By Lorenz S. Marasigan | Business Mirror | February 10, 2015
EVERYTHING about the state’s planned multibillion-peso takeover of the Metro Rail Transit (MRT) Line 3 is flawed, so a government buyout, at this time, would not address the persistent woes of the mass transit line, the chief honcho of the company that holds the concession for the train system said.
Instead, MRT Holdings II Inc. Chairman Robert John L. Sobrepeña said the government must open its ears, and listen to the private sector to correct the mistakes of the past and improve the train facility.
Sobrepeña said his company, for instance, has been submitting proposals to augment the capacity of the line and upgrade its facilities since the early part of the new century.
However, three administrations had passed and the proposals were left untouched, causing chronic congestion at the train system.
“We have been trying to improve the train system, proposing several times, in different modes of implementation, to upgrade the MRT’s facilities and augment its capacity. But they ignored them,” the businessman lamented during an interview with the BusinessMirror.
The 15-year-old mass-transit system, which ferries more than half a million passengers daily, has been in a state of decay. Passengers frequently complain of long queues caused by the lack of light-rail vehicles. The public was also outraged by the MRT’s inefficient ticketing system, humid train cars, faulty elevators, and escalators, and rude tellers.
But what is more alarming, Sobrepeña said, is the overall state of the once-mighty train system.
“The train system already poses security risks to passengers,” he said, citing the findings of the asset evaluation conducted by experts from Hong Kong’s MTR Corp. Ltd.
Nine rail specialists concluded that the line is already exhibiting signs of obsolesce, hence improvements must be made in order to address the risks posed to the lives of commuters.
In order to address the persistent woes of the train system that connects the northern and southern corridors of Metro Manila, the Department of Transportation and Communications (DOTC) wants to buy the concessionaire out through a P54-billion takeover deal.
But buying out the MRT Corp. (MRTC), Sobrepeña said, would never address the problems of the line. Instead, it only worsens the condition of the train system, as it delays the much-needed upgrades that were supposed to be rolled out about a decade ago.
“What they are doing will result in loss of lives. I’m telling you, everything in the equity-value buyout is wrong. It is legally flawed,” he said.
The deal that the government is pursuing, he said, would only provide for the exchange of money from one government agency to another.
“The P54-billion budget is only enough for the 80-percent economic interest held by the two government-owned banks. It does not include the remaining 20 percent, and the equity in MRTC,” Sobrepeña explained.
Congress took his word. The budget for the buyout was initially included in the P2.6-trillion appropriations this year. It was, however, slashed out, after lawmakers found the initiative as having no “economic value.”
With no funding for the takeover deal, Transportation Undersecretary Jose Perpetuo M. Lotilla has said his agency is now considering tapping the local debt market to bankroll the multibillion-peso initiative.
In response, Sobrepeña said the government is only cutting reserves in the $270-billion economy.
“It is unbelievable that they would do such a thing. Imagine spending P54 billion to buy something that they practically owned,” he said with utter disbelief. “The only thing that this initiative will accomplish is delaying the solution.”
The amount for the takeover, the businessman said, could already translate to over 100 brand-new light-rail vehicles for the train system, plus a complete overhaul of the line.
“Yet they want to spend it to nothing,” he lamented, explaining that the government practically controls the mass-transit system through government appointees in the MRTC’s board.
The solution to the chronic problems of the MRT, Sobrepeña said, lies on mutual cooperation.
He said the government must be open to the proposals of the private concessionaire to improve the line.
“We submitted a new proposal to improve the MRT last month. It involves the procurement of a total of 96 new train cars, the rehabilitation of the existing 73 coaches, and extend the MRT all the the way to Caloocan. We want to fix the whole line,” he said.
The P6.75-billion proposal, he said, would also free the government from paying billions of equity rental payments to MRTC annually.
“The proposal is at no cost to the government. We’ll bring back Sumitomo Corp. for the rehab and maintenance and bring back the single point of responsibility for the line. Instead of spending billions of pesos to buy out the private partner, we urge the government to consider our proposal,” Sobrepeña said.
He said the current set up of rehabilitating the MRT 3 is, likewise, flawed. Chopping off a P9.7-billion rehab deal to different contractors slows down the process, while increasing the possibility of pointing fingers should one system bog down after another.
“The objective is to fix the trains but in the fastest way,” he said.
The Filipino company’s proposal with Japanese firm Sumitomo would also augment the capacity of the line, increasing it fourfold to 1.2 million daily passengers. He allayed fears that the company would increase the fares sharply should its proposal be adopted by the government.
“We will not increase the fares sharply. It will be done staggeringly, and will only be equal to bus fares,” the businessman said, adding that he was not in favor of the fare adjustment that took effect on January 4 this year.
“I am not in favor of the increase because the service is not good. The increase should only come when the system is fixed and improved,” Sobrepeña said. Aside from the proposal with Sumitomo, the railway company also has a separate offer with Metro Pacific Investments Corp.
The local flagship of Hong Kong-based conglomerate First Pacific Co. Ltd. is proposing to shoulder the upgrade costs of the train system and free the government from paying billions of pesos in equity rental payments.
The group of businessman Manuel V. Pangilinan, which earlier entered into a partnership agreement with the corporate owner of the MRT, intends to spend $524 million to overhaul the line.
The agreement would allow the firm to invest roughly $600 million to improve the services of the train system.
The venture would effectively 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 would 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.
“They are planning to submit the proposal within a week or two,” Sobrepeña said. “I’m open to any of the proposals from the private sector. What we intend to do is to upgrade the system.”
The government has been struggling to improve the train line. It even failed to procure a maintenance provider twice. The two auctions for the P2.38-billion MRT maintenance contract were snubbed by railway companies despite a sweeter deal.
Multinational and local companies like Busan Transport Corp., Mosan-Inekon Phils Ltd. Co., SMRT International Pte. Ltd., Miescorrail Inc., and D.M. Consunji Inc. backed out from the first tender, while none of them even expressed their interest in a much better upkeep deal. Investors were spooked by the glaring defects of the train system, a rail expert said.
The government is now looking for other ways on how to successfully procure a reputable maintenance provider for the MRT 3. “No maintenance provider, who, in his right mind, would take the contract, no matter how they sweeten the deal. No one would want to maintain a broken train system,” Sobrepeña said.
Government officials were sought for comment on the businessman’s comments and suggestions, but no one replied to the BusinessMirror’s queries. MRT Line 3 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.