp. (MPIC) may hold off on its planned divestment from Light Rail Manila Corp. (LRMC) after the government immediately opened talks to address its obligations to the company.

LRMC President and Chief Executive Officer Enrico Benipayo told MPIC Chairman Manuel V. Pangilinan at a media briefing that the government reacted swiftly to Pangilinan’s statement that the company was ready to divest after a decade of losing money due to regulatory issues.

MPIC had announced last week its intent to exit LRMC due to years of substantial losses.

“Mr. Chairman, your statement a bit pushed DOTr (Department of Transportation) to act,” Benipayo said. “The following day, I received a message coming from the DOTr (acting) Secretary (Giovanni Z. Lopez) himself. I cannot disclose at this point in time, but what I can say is it’s something positive.”

Ayala Corp., which holds a 35 percent stake compared with MPIC’s 35.8 percent interest, had also previously expressed interest in exiting LRMC.

Pangilinan stressed the principle of Public-Private Partnership (PPP): “It should be a government thing, if they do not want to give tariff hikes. The basic tenet of PPP is you’re asking for other people’s money to build a particular project.”

He added: “So, it is not government money. When you borrow other people’s money, that money was given to that particular proponent by its owners, and its owners expect a return from that because they borrowed the money themselves. When you borrow people’s money, you have to pay for the use of that money. It’s as simple as that.”

Pangilinan argued that if the government is unwilling to implement rate increases, it should finance the projects itself.

“If you’re not willing to [increase in rates], then use your own money. Then, you don’t have to worry about these returns and calculations about tariffs and everything else. If you can’t put your mind around that concept, the very heart of PPP, then you should undertake it by yourself,” he said.

Benipayo acknowledged the financial strain. “Obviously we've had a lot of difficulties during the past 10 years… primarily due to some obligations of the government that they were not able to fulfill, then definitely we're not in a good financial position at the moment. But we're about to turn the corner.”

He expressed optimism about convincing MPIC to stay. “I hope I'll be able to convince our chairman. We're meeting him, I think, next week. As we did with our other shareholders like Ayala and Sumitomo, I think both of them have bought into the plan to turn the corner for LRMC,” he added.

Benipayo noted a shift under the current administration. While previous governments held back fare increases due to public outcry, he said, “we have recently had some breakthrough in our discussions with the government. In fairness to this current administration, this is where we had our first tariff increase.”

Beyond fare rates, the company holds significant claims against the government, with delayed payments resulting in higher financing costs.

“But, again, the good news, again, some breakthrough,” Benipayo disclosed. “The current government, particularly DOTr and the Department of Finance, is actively in discussion with us to be able to resolve the concession agreement… For the very first time, in the past several months, they have already acknowledged, at least, that they owe LRMC and they're willing to pay a significant amount of our claims in the next few months.”

To ensure the project's long-term economic viability following a decade of losses due to unfulfilled government obligations, LRMC also seeks to "rebalance" the concession agreement.

“Rebalancing means, and in principle, they've agreed, like an extension of our concession period,” Benipayo explained.

The proposal is to extend the current 32-year concession by another 18 years, for a maximum of 50 years, along with “some other tweaks in the current concession agreement so that the project can be put back or restored to its financial position had the delays not occurred.”