DOTC allots P51 M for ‘other works’ in MRT deal with Busan

MANILA, Philippines – More than P51.759 million was allotted by the Department of Transportation and Communications for “additional maintenance works” of the South Korean-Filipino joint venture that bagged the Metro Rail Transit’s P3.8-billion contract.

An insider told The STAR yesterday that Busan Transportation Corp., Edison Development and Construction, Tramat Mercantile Inc., TMICorp Inc. and Castan Corp. presented the breakdown of the MRT’s contract during a “secret bidding” before Christmas last year.  

Under the breakdown, P1,962,000,000 was allotted for the maintenance of the MRT 3 for three years; P907,369,561.81 for general overhauling of 43 units of light rail vehicles (LRV); P888,000,000 for the total replacement of the signaling system; and P51,759,326.19 for “additional maintenance works.”

That breakdown shows that the P1.962 billion already covers the maintenance of the MRT 3 for three years, but the DOTC has yet to explain the need for another P51.759 million added for maintenance.

Transportation Secretary Joseph Abaya did not respond when asked to explain the P51.759 million for additional maintenance.

The DOTC’s notice of award and notice to proceed was received by Eldonn Ferdinand Uy, the joint venture’s authorized representative.

It only stated that Busan would be the MRT’s system maintenance service provider responsible for the general overhaul and total replacement of signaling system for 43 LRVs.

A notice of award dated Dec. 23, 2015 obtained by The STAR stated the contract was awarded to Busan for P3.8 billion. There was nothing about “additional maintenance works.”

The DOTC resorted to a negotiated procurement “in recognition of the urgency to address the railway’s maintenance needs and the system’s core problems of obsolescence and complete wear-and-tear.”

The DOTC said they attempted to bid out the contract in September 2014 and January 2015, but “both resulted to failure due to the non-participation of bidders.”

The notice of award was signed by Edwin Lopez, DOTC undersecretary for operations and head of procuring entity, and conformed to by Uy.

After issuing the notice of award, the DOTC then issued a notice to proceed to Busan on Jan. 7, directing them “to commence the performance of the works and/or service” on Jan. 19, “except for the rolling stock and signaling which will commence immediately.”

The notice to proceed was signed by MRT 3 general manager Roman Buenafe and Lopez. Uy received the notice at 10:39 p.m. on Jan. 7.

“We are one step closer to having a safer and more reliable MRT 3 system with our new world-class rail maintenance service provider. With the operator of the Busan railway network in South Korea sharing their technical expertise, the riding public can expect an increase in the number of running trains and efficiency of operations,” Abaya said in a statement posted on the agency’s website.

In a related development, Abaya announced that Bombardier Transportation Signal Ltd. would start the upgrade of MRT 3’s signaling system this month.

Bombardier was awarded via direct procurement the P53-million contract for the signaling system of MRT 3 covering North Avenue station in Quezon City until Taft Avenue station in Pasay City.

Abaya said Bombardier is expected to start the upgrade of MRT 3’s signaling system, particularly the operating system, once all requirements are completed.

“We are waiting for the issuance of the notice to proceed because there are additional requirements. Essentially, we are importing them. We had to get permits from the Department of Trade and Industry. Letter of credit had to be applied for. We expect them to start installation, implementation this month or next month, after all requirements are completed,” he said.

He said the installation and upgrade of the operating system for the MRT 3’s signaling system would be completed within seven months or by August.

The upgrade is necessary as it provides a quick fix to the obsolete signaling system of the MRT 3.

On Friday, the MRT 3 had to temporarily suspend operations due to glitches, which Abaya attributed to the train system’s obsolete signaling system.

The notice of award for the upgrade was given to Bombardier on Sept. 29, 2015, while the contract was signed in December last year.

“If we didn’t do Bombardier upgrade, the operating system will remain obsolete for two years,” Abaya said.

LRT 1 upgrade

On the other hand, the firm operating the Light Rail Transit Line 1 (LRT 1) is looking to spend over P40 billion for the rehabilitation and extension of the train system.

AC Infrastructure Holdings Corp. president and chief executive officer John Eric Francia said the Light Rail Manila Corp. (LRMC) expects to use over P40 billion to cover the costs of the rehabilitation of the existing LRT 1, which runs from Roosevelt station in Quezon City to Baclaran in Pasay City, and the extension of the train line all the way to the Niog area in Bacoor, Cavite.

Of the over P40 billion for the project, he said around P10 billion would be used for the rehabilitation of the existing LRT 1 for roughly two years.

The rehabilitation of LRT 1 is necessary to provide better service and improve the riding experience of passengers as LRMC awaits the new light rail vehicles or train cars to be procured by the DOTC via a loan extended by the Japan International Cooperation Agency.

The rest of the amount, meanwhile, would be used for the 11.7-kilometer extension of LRT 1 from Baclaran to Cavite.

The total amount needed for the rehabilitation and extension of LRT 1 would be funded by LRMC, a consortium of Metro Pacific Investments Corp.’s Metro Pacific Light Rail Corp., Ayala Corp.’s AC Infrastructure Holdings Corp. and Macquarie Infrastructure Holdings (Philippines) PTE Ltd., through equity and debt.

“We’re expected to sign with lenders by the first quarter,” Francia said.

Francia, however, declined to say how much financing would be tapped from local lenders, but cited the loan would span at least 12 years.

While the breakdown of the equity and debt for the project has yet to be finalized, Francia said the bulk of the cost would most likely be funded by a loan.

Francia noted that most projects would typically be financed by 60 to 70 percent debt.

LRMC, which bagged the P65-billion LRT 1 Cavite Extension, Operation and Maintenance Project under the public-private partnership (PPP) program, took over operations of the train system in September.

Under the concession agreement for the project, LRMC will have a cooperation period of 32 years with the government. – With Marvin Sy