Malaya Business Insight | September 18, 2017

Government believes privatization of the Metro Rail Transit (MRT3) will resolve the issues on the rail system.

The resulting rehabilitation and upgrade by the private sector would lead to the efficiency of the system.

The Department of Transportation (DOTr) said on Friday it has given the group of Metro Pacific Investment Corp. (MPIC) and Ayala Corp. the original proponent status for the rehabilitation of the rail system which would allow it to take over its operation and maintenance.

"We… have initiated… the creation of the platform to explore possibilities including privatization to address the issues in MRT," said Arthur DOTr secretary.

The grant of original proponent status to the MPIC-Ayala consortium does not automatically mean its proposal is approved.

"There will be a discussion , we will agree (on the proposal) and submit it to NEDA (National Economic and Development Authority). Once approved by NEDA and the President , there will be a Swiss challenge," said Tugade. The NEDA board is chaired by President Duterte.

Last July ,MPIC and Ayala submitted an unsolicited proposal to the DOTr to upgrade and rehabilitate the MRT 3 for P 12.5 billion. The group also offered to buy out the private and government stakeholders in MRT-3 and take over operation and maintenance of the rail system.

The rehabilitation will be undertaken through a concession arrangement with the government for 30 years similar to Light Rail Manila Corp. , concessionaire for LRT-1.

The government through Land Bank of the Philippines and the Development Bank of the Philippines holds an 80-percent economic interest in MRT-3. The balance is held by creditors of Metro Rail Transit Corp.

MRT-3 currently carries over 460,000 passengers daily, well beyond its design capacity. MRT-3 station runs from North avenue in Quezon City to Taft-Buendia in Pasay City.

The DOTr is looking at terminating the contract of the MRT- 3 maintenance provider Busan Universal Rail Inc. (BURI) which will lapse in December next year due to several technical glitches on the rail system.

Cesar Chavez, DOTr undersecretary for rail, BURI failed to execute the P907-million general overhaul contract for the light rail vehicles.

Chavez said commuters should expect three to five unloading incidents daily at the MRT-3 Last Friday, only 17 trains were operational from 20 trains that it should have deployed.

But BURI in a statement called on the DOTr to investigate why technical glitches and service interruptions continue to persist despite proper maintenance of the MRT-3.

In a letter to MRT-3 general manager Rodolfo Garcia obtained by media the current maintenance provider pressed for the conduct of the said probe "to confirm that the MRT-3 design flaws are the primary reason for the recurring service interruptions of the system".

The service provider specifically cited that during the first year of MRT-3 operations in 2000 at the time also the trains were all brand new it recorded a total of 1,492 glitches, while in n 2008 the glitches reached 1,927, and in 2009 it climbed to 2,199.