Gov’t urged to bare and disclose MRT-3 mess before asking for a fare hike

NEWS RELEASE

15 August 2013

Before considering any hike in MRT and LRT rates, the labor group Partido ng Manggagawa (PM) is asking the Department of Transportation and Communication (DOTC) to bare and disclose the real score behind the failed Build-Lease-Transfer (BLT) MRT-3 project which condemned the government with tremendous financial headaches.

In a position paper it plans to submit prior to the public consultations being organized by DOTC, PM demands that all parties be provided with the following documents:

1.      The original BLT contract between the DOTC and the MRTC, including contract price, guaranteed passenger traffic, and amendments that were made;

2.     A factual presentation of why the government was forced to assume the operations and maintenance of MRT-3 from MRTC and why the latter hailed the former before the Arbitration Court in Singapore;

3.      The proposed Compromise Agreement with MRTC as mentioned under Executive Order No. 126 signed by President Aquino on February 28, 2013;

4.     Audited financial statements of MRT/LRT systems, including BLT amortization and local tax liabilities of MRTC assumed by the government; and,

5.      Other available relevant documents.

“Hindi lang dapat tama ang kwenta.  Dapat tama rin ang kwento,” stated PM spokesman Wilson Fortaleza, pointing out that Pepe and Pilar deserved to be apprised of the real story behind the numbers as well as the truth on why the MRT-3 project turned into a big mess.

President Aquino during his fourth State of the Nation Address (SONA) complained of the big subsidies taxpayers pay for MRT and LRT commuters.  He said the amount of subsidy in MRT line is P45 and in LRT lines P25.  To reduce this burden, he proposed that rates in the MRT/LRT systems be brought closer to the rates of air-conditioned buses.  The President’s numbers, however, are being contested by PM.

DOTC puts the annual subsidy for the MRT and LRT systems at P6-B, down from P7-B in the previous years.  The agency has recently floated the idea of asking for a P10 hike in MRT/LRT rates.

The labor group said based on initial reports, some P75-B of subsidy for MRT-3 had been spent by the government for the past ten years and close to that amount for LRT 1 and 2.

“If such is true, private investors and creditor banks had already made the killings out of the MRT-3 contract,” said Fortaleza, adding that the project cost amounted to US$679-M only in 2007 or about P20-B based on the prevailing exchange rate at that time.

“So after coughing out P75-B, are we going to continue to pay them P6-B annually for the next 10 years?” lamented Fortaleza.

Ownership of the private concession was also mired in corporate complexity after the consortium Metro Rail Transit Corporation (MRTC) owned by the Sobrepenas, Ramos and Ayala, who bagged the MRT-3 contract securitized their interests through bond issues and which later was bought back by the government through the Land Bank and the Development Bank of the Philippines.

MRTC loans were backed by government’s sovereign undertakings similar to the notorious IPP contracts in the power industry which carried “take-or-pay” provisions.

“The country had loads of bad experience in onerous IPP contracts.  The MRT project happened under the same regimes of BOT contracts during the time of President Ramos and as such, it must have suffered the same flaws,” explained Fortaleza. 

Partido ng Manggagawa insists that costs borne out of onerous contracts, corporate fraud, or flawed executive decisions should not be passed on to consumers.

If such is proven, PM demands that the BLT contract is not only terminated but rescinded at no further cost to the government and any liabilities accrued from such onerous or fraudulent transactions should not be passed on to commuters.