IBON FEATURE

LRT sweet deals, bitter pill for public

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AFTER much delay in the bidding process, the government scheduled a deadline on the submission of bids for the Light Rail Transit (LRT) 1 Cavite Extension and Operation and Maintenance (O and M). The Aquino admiistration closed the bidding last May 28.

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The bidding has been postponed three times since last year. The Department of Transportation and Communications (DOTC) said that there were not enough bid submissions and there were “several unsettled issues.” The new deadline was set on April 2014 after bidding was put on hold in August 2013 after a bidding failure. In order to fast-track the process, the DOTC also removed the prequalification stage and merely required corporations to submit their qualification documents together with their technical and financial bids. However, in April 2014, the DOTC again postponed the submission of bids to May 28 because bidders insisted to have more time to include the design of the common station in their bids.

Interested bidders have long been pressuring the government to include the design of the common station in the LRT 1 extension project. In November 2013, the government approved the Php1.4 billion construction of the LRT1 North Extension Project—Common Station. The common station will be for LRT 1, MRT 3 and MRT 7. In April, the Aquino government gave in to the wishes of the corporations and included the design (and eventually the right to construct) of the common station in the LRT 1 Cavite Extension Project. The winning bidder would be granted the right to submit an alternative preliminary design of the common station and design it at its own cost. The government and the winning bidder would then share the total bid cost of the common station 70%-30%, respectively. If not, the government will design and will get a contractor through public procurement. The common station would be located near Trinoma Mall of Ayala Corp., instead of SM North Edsa, which was the original plan.

This new concession is on top of a guarantee on profit that the government included in the LRT 1 Cavite Extension and O and M package in 2013. DOTC included a top-up provision in the concession agreement which means that the difference between pre-approved fares in the contract and the actual fares that will be implemented will be paid by the government to the winning bidder. This is the government’s promise of freedom from regulatory risks to the private sector.

At Php64.9 billion, the LRT 1 Cavite Extension is the biggest project bid out by the government so far. It entails the construction of a railway from the present terminal station in Baclaran to Niyog Station in Bacoor, Cavite. The project also includes the takeover of the winning bidder of the operation and maintenance of the entire LRT 1 from the DOTC-Light Rail Transit Authority (LRTA).

In the end, the Ayala-Pangilinan consortium (Light Rail Manila) emerged as the sole bidder of the LRT Line 1 Cavite Extension and O and M. Both corporations are already making it big in the infrastructure arena because of PPPs and privatization projects under previous administrations.

It can be recalled that erstwhile competitors in privatized public utilities (telecoms and water supply) and other infrastructure projects Metro Pacific and Ayala Corporation have teamed up forming the Light Rail Manila Consortium to bag PPP contracts for railways and airports. Metro Pacific also owns 20% of the economic interest in the Ayala-led Metro Rail Transit Corp., the operator of MRT 3.

Essence of mass transport
The essence of having a mass transport or transit system such as the railways for the Philippines is to transport people en masse to workplaces. The kind of mass transport system depends on the needs of the economy. Mass transport systems are also more efficient than other systems of transportation because of the scale of operations. Mass transport systems in developed countries are also called public transportation systems –owned and operated by the state.

Mass transport systems are not regular business activities because they do not exist for profit but have a big public interest.

There are nine PPP projects in mass transport under the Aquino administration. These include the mother of all mass transit projects, the Php271.2 billion Integrated Luzon Railway Project Phase 1 which previously was among the anomalous projects awarded to Chinese corporations under Pres. Arroyo. It also includes the first envisioned subway rail line, the Php135 billion Mass Transit Loop which would connect Bonifacio Global City, Makati Central Business District, and the Mall of Asia area in Pasay City.

Out of the nine PPP, only one has been awarded so far, the Php1.72 billion Contactless Automated Fare Collection system awarded to AF consortium led by Ayala Corp and Metro Pacific, which hold the majority shares of the Metro Rail Transit Corp. (MRTC), the MRT 3 concessionaire. This deal was questioned in the Office of the Ombudsman because of a pending case regarding the anomalous procurement of new trains and conflict of interest involving the MRTC.

To be continued

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