DOTr bats for Japan ODA option to solve MRT woes

The Department of Transportation (DOTr) yesterday batted for a government-to-government (G2G) Japan Official Development Assistance (ODA) solution for the woes of the Metro Rail Transit (MRT)3 and lambasted the private sector alternative as unsubstantial – something “not based on any comprehensive inspection” of the railway system in question.

In its “briefer” issued to the press yesterday, the DOTr pointed out that it has already twice denied the private sector option to solve MRT 3’s problems proposed by Robert John L. Sobrepeña through his MRT Holdings, Inc. II (MRTH II) and subsidiary Metro Rail Transit Corporation (MRTC).

“It is a wonder why some appear to have been consistently selling the Sobrepeña-MRTC Option despite the DOTr’s advance efforts to fix MRT-3 with a comprehensive, single point-ofresponsibility solution to be delivered by a highly qualified and highly-experienced provider, backed by the government of one of the leading railway powerhouse countries in the world,” the DOTr stated in its briefer.

The state transport agency stressed that “MRTC had no other railway development experience other than MRT-3.”

On top of this, the DOTr also underscored “Sobrepeña’s track record from his failed College Assurance Plan (CAP) scheme and controversy-ridden Camp John Hay Development. Corp. (it appears that CJHDC still refuses to pay billions in debt intended for the Armed Forces, through BCDA).”

“It is a wonder why some appear to have blind allegiance to the 5-page proposal underlying the Sobrepeña-MRTC Option proposed by Sobrepeña through MRTH II and MRTC, private companies involved in the earlier construction and maintenance of MRT-3.”

MRTC built the R35.6-billion MRT 3. To pay for the construction cost, MRTC used R10 billion of its own money and borrowed R25.6 billion from various lenders, payable over 10 years, at interest rates of 2.8%, 7.52%, and 9%.

Filipino taxpayers have been paying, and will continue to pay, MRTC a 15% return on the R10-billion used in MRT-3. Over 25 years, Filipino taxpayers will have paid MRTC a total of R126.4 billion for its R10 billion equity.

As of early 2018, Filipino taxpayers have already paid MRTC close to R73.7 billion and will continue to pay more than R52.7 billion up to 2025, according to the DOTr.

Aside from coughing up R126.4 billion to MRTC for its R10 billion equity in MRT-3, Filipino taxpayers have already fully paid the R25.6 billion that the borrowed, plus interest of R6.9 billion as of 2010.

In addition, Filipino taxpayers have been paying, and will continue to pay, R2.2 million per month for MRTC’s staffing and administration costs.

As of early-2018, Filipino taxpayers have paid R463.5 million for MRTC’s staffing and administration costs, and will continue to do so up to 2025.

Filipino taxpayers also pay for MRTC’s taxes. As of early-2018, Filipino taxpayers have paid MRTC R27.1 billion as reimbursement for MRTC’s taxes and will continue to reimburse MRTC for its taxes up to 2025.

In total, after investing R35.6 billion to build MRT-3, MRTC already received R133.7 billion total. By 2025, the company stands to receive R200 billion in return for its R35.6-billion investment.

Filipino taxpayers would have paid MRTC the equivalent of almost 6 MRT3’s, according to the DOTr.

Despite all these, MRTC’s affiliate, MRT DevCo, has refused to pay DOTr almost R2.3 billion as of mid-2015 for leasing out kiosks and advertisement spaces in MRT-3.

MRTC and DOTr are still squabbling on the interpretation of the Build Lease Transfer (BLT) Agreement for MRT-3, as well as MRTC’s performance of its obligations.

There are ongoing cases between MRTC and DOTr, as well as between MRTC and various local governments, both in Singapore and in local courts.

Now, the Sobrepeña-MRTC Option for solving MRT 3’s problems is largely based not just on continuing, but even expanding, what MRTC gets under the BLT Agreement, such as MRTC receiving MRT-3’s fare revenues of almost P3 billion per year up to 2040, without the benefit of any bidding, or even a Swiss Challenge.

The Sobrepeña-MRTC Option also involves an unspecified schedule of fare increases, which will increase MRT-3 fares from the current maximum of R28.00 to up to almost R40.00.

This involves giving to MRTC up to more than R10 billion per year in fare revenues over a period extending to 2040, again, without the benefit of any bidding, or even a Swiss Challenge.

Notably, the Sobrepeña-MRTC Option also involves extending onerous terms of the BLT Agreement beyond 2025, and into 2040.

For example, Sobrepeña-MRTC Option requires Filipino taxpayers to continue reimbursing MRTC for all its taxes.

The DOTr denied this option twice, first in August, 2017 and again in October, 2017.

On the other hand, the Japan ODA option costs R11.6 billion for the railway rehabilitation and R5.5 billion for the maintenance.

Rehabilitation includes restoring MRT-3 to its design operating condition, and will take 26 months. This will “fix everything that needs to be fixed” in MRT-3.

Maintenance, includes day-to-day maintenance, preventive maintenance, corrective maintenance, and the complete general overhaul of MRT-3’s 72 cars, which were supposed to have been done in 2014-2016 (MRT-3’s terminated maintenance contractor, BURI, failed to do the overhaul).