MRT-3 builder offering to resume maintenance

GOTCHA By Jarius Bondoc

The MRT-3’s private builder is offering to reassume maintenance of the rotting commuter railway from the government. The offer includes full rehabilitation of trains and tracks over two years with no shutdown of operations.

“We can rehab the system while continuing to service hundreds of thousands of daily passengers,” said president Frederick Parayno of Metro Rail Transit Corp. (MRTC). “Continuous service while completely overhauling is what government wants.” Malacañang announced the other day that temporarily closing the railway is not an option, as riders would have no alternative transport through Metro Manila.

MRTC has submitted proposals to the Dept. of Transport (DOTr) and to Malacañang. It has yet to receive a reply.

To rehab and maintain MRT-3, MRTC will rehire Sumitomo Corp., the Japanese giant that designed and constructed the railway in the late 1990s. The rehab will include total replacement of the tracks and overhaul of all 73 coaches. Maintenance will cover not only trains and tracks but also signaling, power supply, and stations.

Sumitomo estimates the 26-month work to cost $150 million (P7.5 billion), Parayno said. MRTC will not profit as it will serve only as pass-through of payments like before.

MRTC leaves to the government the option to bankroll the $150 million, or advance it. If the latter, MRTC will take over operation, including fare collection, and give the government an agreed share. At present the government subsidizes MRT-3 operations and maintenance at about P7 billion a year.

“We will revert to the single-point-of-responsibility,” Parayno said. “There will be no finger pointing for any failures, as what happened up to recently.”

MRTC has a 25-year build-lease-transfer deal with the government spanning 2000-2025. From the start Sumitomo was hired for the upkeep; it overhauled the system in 2007-2008 as required every seven to eight years. Parts and equipment included, the fee rose with inflation to $1.6 million (P80 million) a month up to 2012.

That year the transport department forced MRTC to relinquish maintenance to an MRT-3 project management office. Sumitomo abruptly was fired, triggering an emergency of no expert handling daily maintenance. Hired through emergency negotiations were a series of unqualified, inexperienced, undercapitalized firms close to the then-ruling Liberal Party. PH Trams (Oct. 2012-Aug. 2014), Global Epcom (Sept. 2014-Dec. 2015), and Busan Universal Rail Inc. (Jan. 2016-Oct. 2017) had interrelated LP ownerships. The three merely rehired Sumitomo’s displaced technicians, issuing them new ID cards and uniforms each time. Charging P55 million a month, the LP fronts did not replace crucial parts or bring in proper maintenance equipment. The trains, tracks, signaling, power supply, and station elevators-escalators rapidly deteriorated. MRT-3 suffered at first thrice weekly then thrice daily breakdowns. Passengers were injured in sudden unintended braking between stations. Trains derailed six times from Apr. to Oct. this year alone.

Three weeks ago the DOTr terminated the remainder of BURI’s services till Dec. 2018, and took over the daily maintenance. BURI had reneged on its commitment, for P3.8 billion, to maintain the system and overhaul just 43 of the 73 coaches. In taking over, the DOTr retained BURI’s (mostly Sumitomo’s old) employees, and lessened the number of trains from 20 to only 15 reliable ones. Glitches still bog down operations, and a suspected sabotage last week caused coaches to decouple while accelerating.

The DOTr wants to rehire Sumitomo directly but has no legal justification to do so. Out of the question is the recommendation of the Hong Kong MTR, as MRT-3’s consultant in 2014, to shut down the railway for a year for total rehab. Public bidding can be conducted for the rehab-and-maintenance, to take at least four to six months. Meanwhile, the DOTr is forced to repair and run the MRT-3 on its own, bringing in engineers from the sister Light Rail Transit Authority and the Philippine National Railways. Original equipment makers, like Bombardier of Canada for signaling and ThermoKing of Europe for air-conditioning, have been asked to rush in parts and repair the components. Separately the DOTr asked the budget department to bid out the total rail replacement for P1.2 billion, but the bidding failed.

Parayno said its offer is to immediately bring in 200 engineers to assess and repair the dilapidation, then commence the rehab and upkeep. Parts will be stockpiled as before, and equipment brought in.

“It is immediately enforceable as Sumitomo is amenable,” Parayno assured. MRTC will hire the Japanese, but DOTr will impose the service standards and minimum number of trains running, like before.

As for the 48 new but inoperative coaches that the LP admin bought from China in 2013, MRTC proposes to jointly hire with DOTr a certification outfit for the trains’ safety, reliability, and durability.

The MRTC has an ongoing arbitration against the DOTr in Singapore. It began in 2008 when vulture fund operators were able to buy economic rights, later acquired by and to the profit of state-owned Development Bank of the Philippines and Land Bank. Although suspended in 2009-2014 the arbitration had cost the government $2 million (P100 million) in lawyers’ fees.  Before stepping down, the past DOTr in May 2016 revived the arbitration – and the concomitant legal costs.

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