Clarification on MRT project

MANILA, Philippines - May we refer to the column of Mr. Babe Romualdez in the 10 September 2009 issue of The Philippine STAR, particularly to his reference to the MRT as “a messy deal when it was closed in the 1990s under a built-operate-transfer scheme during the time of FVR, with the deal so lopsided against the government”. Mr. Romualdez also mentioned that “this mess was untangled by DBP President Rey David, who told me that while the MRT is run by the DOTC, it is 80 percent owned by the DBP.”

A little diligence would have led said columnist to find out what caused this so-called “mess” and avoid unfairly suggesting that it was the Ramos administration who caused it. He would have also found that recently, DBP President David himself said that while “the government was paying a substantial amount to the private group because it guaranteed the IRR (internal rate of return), in 1994, it might have been the right thing to do because interest was way way up. But now that the cost of borrowing money has sharply gone down, the MRT3 takeover made sense in order to realize huge cost saving.”

FVR recalls the first test run of the MRT III on 04 May 1998 where he, together with First Lady Amelita Ramos, their two daughters, three grandchildren and some 200 people took a ride from the Santolan to the White Plains Stations and back. This was followed by a “Presidential Inspection” of the MRT II on September 17, 1998, where FVR was invited to join President Joseph Estrada in a 30-minute ride. The following day, The Philippine STAR reported that on the said occasion, both of them expressed that once it becomes fully operational, MRT III “will serve the need for an efficient mass transport system and ease the perennial traffic jams in Metro Manila.”

Just before the inauguration of MRT III on 15 December 1999, President Estrada ordered the lowering of the proposed MRT fares from P20-P44 to P17-P38” or P34”. It goes without saying that this populist move on the part of President Estrada was without public hearing, or further negotiations with the BLT investors. While such move will always be popular and favored by many, it failed to take into consideration the long-term viability and debt-repayment aspect of the project.

The reaction of then DOTC Secretary Vicente Rivera Jr. to this unilateral mandatory reduction was reported by a major daily on 2 December 1999: “Transportation and Communications Secretary Vicente Rivera Jr. however, expressed apprehension that MRT 3 may incur a loss since P34 “is below our estimate.” Rivera said the loans incurred for the $655-million project, plus the overhead and maintenance and operating costs, were all considered in computing the realistic fare rates.”

Please allow us to quote some portions of the 19 July 2001 “letter to the editor” of Mario C. Miranda (Project Director — DOTC-MRT III Project Management Office):

“There is even a statement in the 17 July 2001 release that the Commission on Audit is looking into the contract for the rail project for its being onerous. We are proud to state that the contract for the rail project can be considered as a document that had already passed scrutiny from all branches of the government — executive, legislative and judiciary. It is noteworthy that said contract was reviewed by the DOTC, NEDA, Office of the President, the Senate Blue Ribbon Committee, and the last of them was when it was brought to the Supreme Court (Tatad vs. Garcia — G.R. No. 114222). The findings or decisions of these offices never made any statement to support any allusion to the contract being onerous.”

When MRT III was finally inaugurated on 15 December 1999, Erap was quoted by reporters Michael Ubac and Juliet Javellana saying: “This is one of the best Christmas gifts of my administration to all our people. MRT does not only mean Metro Rail Transit, it also means a precious gift to the people (Mahalagang Regalo sa mga Tao) especially this Christmas season”.

One of our most credible and respected columnists, Amando Doronila, summed it up well in his column of 17 December 1999.

“… It is preposterous for Mr. Estrada to claim that the Metrostar Express is “one of the best Christmas gifts of my administration to all our people” and to dedicate it to the masses who elected him to office. He did nothing for the project. It fell on his lap, without shedding a single drop of sweat. When Ramos planned and launched his flagship projects, he did not brag that they were intended for the poor masses. He just built them, but the poor are undeniably the beneficiaries of these projects.

Thank you for giving us the opportunity to make the foregoing comments and clarifications. — ATTY. NICK LAGUSTAN, FVR Spokesman