MRT 3 fiasco dwarfs pork barrel scam | Inquirer Opinion
As I See It

MRT 3 fiasco dwarfs pork barrel scam

/ 12:11 AM June 27, 2014

The government is about to complete the buyout of MRT 3, the elevated rail system running above Edsa. But wait a minute, look at its background first.

MRT 3 is a sinkhole of public money, compared to which Janet Lim Napoles’ P10-billion pork barrel scam appears piddling. With the $1.8 billion in government subsidies and the over $485.5 million interest the Philippine government has coughed up to project lenders, MRT 3 has cost taxpayers an estimated $2.5 billion in the last 14 years. The government adds an amount to the fare that each MRT passenger pays to assure the operators of MRT 3 a 15-percent profit on investments. The pork barrel scam of Napoles and cohorts pales in comparison as it translates to only $228 million—less than 10 percent of the MRT 3 godzilla.


Already, the $2.5 billion that the government has spent is almost four times the amount it took to build the whole MRT 3 project. That’s only the good news. The bad news is that it does not end there. Unconscionable profiteering and seething corruption occur every day at MRT 3.

Advocating a shift to government control, Sen. Chiz Escudero avers that the MRT 3 Build-Lease-Transfer (BLT) agreement “has been anomalous and grossly disadvantageous to the government from the very beginning.” He reiterated the need to resolve the ownership of MRT 3 soon “because it is hurting the implementation of an efficient and sufficient mass transport system for the riding public.” Escudero’s contenton fits snugly with public record.


After the Department of Transportation and Communications declared it the only prequalified bidder in 1991, Edsa LRT Consortium, composed of 10 local and international companies, submitted a bid to build the project for $350 million. However, then Transportation Secretary Pete Nicomedes Prado entered into a BLT agreement not with Edsa LRT Consortium but with an Israeli businessman, Elijahu “Eli” Levin, owner of a shell company uncannily named Edsa LRT Corp. Ltd. Let’s call it ELCL for short.

No law, decree or commandment allowed Prado to substitute ELCL with the prequalified and winning bidder, which was Edsa LRT Consortium. After all, ELCL was organized in Hong Kong just one month before it closed the deal with Prado and had a measly $998 capital, according to former senator Francisco Tatad. ELCL failed to prove that it had sufficient net worth and liquid assets, and a credit line fully committed to the project (Edsa LRT 3), which are legal preconditions for entering into a BLT agreement with the DOTC. Tatad also said that Prado signed the agreement “over the misgivings of the National Economic and Development Authority, the secretary of finance, and the governor of the Central Bank [now officially referred to as Bangko Sentral ng Pilipinas] on its financial viability, and doubts on the legality of the contract from the Department of Justice.”

The building blocks of corruption followed the illegal signing of the agreement.

The original $350-million project cost was nearly doubled. The BLT was further “enhanced” with a sovereign guarantee ensuring an annual 15-percent return on investment (ROI), which forced taxpayers to subsidize ELCL’s profit-taking. The agreement was extended from 25 to 50 years. Everyone knows that MRT fares cover only the cost of operating and maintaining the rail system, at best. In other parts of the world, development rights are normally given to investors in railway projects; this  is where the ROI comes from in railway investments.

Not for MRT 3’s 13 stations, including the state-owned 16-hectare land where Trinoma now stands. Under the “enhanced” agreement, ELCL does not have to develop the commercial potential of the land that MRT 3 occupies. Why bother? Their ROI is a clean 15  percent of everything, guaranteed by a sovereign government and subsidized from the pocket of every Filipino taxpayer—for 50 years!

A legal expert, familiar with a 2011 preliminary internal investigation of MRT 3 by the Senate finance committee, opines that the original BLT agreement, being contrary to law when it was executed in 1991, is “void ab initio” (has no value from the very beginning).

Here’s a chance for Senator Escudero to make the Senate rise from the muck after the Napoles pork barrel scam. Show resolve and concern by formally convening the Senate finance committee to immediately investigate the MRT 3 fiasco before the planned MRT 3 buyout is finalized.

But it still beats me: How on earth can a foreign businessman with $998 in capital sashay into our islands’ corridors of power and sign lucrative contracts with the high and mighty?

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TAGS: As I See It, Graft and Corruption, MRT-3, neal h. cruz, opinion, pork barrel scam, railway
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