Jovee Marie N. dela Cruz & Lorenz S. Marasigan | BusinessMirror | November 6, 2017

TERMINATING the maintenance contract of Busan Universal Rail Inc. might be a sound decision on the part of the government, but it must thoroughly study its game plan for the Metro Rail Transit (MRT) Line 3 so as not to make the same mistake twice.

Rene S. Santiago, a rail expert, said the government's move to end the maintenance deal with Busan Rail is "inevitable," given its performance over the past year and a half.

"It is about time," he told the BusinessMirror. "Poor outcomes merit termination."

Citing four grounds for the termination, the Department of Transportation served the notice of termination to Busan Rail on Monday.

In the said document, Transportation Secretary Arthur P. Tugade listed the four grounds as: poor performance; failure to put in the prescribed number of working trains in service hours; failure to implement a feasible procurement plan for spare parts; and failure to comply with the contractual requirements of a complete and up to date computerized maintenance management system.

"It cannot be overemphasized that what is at stake here is the welfare and interest of the riding public. This office could not just sit back and wait while watching Busan Rail trifle and flirt with the lives of the commuting public, with its substandard performance," Tugade said.


Busan Rail Legal Counsel Maricris B. Pahate said the government should recall its decision, as there are no legal bases on its claims that the group failed to deliver on its contract.

"We regularly deliver the required number of trains under the contract. We are also entitled to procure spare parts as needed," she said. "Why are they blaming us? The whole system is a lemon."

The company has always been vocal in its view that the MRT 3 has inherent flaws, which have caused system glitches since its first year of operation.

Busan Rail started maintaining the rail system in January 2016, after it won the P3.8-billion deal under a negotiated procurement process. The government resolved to such a process because the first two auctions failed due to lack of interest.

Pahate said her group is aware that the system is flawed inherently, but still decided to pursue the deal because the government gave its assurance on issues of liability.

"We were given the assurance that if the glitches are based on the rails or signaling we will not be liable. Right after we entered into the contract, four days into it, we surveyed it. We wrote them that they need to change the rails, as these could result in derailments," she said.

Pahate added the government should honor the terms of the contract, which calls for an arbitration procedure for disputes such as these.

It has filed for arbitration proceedings through the Philippine Dispute Resolution Center Inc. (PDRC), a nonprofit organization. "We have sent a notice of arbitration for us to do the arbitration on the PDRC," Pahate said. "It is provided for in the contract."

'Charge those liable'

Lawmakers also pushed for the filing of criminal negligence and plunder against behind the "anomalous" maintenance contract with Busan Rail.

"It is not enough to terminate the contract with Busan Rail, but also to hold them accountable for the unacceptable deterioration of the MRT system, that affected and endangered hundreds of thousands of the commuting public," Party-list Rep. Ariel B. Casilao of Anakpawis said. Party-list Rep. Jericho B. Nograles of Puwersa ng Bayaning Atleta agreed, saying that the transportation department should start the process of fully rehabilitating MRT 3.

"It's really doesn't matter who takes over as maintenance service provider so long as the provider has a proper and valid contract and has actual and proven track experience," Nograles said.

Party-list Rep. Carlos Isagani T. Zarate of Bayan Muna said the termination should have been done much earlier, "as the company miserably failed to do its job in maintaining the MRT."

Since terminating the maintenance contract may mean service interruptions, Tugade said his agency has established a maintenance transition team to take over the upkeep requirements of the train line while it procures a replacement.

"The question then is: what would they put in place? If another short-term contractor, the result will be the same by another dog with a different collar," Santiago said. "It's the similar game plan of previous administration. It will end up the same way."

Transportation Undersecretary Cesar B. Chavez told the BusinessMirror his agency is looking at placing in a new maintenance provider in six month's time.

Initial terms, he said, would include a concession period of as long as five years.

"The best case scenario is by three months, we could have a new maintenance provider. But we are looking at around three to six months to procure a new maintenance provider, which should be there for about three to five years," he said. Already, three groups have expressed interest in the maintenance of the railway system. Chavez listed the three as Singapore MRT, Sumitomo Corp. and RATP.

System overhaul

Despite this, Santiago said he expects no change in the MRT at all. "Maintenance needs history of every parts in a train and where to buy, lead time, etc. New bidder cannot guess what parts will break over contract period. Incentive is to postpone and scrimp on parts in order to earn profit."

Hence, the most plausible way to fix this mess is to consider and implement the unsolicited proposal of Metro Pacific Investments Corp. (MPIC). "The better solution is to take the Metro Pacific proposal," Santiago said.

MPIC submitted the transportation department on July 14 a P20-billion unsolicited proposal for the overhaul and expansion of the MRT 3.

The proposal involves the expansion of the capacity of the railway system by adding more coaches to each train, allowing it to carry more cars at faster intervals. It will double the capacity of the line to 700,000 passengers a day from the current 350,000 passengers daily.

The multimillion-dollar expansion is deemed as an all-encompassing deal, including the improvement of the reliability of rolling stock, the upgrading of power supply, the upgrading of stations, and the replacement of rails, which will allow the company to operate the new trains purchased by the government from Chinese train manufacturer Dalian.

Should the government grant MPIC such a status, it can proceed with the Swiss Challenge for the deal. Unsolicited proposals are required, under the law, to go under a competitive challenge, wherein other groups can offer a similar proposal, and the original proponent can present a counter offer.

The railway system is owned by the group of Robert John L. Sobrepeña and a few minority shareholders. The facility serves roughly 500,000 commuters daily, way above its rated capacity of 350,000 riders a day.