LIGHT RAIL MANILA CORP. (LRMC), the operator of Light Rail Transit Line 1 (LRT-1), said it is gearing up for a financial rebound, citing renewed shareholder support and fresh talks with the Department of Transportation (DoTr) for the rebalancing of its concession agreement.
“LRMC has been encountering problems for 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,” LRMC President and Chief Executive Officer Enrico R. Benipayo said at the Metro Pacific Investments Corp. (MPIC) briefing in Hong Kong last week.
The LRT-1 operator is now in talks with the DoTr and the Department of Finance (DoF) for some tariff adjustment, Mr. Benipayo said, noting that under its concession agreement, the company is allowed to increase fares by a certain percentage every two years.
“In fairness to this current administration, this is where we had our first tariff increase… The current government, particularly the DoTr and the DoF, is actively in discussion with us to be able to resolve the concession agreement,” he said.
LRMC assumed operations and maintenance of LRT-1 in September 2015 under a P65-billion, 32-year concession agreement with the Light Rail Transit Authority and the DoTr.
Under the agreement, the operator may seek a fare adjustment once every two years. In April, the Transportation department approved LRMC’s petition for fare adjustments, though the new fare matrix remains below the company’s requested rates, resulting in a fare deficit of P2.17 billion.
LRMC is also seeking discussions with the government to rebalance its concession agreement, which would allow the company to extend its current concession period, Mr. Benipayo said.
“The rebalancing is, and in principle they have agreed, like an extension of our concession period, and some other tweaks in the concession agreement so that the project can be restored to its financial position,” he said, noting that the company is also working double time to complete the extension of Cavite Extension Phases 2 and 3.
Earlier this week, MPIC Chairman, President, and Chief Executive Officer Manuel V. Pangilinan said the company is considering selling its stake in LRMC, citing mounting losses as ridership numbers failed to recover from the pandemic impact.
MPIC holds its 35.8% stake in LRMC through its unit, Metro Pacific Light Rail Corp., while Sumitomo Corp. owns 19.2% and Macquarie Investments Holdings (Philippines) Pte. Ltd. holds 10%. LRMC is a joint-venture company of MPIC, AC Infrastructure Holdings Corp. (a unit of Ayala Corp.), Sumitomo, and Macquarie Investments Holdings.
LRMC’s ridership averaged around 450,000 daily passengers in 2019, dropping to 350,000-370,000 in 2023. By November 2024, just before the opening of the LRT-1 Cavite Extension Phase 1, daily ridership was 323,000.
Mr. Benipayo said LRT-1’s ridership has increased to 390,000 daily year to date.
“First, we are working with the government so that they pay our claims. That is the first thing. Second is we are talking to our lenders to refinance our debt, and the third one is we would like to start the discussions with the government to rebalance the concession agreement,” he said.
LRMC is now also in active negotiations with its foreign partners for some value-up initiatives to improve passenger experience, and other operations and maintenance activities to increase its ridership, he said.
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