Are MRT-3 riders risking their lives?

The good news is that DOTC Secretary Jun Abaya announced a plan for the government to completely buy out the equity of the private owners of MRT Corp. (MRTC) as well as the economic rights now held largely by DBP and the Land Bank. P-Noy has approved in principle to spend $1 billion for an Equity Value Buy Out to be carried out through an Executive Order. Once completed, government will bid out the operations and maintenance of LRT1/2 and MRT3 as one contract.

P-Noy previously approved the purchase of additional trains to improve the reliability of the entire system. DOTC even actually got the money, some P8.63 billion of it, and deposited it to an LRTA account so it won’t lapse into the general fund for non-use.

But government cannot spend for the capex of a private company, which MRTC still is. If, and that’s a big if, they are able to carry this equity buy out, there will be no more legal barriers to carry out an honest-to-goodness rehabilitation of MRT3.

Such a major rehabilitation of MRT 3 is badly needed, including buying new rail cars. Right now, the system has so deteriorated that commuters on MRT 3 are putting their lives on the line every time they ride.

Knowledgeable sources told me many MRT 3 cars have been sidelined for maintenance for past six months and many more are no longer operational. They have a serious spare parts problem. They have not procured spare parts and are just consuming the existing inventory of spare parts at the warehouse. The explosion and burning last November is said to be because of this spare parts problem.

I am told at least 20 cars are now experiencing excessive lateral movement that could result in derailment. Each train has been designed for a capacity of 350 passengers but now carry over 500. The wheel therefore becomes oblong due to the weight.

In the past, they used to do constant “touring” meaning they grind the wheels to maintain its circular shape. Grinding can only be done a few times after which you need to change the wheels. If the wheels are not changed as necessary, this may cause the train to fall off track.

The condition of the trains and the tracks are said to be so bad the current maintenance provider will undertake repair only under special repair orders. Broken tracks between station eight and nine must be repaired properly. The rail was only clamped and no speed restriction was imposed.

The signaling system also needs a lot of attention. A malfunctioning signaling system can lead to head on collisions of trains. Nothing much has been done to repair the system.

DOTC has also reportedly allowed the all risk industrial insurance for MRT 3 to lapse last Dec. 8. It is now assumed DOTC has opted to self-insure to comply with the provisions of the build, lease and transfer contract. GSIS declined to get involved because the sum is beyond its capacity.

There is also a problem about real property taxes being charged by local governments. To date, total unpaid taxes to local government is estimated at P2 billion. MRTC insists this is DOTC’s responsibility under its contract.

One wonders if the $1-billion buy out announced by Secretary Abaya is enough. It would seem that just buying back the derivative papers that hold economic interest in MRT 3 would use up that amount.

It will be recalled that the original private sector owners of MRTC sold their economic interests (future lease payments to MRTC which were sold and resold as derivatives). Some entities said to be close to the past administration bought these papers from a vulture fund for about $200 million, flipped and sold to DBP and LBP for about $800 million.

DBP and LBP have been ordered by the BSP to unload those papers and it would seem the buyer is no other than the GOP (DOF and DOTC). They will buy the debt papers for about $1 billion.

A portion of these papers, some 22 percent, represent equity in MRTC. Presumably, they now have to buy out the remaining equity in MRTC to takeover MRTC and collapse it.

From a layman’s viewpoint, the government is paying more than $1 billion for something that the derivatives market priced at $200 million. Who made money in the series of transactions? DBP and LBP bankrolled the purchase from the vulture fund. Why did the GFIs not buy the debt papers directly for $200 million? It would be good policy if the transactions get explained and justified before Congress.

Since this buy out is nothing more than a financial transaction to clear the deck of past indiscretions, not a single train will be added to the MRT 3 system after $1 billion had been spent. That’s why I said earlier it is a big IF that DOTC can introduce improvements quickly that would improve passenger comfort and safety. The track record of DOTC gives us no comfort.

So, do not get excited with the press releases of DOTC. It would be best to expect no improvement in train services on MRT 3 until the end of P-Noy’s term. As for the other systems, the LRT1 extension to Cavite or the LRT2 extension to Masinag are also delayed and are in danger of not being completed by mid-2016, the end of P-Noy’s term.

Northrail is also dead in the tracks. The chairman of the Northrail Corp., Jose Aliling, has reportedly resigned as early as October 2012. I heard most of the Board members have also left. Lanny Nanagas, Jun Berba, and Aliling provided the professional touch in the Board and best of all, they didn’t ask for compensation.

The initial enthusiasm of these volunteers to get the project moving was doused by DOTC’s past officials. Without a board quorum, Northrail Corp cannot move. Election ban on appointment may also preclude filling up of the positions anytime soon.

In other words, DOTC’s rail projects are a mess. It is however hoped that they do something quickly for MRT 3 just to make sure passenger safety is not compromised. The current “puede na” approach to maintenance risks lives and limbs.

If I were P-Noy and Sec. Abaya, I would have sleepless nights worrying about passenger safety. If something really bad happens, it will be on their conscience because they have been constantly warned about the dangers of their slow approach to improving MRT 3’s service.

Joker

An Abigail Hinto, supposedly of the legislative staff of Sen. Joker Arroyo wrote my editor last week in reaction to my column on the Enrile Christmas gift to senators. Hmm… Sen. Joker has now hired an assistant other than his driver? Interesting!

After a pained attempt to insult me by accusing me of being so egotistical as to only read my column and nothing else, Ms. Hinto went on to sing hosannas on the frugality of the senator in typical press release fashion. If Ms. Hinto read my column well, she would have realized that I never questioned Sen. Joker’s frugality. In fact, I celebrated it.

Anyway, after everything she had written, Ms. Hinto admits that the senator did accept the Enrile gift. But she justified it by saying the voucher described it as additional maintenance operating and other expenses. No mention it was a gift, she said, so they treated it as any other MOOE. Do I detect some intellectual dishonesty here?

Two more things. It would be interesting to see how the money was spent. Can they really spend P1.6 million worth of maintenance and operating expenses in the last two weeks of the year? Should we challenge Frugal Joker to publicly liquidate the amount?

Second, Senate President Enrile himself virtually admitted it was a gift… he said he wanted to make “lambing” to the senators. If it was something regular, all senators would have received the same amount. Now that it is openly known as a gift at taxpayer expense, would Frugal Joker return the money?

I have no quarrel with Sen. Joker. We have been friends probably even before his assistant was in kindergarten. Ms. Hinto shouldn’t try to make it look like Joker and I are anything other than friends who sometimes needle each other.

Some final words of advice to Ms. Hinto: Next time stick to the issue at hand. You should only attempt to even be mildly insulting or dare use sarcasm if you have enough wit and confidence in the language. Otherwise, you may end up convincing Joker that he was right all along to only have his driver double up as his assistant for the longest time.

Lawyers

Atty. Sonny Pulgar sent this one.

What do you call one lawyer thrown off a bridge into a river?

Pollution.

What do you call all the lawyers thrown off a bridge?

Solution.

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco