The owner of Metro Rail Transit (MRT) Line 3 supports the proposal of Metro Pacific Investments Corp. (MPIC) to upgrade the most congested railway line in the Philippines, even if it means his separate “quick fix” scheme would be snubbed by the state.
MRT Holdings II Inc. Chairman Robert John L. Sobrepeña welcomed the idea that the government is now opening its doors to private sector proposals to overhaul the mass-transit system, despite the state’s firm stance against unsolicited deals.
However, his group is more keen on implementing its own proposal to provide a quick fix to the ailing system.
Along with foreign firms Sumitomo Corp. of Japan and Globalvia Infrastructuras of Spain, Metro Global Holdings Inc. is proposing to “fix” the ailing system through a $150-million investment that involves the procurement of a total of 96 new train cars and the rehabilitation of the existing 73 coaches, increasing its capacity by fourfold to 1.2 million daily passengers.
“We submitted a proposal for a fast-track rehab and upgrade of the MRT 3 to the DOTC [Department of Transportation and Communications] from MRT Holdings Inc., the owner of MRTC. With us in this proposal is Sumitomo Corp. and Globalvia of Spain,” Sobrepeña said in a phone interview.
“The proposal of MPIC, which we have a cooperation agreement with, is a much larger offer; the grand plan could come in later. For now, my priority is to fix the line and prevent any other accident. But I will support any company that proposes to upgrade the MRT,” he added. “Under our proposal, Globalvia and Sumitomo will run and maintain the system.”
The holding company of the businesses of tycoon Manuel V. Pangilinan submitted last week its $524-million offer to overhaul the most congested train line in Metro Manila.
The infrastructure giant, which has interests in power, toll roads, water and health care, proposed to defray the upgrade costs of the train system and release the government from the bondage of paying billions of pesos in equity rental payments.
The group intends to spend $52 million to overhaul the line and improve the train line’s poor services.
The venture aims to expand the capacity of the railway system by adding more coaches to each train, allowing it to carry more cars at faster intervals. The multimillion-dollar expansion plan, hence, will double the capacity of the line to 700,000 passengers a day from the current 350,000 passengers daily.
It was submitted in 2011, but the transportation agency’s chief back then rejected the proposal.
It is now being reviewed by both the legal and technical experts from the DOTC, Transportation Secretary Joseph Emilio A. Abaya said, noting that his office is not too keen on accepting the unsolicited proposal.
He stressed that the government is “better off with open, transparent and competitive bids,” but as per the legal division of his office explained, an amendment to the build-lease-transfer agreement with MRTC, the owner of the train system, is still possible.
The amendment, however, needs to meet two criteria: that the revision would not result in a disadvantageous deal to the government, and that the changes in the contract would not be substantial.
The proposal of the infrastructure giant to improve the line involves a substantial amendment to the MRT contract.
For one, the group wants to extend the concession period of the contract to another 25 years, hence, a 15-year extension of the current period.
With this, the DOTC needs to review the proposals with utmost care.
For now the government will continue to execute the multibillion-peso takeover of the train system, despite the lack of funding for the initiative.
“It’s not a roadblock; funding is not a roadblock,” Abaya reiterated, explaining that what remains to be done is to complete several components of the buyout.
“First, a memorandum of agreement needs to be signed by the DOTC and the government financial institutions or GFIs, essentially Land Bank and the Development Bank of the Philippines, and finance department,” he said. “Legally, it should be checked off by the Office of the Solicitor General, and then we’ll enter into a compromise agreement with MRTC.”
President Aquino’s Executive Order 126 called for the government to buyout all the shares and the bonds in the railway company.
It also required the state to strike up a compromise deal with the private partner to end the ongoing arbitration case in Singapore that was lodged against the state in 2008 due to its failure, as the operator of the line, to pay billions of equity rental payments to the owner of the rail system.
“We need to execute both in the arbitral and local arenas. We still want to execute because there’s a pending order on that,” Abaya said.
Should the buyout be completed in 2016, the transportation agency may then bid out the operations and maintenance contract of the line, thereby tapping private-sector efficiency and customer service orientation for operational needs, while retaining regulatory functions for passenger protection with the government.
But, for Sobrepeña, the buyout is not the solution to the ailing 15-year- old train facility, calling the takeover a flawed initiative.
Instead, the government must focus on improving the line, which ferries more than half-a-million passengers daily.
Everyday, passengers complain of long queues caused by the lack of light rail vehicles, an inefficient ticketing system, humid train cars, faulty elevators and escalators, and rude tellers.
The train system even poses risks to the safety of the riding public, several rail experts including those from MTR Corp. Ltd., the operator of the railway system in Hong Kong, concluded.
The state of the railway line was poor enough to discourage prospective maintenance contractors from joining the auction for the P2.38-billion MRT upkeep deal. The maintenance contract was snubbed twice by railway maintenance providers such as Busan Transport Corp., Mosan-Inekon Phils Ltd. Co., SMRT International Pte. Ltd., Miescorrail Inc., and D.M. Consunji Inc.
In order to address the present woes of the MRT, the government currently in the process of is rolling out a P9.7-billion multiyear venture to overhaul the line. The complete makeover is expected to be done within the term of President Aquino.
The train system has been operating at overcapacity since 2004. Currently, the line serves nearly 550,000 passengers per day, it even reached, at one point last year, the 650,000-daily passenger mark. It has a rated capacity of 350,000 daily passengers.
Meanwhile, the MRT-3 rehabilitation program will start within two weeks, an official said on Monday.
MRT General Manager Ramon Buenafe, in an interview with reporters at the sideline of the House Committee on Metro Manila Development hearing on MRT operations, however, clarified that the MRT-3 operations will not be shut down during the rail rehabilitation. Operations will only be shortened during weekends.
“We are also set to conduct a time and motion study to know the length of the rehabilitation program,” Buenafe said.
Once the repairs begin, he said that MRT will close early on Saturday at 9 pm, instead of 10 pm, and start late at 12 noon on Sunday.
“We will announce when it [rehab plan] will take effect,” he said.
Buenafe said the MRTC hopes to finish the repairs before the end of 2015.
According to Buenafe, once the welding kits–which are expected to be delivered on Friday—are obtained, the rehabilitation will be implemented.
Last week, the MRT 3 suffered at least three glitches.
Abaya, in an interview with ANC, said at least 6,000 linear meters of rails need to be replaced, with 150 meters of rails to be replaced every weekend.
He added that the DOTC is planning to maximize the MRT’s closure during the Holy Week to complete the project.
The MRT rehabilitation program comes after the recent train fare adjustment.
The fare adjustments that took effect on January 4 marked the first such hike in ticket prices for Metro Manila’s train riders in a decade.
The DOTC said the fare adjustments would enable the government to save P2 billion in annual subsidies, or 17 percent of the P12 billion that it allots each year to subsidize the rail systems.
(With Jovee Marie N. dela Cruz)