Delay of BRT project causing government millions

CEBU, Philippines - The delay in the implementation of the Cebu Bus Rapid Transit Project is causing the government millions of pesos in commitment fees to its creditors, according to the Commission on Audit.

In its 2016 audit report for the Department of Transportation (DOTr), COA said the delay has already resulted in the incurrence of P8.065 million commitment fees.

State auditors noted that despite the availability of the loan facility amounting to $198.5 million to fund the CBRTP, the implementation was delayed due to slow procurement process and right of way problem.

The Philippine government in 2014 entered into Loan Agreement with Agence Francaise Development (AFD) and World Bank (WB) through International Bank for Reconstruction and Development (IBRD) and Clean Technology Fund (CTF) for the implementation of the CBRTP.

The WB will finance the CBRTP with $116 million loan from the (IBRD) and $25 million from its CTF, and another $57.5 million from AFD.

“The delayed implementation of the above FAPs (Foreign Assisted Projects) not only resulted in the incurrence of additional costs to the government in the form of commitment fees but, more importantly, it deprived the public of the benefits that could have been derived from the immediate use thereof,” COA stated in its report.

It said that DOTr should consider the conditions under the agreement that any expenses to complete the project after the loan closing date will not be financed under the loan. The loan closing dates of the CBRTP are on March 31, 2021 for AFD, and June 30, 2021 for IBRD and CTF.

“Any further delay in project completion would pose further financial burden to the government since the cost to complete the said FAPs would have to be sourced from GOP (Government of the Philippines) counterpart funds,” COA said.

Recommendations

Among the COA recommendation to DOTr is, first, to require the Project Management Office (PMO) of CBRTP to adopt an effective project monitoring system of the project implementation to ensure that loan drawdowns are on schedule as embodied in the loan agreement to maximize availment of loan proceeds and avoid payment of commitment fees.

Second is to conduct an independent investigation and file appropriate legal action against DOTr officials responsible and accountable for the delayed implementation of the projects, if warranted by evidences, and to consider holding liable the concerned DOTr officials for the commitment fees incurred.

On Hold

The commitment fees already incurred by the government is expected to increase further after the DOTr announced that it is putting the implementation on hold to allow review following several concerns raised against the project.

DOTr announced Wednesday evening that a review is necessary to address several concerns that cast doubts on the integrity of the BRT project.

The Cebu City government and Bus Rapid Transit Project Implementation Unit said they will wait for formal communication from DOTr about it.

“The project implementation unit will await official instructions from DOTr on the matter,” said lawyer Rafael Christopher Yap, project manager.

City Administrator Nigel Paul Villarete, one of the people who pushed for the project, said he has sent communication to representatives of World Bank if they were consulted about the development.

“I already sent an inquiry to the World Bank on whether they were consulted or apprised by DOTr on its decision to put the Cebu BRT on hold,” Villarete told The FREEMAN.

While waiting for any memo or communication from DOTr, he said the city and BRT-PIU will continue the lot acquisition process as required under the Memorandum of Agreement signed by the city and the transportation department.

Villarete said he cannot understand the conflicting statements from DOTr and National Economic and Development Authority.

To recall, NEDA Secretary Ernesto Pernia was in Cebu last week where he said after meeting with Presidential Assistant for the Visayas Michael Dino that the BRT project should be stalled.

NEDA later issued a statement that Pernia cannot by himself decide to put on hold the project. Then came the DOTr announcement.

Villarete said the city will clarify the stand of different agencies especially DOTr since it is the implementing agency of the project.

“I just want to ask DOTr if they have read the statement of NEDA in the previous days,” Villarete said.

Today, the NEDA- Investment Coordination Committee is expected to discuss the additional P6.3 billion budget to the current P10.6 billion budget of BRT. (FREEMAN)