RP urged to speed up LRT expansion

The Japanese agency funding the capacity expansion of the Light Rail Transit (LRT) Line 1 urged the Philippine government yesterday to expedite the project process so that it could be completed soon.

In a letter to Transportation Secretary Leandro Mendoza, Osamu Murata, Manila office chief of the Japan Bank for International Cooperation (JBIC), warned the Arroyo government might be held liable and compelled to pay the contractors the amount of the total cost of the project if it is discontinued.

Murata earlier said the project was estimated to cost P8.5 billion.

"If the DOTC (Department of Transportation and Communications) would fail to process the variation orders on time, the Philippine government shall assume all unpaid obligations to the contractors as there is absolutely no basis for the JBIC to extend a loan for the project that has (not) been completed," said Murata in the letter.

The JBIC official accused the DOTC of having been "the major cause of delay in the processing of a lot of variation orders for the LRT project."

"I would like to request you (Mendoza) to completely expedite the process so that all the necessary processing can be finished by the expiration date of disbursement, July 26, 2005," Murata stressed.

The Philippine government and the JBIC signed a loan agreement on April 7, 2000 for the LRT Line 1 expansion. JBIC loan-funded projects are considered "tied" projects under the JBIC provision that only Japanese corporations and entities are qualified to participate in the bidding and implementation of the projects.

Murata noted the JBIC is a major donor of overseas development assistance to the LRT Authority (LRTA), and has been assisting the Philippine government agency financially and technically through the provisions of several loans.

The cumulative loans, he said, are estimated at more than 100 billion Japanese yen, or approximately P50 billion.

The LRT Line expansion project has been mothballed for some three years amid allegations that the bidding conducted by the LRTA was fraught with irregularities.

Murata’s communication to Mendoza was in reaction to the letter of DOTC Undersecretary Guiling Mamondiong dated March 21, 2005, asking the JBIC to hold in abeyance the processing of the requisite financial drawdowns in favor of Sumitomo-Itochu Joint Venture, which won the bidding for the construction of the project.