DOTC at fault for MRT-3 breakdowns

At the Senate hearing last Monday on the problems of the Metro Rail Transit line 3 (MRT3), the resource persons, all from the Department of Transportation and Communications (DOTC), made it appear that the owners of the train line, MRT Holdings, were at fault. (Resource persons from MRT Holdings were not invited to the hearing.) They even said that the DOTC would sue the owners for breach of contract for not buying more trains, in spite of the fact that the 500,000 passengers that ride the MRT every day cannot be accommodated with the present number of trains, and for its failure to maintain the trains properly.

However, at the Kapihan sa Manila at the Diamond Hotel on the same day where resource persons from both MRT Holdings and the MRT3-DOTC were present, it was the other way around: It was the fault of the DOTC. It was the DOTC that was violating the BLT Agreement. This was bolstered by records and correspondence that fell into my hands. MRT Holdings is the owner of the train line through the Metro Rail Transit Corp., or MRTC, while MRT3-DOTC is the operator under a 25-year build-lease-transfer (BLT) agreement with the owners.

• On the failure of the maintenance provider to keep the trains running smoothly:

Transportation Undersecretary Jose Lotilla said at the Senate hearing that the MRTC had failed to maintain the system, hence the frequent breakdowns. Records show, however, that it was the DOTC who chose the present maintenance provider, Autre Porte Technique Global Inc. (APT Global). The original maintenance provider was Sumitomo of Japan who subcontracted the service to TES Phils. For unknown reasons, the DOTC replaced Sumitomo when its contract expired, took over the maintenance of the MRT system in October 2012 and awarded the contract—without any public bidding and without submitting the terms of reference (TOR) to MRTC for its consideration and approval—to a joint venture between Philippine Trans Rail Management & Services Corp. and Comm Builders and Technology (PH Trams-CBT&T) and later to APT Global.

Records show that the breakdowns and shortages of trains, which cause long lines at the train stations, started to occur only after the DOTC took over the maintenance of the system. Of the original 20 trains, only 16 are running regularly because of the lack of maintenance.

As early as three years ago, MRTC already raised with the DOTC the need to bid out the maintenance of the MRT3 System to a qualified maintenance provider as required under the relevant agreements. However, the DOTC did not act on it promptly. With only 10 days left before the expiration of the contract with TES-P/Sumitomo, DOTC required MRTC to conduct a public bidding to select a new maintenance provider and said that TES/Sumitomo “must be taken out.”

With the very limited time to conduct due diligence on the qualifications of prospective maintenance providers as well as the required publication of notices to interested parties, MRTC was constrained to allow the DOTC to select the interim maintenance provider on the condition that the TOR will be submitted to and approved by MRTC as required by the BLT agreement. But DOTC did no such thing.

Eventually, DOTC awarded the contract to PH Trams-CB&T without any public bidding as required by law. (According to the Securities and Exchange Commission, PH Trams is not even registered with the SEC.) Subsequently, DOTC awarded a P685.04-million one-year maintenance contract to APT Global, again without any public bidding and without submitting the TOR to MRTC.

•  Records also show that MRTC has repeatedly requested DOTC for an independent third party technical audit of the MRT System. However, DOTC ignored the requests and did not even respond. The technical audit is necessary to determine the true status of the MRT3 System to ensure the safety of the riding public and make sure that the entire system is properly maintained so that “it can be run based on the operational specifications provided for in the BLT Agreement”

The BLT Agreement also specifies a minimum of 54 to 60 Light Rail Vehicles (LRVs) comprising 18 to 20 trains with three LRVs each, with an interval of three minutes between trains during peak hours. The technical audit will also assess if the current maintenance provider is financially and technically competent to maintain the trains, taking into account the recent breakdowns and fears that fewer trains are now capable of being operated due to deterioration.

The DOTC ignored all these requests and did not even show up during the Jan. 17, 2014 MRTC board meeting where the DOTC was supposed to present the maintenance provider it had chosen to the MRTC board. Notwithstanding the fact that DOTC had earlier confirmed the presentation by Undersecretary Lotilla, DOTC did not even bother to call the board to say that they had decided not to come.

To be continued.