THE National Economic and Development Authority, Cabinet Committee (Cabcom) will elevate the contract approval of the Metro Rail Transit Line 7 (MRT 7) project to President Arroyo after no one challenged the proponent’s offer.

Ruben Reinoso, NEDA assistant director general for infrastructure, said the Department of Transportation and Communications (DOTC) will present to the NEDA Board the result of the Swiss challenge and the terms of reference (TOR) of the project.

Last year, the government through DOTC awarded the project to Universal LRT Corp. (ULC).

Under the contract, ULC will post an estimated $120-million performance bond, or 10 percent of the project cost, on the rail and road system investment. The proponent would also pay up a 10-percent three-year rolling performance bond of $220 million on the scheduled real estate and commercial development component of the project.

The bonds would be forfeited in favor of the government in case the proponent fails to fulfill its obligations.

After the approval from the NEDA Board, the proponent can complete the financing for the construction of the system, Reinoso said.

ULC, a consortium led by the group of Salvador Zamora II and the La Costa Development Co., plans to start the construction by 2010.

Zamora is president of Hinatuan Mining Corp.

Other investors in the project include SM Investments Corp., which owns 20 percent of the consortium, the Velasco group with 20 percent and Levin group with 10 percent.

The group earlier said it plans to tap multilateral institutions, naming the International Finance Corp., Asian Development Bank, and Macquarie Bank of Australia, among others, for project financing.

The consortium said $320 million of the project’s total cost will come in the form of Equity, while $900 million to $1 billion will be sourced through borrowings.

Estimated to cost $1.235 billion, the proposed 20-kilometer MRT 7 will run from San Jose del Monte station in Bulacan province, north of Manila, to SM City station in North Avenue, Quezon City, to link the line to Light Rail Transit Line 1 and MRT 3.

The line will begin its route from Tala, Caloocan City, passing through La Mesa Dam reservoir, Fairview, Batasan, Diliman, Philcoa, and ending at EDSA-North Avenue.

It will serve an estimated two million commuters in the northern parts of Quezon and Caloocan cities. Besides the elevated transport system, ULC will also build at no cost a 17-kilometer, six-lane asphalt access road in Marilao, Bulacan, that will lead to its depot in Tala.

Besides the railway project, the proponent will develop the real-estate component, which is estimated to cost $2.2 billion. The firm plans to develop 900,000 square meters of commercial space throughout the concession period. The private investors will also develop two million square meters of residential space.

To recover their investment, the government will pay the proponents about $108 million per year in capacity fees for the next 20 years.

The investors will also get 70 percent of the net passenger revenue after the operation and maintenance expenses, and 80 percent sharing in advertising and commercial development over the stations and real-estate development income.

The government, which has committed to regular fare adjustments, will receive a 30-percent revenue share on net passenger fares, 20 percent on advertising and commercial development fees and 20 percent on income derived from real-estate development.