Termination of Busan awaiting Tugade’s OK

Two transport undersecretaries have recommended the firing of the slipshod MRT-3 maintenance contractor. Separate probes by the Commission on Audit, the Senate, and the House of Representatives point to the same. All warn of dangers to riders’ safety, and cite breaches of obligations for convenience and reliability.

Riders were in fact injured last week when a train – again – suddenly braked due to signaling failure. The government already has paid Busan Universal Rail Inc. (BURI) P650 million since Jan. 2016. More money will be wasted as BURI continues to bill the transport department P55 million a month till Dec. 2018.

The commuter railway awaits Sec. Arthur Tugade’s action for the sake of riders and the government.

Three weeks ago, Sept. 6, Usec. for Rails Cesar Chavez reiterated to Tugade the need to remove BURI. Updating his memo of July 17, he enumerated the breakdowns:

• Jan.-Dec. 2016 – 63 service stoppages and 586 incidents of passenger unloading due to broken trains, signaling, tracks, and power supply, for a total of 649, or nearly twice a day; plus 2,705 train removals due to malfunctions;

• Jan.-July 2017: 38 service shutdowns and 246 times of train unloading due to brake, signaling, and auto-door failures, smoke and sparks, for a total of 284; plus 1,116 train removals; and

• Apr.-May 2017: five derailments, fortunately all when the trains were running slow about to enter the depot, but occurring right after the supposed intensive yearly maintenance check on Holy Week, Apr. 13-16 – unprecedented in MRT-3’s 17 years of operation.

Disputing BURI’s alibis of MRT-3 design flaws and age of the trains, Chavez contends that the breakdowns were preventable. Not only was the maintenance sloppy, he said. BURI also failed in its obligation to field 20 trains during the morning and afternoon peak hours, and 15 during non-peak. It failed as well to timely procure and stockpile crucial spare parts, thus delaying replacements and repairs. Maintenance records are a mess.

BURI lacked precaution, Chavez said. The post-checkup derailments were due to broken axles, nuts, and bolts. The breakdowns in 2017 mostly involved signaling, the system that electronically keeps safe distances between trains, automatically brakes coaches to avert collision, and opens doors in emergencies. An audit by the MRT-3 signaling supplier Bombardier showed that BURI installed unspecified spares. Sensitive signaling equipment were modified without Bombardier’s consent.

Usec. for Legal Reinier Yebra reviewed BURI’s P3.8-billion contract, noting Chavez’s findings about the maintenance. He said that BURI failed to meet its deadlines to overhaul 13 of 43 contracted coaches by end-2016. Since this comprised more than 10 percent unfulfilled obligation, Yebra recommended termination of this contract component. He also computed P46.4 million in liquidated damages to be imposed on BURI for its default.

Yet another contract component, total replacement of the signaling system, was deemed unnecessary. The existing signaling was upgraded only in Oct. 2015, and needs no replacement, only proper maintenance. Yebra outlined the process of terminating the contract.

Sen. Grace Poe’s committee on public services has verified the poor maintenance. BURI executives were confronted in various hearings and cautioned not to lie about maintenance records and expenses.

In house hearings, Rep. Jericho Nograles (Puwersa ng Bayaning Atleta) exposed illegalities in the contract. Despite its huge amount, there was no public bidding, only closed-door negotiation.

The talks were with a supposed joint venture of Busan Transport Corp. of Korea with Filipino companies Edison Construction Development Corp., Tramat Mercantile Inc., TMI Corp., and Castan Corp. It turned out later, Nograles discovered, that no such joint venture was ever registered or even applied for at the Securities and Exchange Commission.

During the talks, amounts arbitrarily were assigned for various contract works and expenses. This included multimillion-peso overpricing of water to clean the coaches daily, paint for the depot and guide ways (which are not painted anyway), and janitorial services (P83,566 a month per janitor).

The P3.8-billion contract was signed by a mere undersecretary Edwin Lopez. That was illegal, Nograles said, because the department secretary, then Joseph Abaya, should sign contracts above P10 million.

The COA is requesting Tugade to submit documents on the legality of the joint venture, if any. It said that BURI was organized only later to bill and collect in behalf of the joint venture.

The COA questioned BURI’s authority, as a mere financial conduit, to discuss technical matters with the Transport Department and MRT-3. It echoed Nograles’s point that BURI has no valid contract with the government since it is undercapitalized at only P500 million. By law, the contractor’s capital must be higher than the contract amount.

Chavez, Yebra, and Nograles agreed that a Maintenance Transition Team immediately shall be formed upon termination of BURI. The team shall consist of present MRT-3 staff, those from the sister Light Rail Transit Authority, and BURI technicians who were taken in from the former long-time maintenance servicer Sumitomo of Japan. Public bidding shall be held within two weeks for a new long-term maintenance contract.

Nograles said Tugade immediately should terminate BURI as passengers’ lives and limbs are at stake. “Sec. Tugade should stop procrastinating,” he said. “He should also file plunder charges against the transport officials and cohorts in the anomalous contract.”

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