The naked truth

As more accidents and technical glitches plague the Metro Rail Transit Line 3 (MRT3), the least that Malacañang could do is acknowledge that there is a problem, that someone made that problem happen, and that someone has be accountable for it.

President Aquino still claims that the Department of Transportation and Communications is “on top of the situation” and that steps are being taken to address the problems.

It is obvious that our transport officials are not giving the Chief Executive the real picture.

Contrary to what DOTC Secretary Joseph Abaya has been saying, the government’s private partner, MRT Corp. (MRTC), is not the one to blame. But of course Abaya would not admit that, nor would he admit that the situation of MRT3 has gone from bad to worse during the successive stints of now Interior Secretary Manuel Roxas II and him on the Aquino watch.

This problem will not vanish into thin air even if government carries out a P53.9-billion Equity Value Buyout (EVBO) or a 100-percent takeover of this system, and even if the DOTC-handpicked Dalian Locomotive and Rolling Stock Co. starts delivering 48 Light Rail Vehicles (LRVs) which will expand capacity to 880,000 daily riders.

Last week, Abaya announced that DOTC was taking over the MRT3 maintenance in light of the “alarming increase” in train-related incidents under current service contractor Au Porte Technologies Global Inc., and that he has already issued a special order creating a maintenance team consisting of MRT3 and Light Rail Transit Authority (LRTA) personnel to do the job side-by-side with APT Global.

Abaya and Lotilla said in a Senate hearing that MRTC has been remiss in its operation and maintenance (O&M) work, so much so that the DOTC was already studying the possibility of taking legal action against its private partner.

When asked by Sen. Sonny Angara why the maintenance and general overhauling were procured separately, Abaya explained that the latter was tucked into the 10-year maintenance contract of TES-P/Sumitomo Corp.

Abaya added that when the MRTC failed to procure the maintenance provider after Sumitomo’s contract expired in 2012, the DOTC had to react quickly and bid out an interim maintenance contract which could not include general overhauling.

As for Lotilla, he told Sen. Nancy Binay that Sumitomo’s contract was no longer extended, mainly because of disagreements between the service provider and MRTC over the O&M contract terms.

But wasn’t it DOTC which took over the maintenance work in 2012 after dumping longtime contractor Sumitomo and “requested” MRTC to surrender its job of selecting the O&M service provider, after which DOTC awarded an interim contract to an unqualified and undercapitalized company through a negotiated arrangement instead of the mandatory public bidding?

DOTC has totally shut out MRTC from the business of selecting and overseeing the work of MRT3’s O&M operators since 2012, when it surprisingly dumped the train system’s longtime maintenance provider TESP-P/Sumitomo Corp. of Japan in favor of PH Trams-CB&T and, later, APT Global.

MRT3’s dismal service started only when PH Trams-CB&T and then APT Global took over from Sumitomo as O&M operators.

Also, contrary to what DOTC executives have been mouthing, MRTC and its mother firm MRT Holdings (MRTH) have actually submitted five capacity-expansion proposals to acquire additional LRVs from the time the DOTC and MRTC sealed their build-lease-transfer agreement in 1999.

DOTC has been accused of violating the original 1999 BLT a number of times. One instance was when it chose PH Trams-CB&T and APT Global as O&M operators along with Dalian Locomotive as LRV supplier, all without prior review and consent from MRTC as provided in the accord. The second one involved non-payment of economic rental payments (ERPs) plus staffing and administrative costs to MRTC, as well as real property taxes (RPT) to host-local government units (LGUs).

And DOTC executives have to think carefully their plan to sue MRTC. After all, seven of the 11 member members of the board are government officials, which means that government is running the show.  Most of the board directors come from Development Bank of the Philippines and the Land Bank of the Philippines, with an LBP director as chairman-president, because these state-run banks own a combined 80-percent economic interest in MRTC. 

In a recent media report, Sen. Sergio Osmeña III noted that the MRT3 problem along with the Manila port congestion and energy crisis have raised government negligence to an “almost criminal” level.

Osmeña bewailed that with its MRT3 inaction, the DOTC has been risking the lives of about 500,000 daily commuters with this train system’s “disaster waiting to happen,” and that if these things happened in the US, the American government will be sued for negligence.

Now let’s go back to the planned buyout. Many believe that the EVBO is a diversionary ploy, considering that the P53.9-billion buyout budget that has been floated since last year by Abaya and Finance Secretary Cesar Purisima is not enough for a 100-percent takeover because it would only cover payment of the economic rights held by DBP and LBP.

What about the cost of purchasing the stocks of private owners, specifically MRTH, MRTC and MPIC?

But even if the much-ballyhooed EVBO takes place, a full government takeover is no guarantee of better service.

Also, continuous funding for this train’s system will be highly vulnerable to government-style politicking and fund juggling under a full government takeover.

What is certain is that Abaya et al have mastered the art of pulling the wool over the eyes of President Aquino and his bosses to hide DOTC’s gross inefficiencies.

A recent statement issued by the government-controlled MRTC Board indicate that DOTC officials have been lying through their teeth in unduly blaming its private partner for this train system’s fiasco and hiding the fact that this department took over the MRT3 maintenance in 2012.

It said that while the MRTC was originally tasked with the maintenance of MRT3, the DOTC, over the objections of MRTC, took over the maintenance of MRT3 by selecting, appointing and contracting with its preferred maintenance contractor/s, PH Trams-CB&T and Global-APT, from 2012 onwards.

Since then, MRTC has written DOTC numerous letters about the resulting problems in the operations of MRT3 and demanded an explanation from DOTC. The DOTC has not answered any of those letters, it added.

MRTC has repeatedly informed the DOTC of its readiness and willingness to purchase additional trains, has told the DOTC of its readiness and willingness to procure the O&M contract after the 2012 expiration of Sumitomo’s contract, has cited the need for a technical audit by an independent third party to assess the safety of the train system; has suggested improvements in the Terms of Reference (TOR) of the O&M contracts awarded to the interim maintenance providers to safeguard the government and riders against foul-ups; and has alerted the DOTC to problems cited by then-outgoing contractor Sumitomo, such as passenger overload and the shortage of spare parts for the train signaling and automated ticket-collection systems, to no avail.

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