Gov’t eyes eventual takeover of MRT

MANILA, Philippines - The government is looking at a proposal to take over the Metro Rail Transit 3 (MRT-3).

Presidential spokesman Edwin Lacierda told reporters yesterday that Isabela Rep. Rodito Albano III’s proposal is for the government to assume ownership to improve MRT operations and eliminate frequent breakdowns.

“According to Secretary Jun (Joseph Emilio Abaya), we are handling the operation and maintenance of MRT,” he said in a text message to reporters.

“Our next step is to do the equity value buyout.”

Other options are being studied, including the acquisition of new coaches to prevent the frequent breakdowns of trains, Lacierda said.

The private firm MRT Corp. (MTC) owns the MRT, but the government operates it.

Albano said it’s time for government to take full control of MRT-3 to uphold public interest.

“It’s a major solution to the transport needs and traffic problems in Metro Manila,” he added.

MRTC built the MRT-3 line during the Ramos administration on a build-operate-transfer basis.

The government subsidizes the line’s operation in the amount of P6 billion a year.

The Department of Transportation and Communications (DOTC) has proposed an ownership buyout for about P53 billion. However, MRTC said the huge amount would not be enough.

Albano said the proposed takeover must not prejudice the DOTC plan to sue MRTC for alleged breach of contract.

Problems relating to the management, maintenance and operation of the MRT line would continually crop up unless the government buys out the private owner, he added.

Albano said when the DOTC tried to buy 48 new additional coaches not too long ago, MRTC went to court and obtained an injunction to stop the procurement.

However, the DOTC was able to convince the court that the procurement of the new coaches is in the public interest, he added.

Abaya’s explanation

Senators Francis Escudero and Grace Poe are dissatisfied with Transportation Secretary Joseph Emilio Abaya’s explanation about the problems besetting MRT-3.

During the Senate subcommittee on public services hearing on the MRT last week, Escudero asked Abaya why the DOTC replaced Sumitomo which seemed to be a capable maintenance provider. Abaya replied that Sumitomo was no longer giving a warranty that PH Trams and Global-APT were willing to give.

Escudero asked MRT Holdings chairman Robert Sobrepeña if it was true. Sobrepeña said Sumitomo had given a guarantee based on the contract that 20 trains or 60 cars would be available and running during peak hours.

Sobrepeña was chairman of MRT Corp. when Sumitomo was hired in 2000.

Abaya then read a letter to DOTC wherein Sumitomo allegedly wrote that it was freeing itself from any liability under the signaling system and from the consequences of passenger overloading.

Abaya said that as opposed to Sumitomo, PH Trams and Global-APT were willing to give a warranty.

Escudero then asked Victorino Espiritu of Global-APT what warranty it was giving that Sumitomo was unable to give.

Espiritu replied: “(Only) to maintain the system, depending on the manufacturer. We will just maintain. Based on the Terms of Reference signed, (we guaranty) 20 trains (at) peak (hours).”

Escudero pointed out to Abaya: “So they did not guarantee it either.”

Poe asked Abaya why various items to ensure passenger safety like overhauling that Sumitomo had offered to pay had been chopped up and separately bidded out.

Abaya replied that upgrades and capacity expansion – the responsibility of the owners – are different from maintenance.

Poe pointed out that overhauling is under the scope of the maintenance provider. She asked Abaya to clarify why this item had to be separately bidded out, but Abaya was unable to reply.

Sobrepeña said overhauling was not under maintenance, all the items that are now being separately bidded out were covered and paid for by Sumitomo under its contract.

“In the 12 years that it was the maintenance provider, Sumitomo handled rail replacement, overhauling, signaling, repairs, spare parts, replacement of wheels and service. There was nothing else to be bought by government because it was all in their contract,” he said.

Poe said the Sumitomo maintenance contract included overhauling, rail steep replacement, communication system, etc. and that DOTC did not have to bid this out separately.

Abaya-MRT-3 talks

In a statement, Navotas Rep. Tobias Tiangco warned yesterday that Abaya’s continued refusal to speak with the private owners of MRT-3 is one of the causes of the safety problems hounding the rail system.

“Secretary Jun Abaya’s refusal to speak to the private owners of the MRT is disastrous,” he said. “It goes against the very essence of a Public-Private Partnership if the public partner refuses to speak to the private owners. This is what is causing all of the MRT problems we have today.”

Tiangco said the DOTC had ignored a letter as far back as 2012 requesting an examination the qualifications and competence of then maintenance provider PH Trams after a train in the Kamuning Station caught fire, he added.

The DOTC must coordinate with the MRT Holdings “before bigger MRT-related disasters happen,” he added.

Tiangco said the private owners had also written MRT Corp. and DOTC in March 2014 after a train suddenly stopped due to the failure of the signaling system, injuring 10 passengers, once again questioning the qualifications of the DOTC’s chosen maintenance provider and requesting for a technical audit.

“It is neglect of public duty for the DOTC to not even acknowledge the letters of the private sector warning them of the dangers of a maintenance provider that is not qualified and warning of possible dangers to the riding public as far back as 2012,” he said.

Sanctions recommended

Transportation Undersecretary for Operations Edwin Lopez recommended sanctions on the maintenance provider for violations of contractual obligations to the government, including using old rails weeks before a broken rail disrupted MRT-3 operations last week, an internal memorandum showed.

In the memorandum dated Sept. 4, 2014, Lopez advised Renato San Jose, MRT-3 Office of the General Manager officer-in-charge, to look into liabilities and possible actions to be taken against Global-APT JV for failing to procure and deliver spare parts, including stock rails, for the safe maintenance of the trains. – Delon Porcalla, Paolo Romero