‘DOTC asking for P7.5-B penalty payment to LRT consortium’

MANILA, Philippines - A sovereign guarantee is allegedly being sought for the Light Rail Transit (LRT)’s private consortium.

It is appalling for the Department of Transportation and Communications (DOTC) to ask the Department of Budget and Management (DBM) to release P7.519 billion as penalty payment to the Light Rail Manila Corp. (LRMC), according to  Bagong Alyansang Makabayan (Bayan) secretary-general Renato Reyes Jr.

“The penalty payments are the result of an onerous contract entered into by the Aquino government and the winning bidders,” he said.

“This is a form of sovereign guarantee that will be borne by the taxpayers.”

Transportation Secretary Joseph Emilio Abaya made the request to the DBM in a letter on Aug. 7, 2015, Reyes said.

“The amount is scandalous and unconscionable,” he said. 

The letter that Bayan had obtained allegedly  stated that Abaya is asking for the release of P5.04 billion as the government failed to comply with the obligations relating to the maintenance and operations of the existing train lines, including structural, seismic and fire defects in the system.

However, Abaya is not aware of the letter-request he supposedly sent to the DBM.

During a morning radio show where they both were guests, he asked Reyes if the letter being cited was signed and Reyes replied that it did not bear any signature, Abaya said in a text message yesterday.

“Quite incredible to have me react to an unsigned draft letter which I haven’t read,” he said. “Not even sure who drafted the letter.”

Bayan’s allegations are based on an unsigned piece of paper, DOTC spokesman Michael Arthur Sagcal said in a text message.

“Their excuse that a signature and a bar code on the document were merely covered to protect the identity of their so-called source is a pitiful attempt to get out of being caught in a lie,” he said.

In a statement, Reyes said the government looks to pay the LRMC some P106 million in a form of  “deficit payment” as the current minimum LRT fare of P11 is below the P12.3 minimum fare agreed upon in the contract.

“Under the agreement, if LRMC does not get its required fare hike, it is the government who will shoulder the deficit,” he said.

That is also asking P500 million for the government “blocked account” for future penalties to LRMC, Reyes said.

Abaya also sought the release of P444 million for right-of-way acquisition to be settled by the third quarter of 2015, he added.

The DOTC’s requested amount shall be drawn from the P30-billion Risk Management Program Fund  put up to cover government obligations to the private sector related to the Public Private Partnership programs and contracts, Reyes said.

“Government is set to pay LRMC a total of P7.519 billion in penalties and fees. In contrast, the LRMC has only paid government P935 million or 10  percent of its concession fees,” he said.

“The private concessionaire stands to get more from this than the government, which appears to be financing the private investors,” Reyes said.

 “Since last year, we have been warning against the disadvantageous provisions of the LRT1 privatization contract,” he said.

“Now we see that there were indeed sovereign guarantees and that the Aquino government entered into a sweetheart deal with LRMC. What’s worse is that it is only Budget Secretary (Florencio) Abad who gets to decide on the release of the funds.” 

In 2014, the LRMC won the LRT-1 line extension contract, including the management and operations of the existing LRT-1 and the construction of a common terminal at Trinoma in North EDSA. – With Louella Desiderio