Responsibility

Among the “errata” items submitted by the DBM and apparently passed without due diligence by the House of Representatives is the P53 billion allotment to the DOTC to undertake an “equity value buyout” of the MRT-3.

The Senate, which has been more diligently studying the budget document, appears to have struck down this item. This is the correct thing to do.

Although DOTC Secretary Joseph Emilio Abaya seems obsessed with the buyout, he has not taken up this transaction with the private owners of MRT-3. The proposed transaction glosses over a vital legal detail: an “equity value buyout” is a remedy reserved for the owners of MRT-3 in the event government reneges on its part of the contract. It is not a transaction government can initiate.

Abaya needs to be educated on this. Or maybe not, since he will not have the money to do this if the Senate indeed strikes down the budget insertion for this.

The public, too, needs to be educated about this strange buyout idea. All this involves is moving money from one government pocket to another. The P53 billion will simply be paid out to DBP and LBP, holders of the bulk of MRT-3 bonds. The two government banks, on the basis of a policy decision, mopped up the bonds from the open market. By holding on to the bonds, the two government banks reap profit from the economic value of those instruments.

Buying out the bonds from the two government banks will not give government ownership of MRT-3. It simply gives DOTC control of the board of the MRTC, now dominated by nominees of the DBP and LBP. Regardless of whether the buyout happens or not, the MRTC board is controlled by government appointees anyway. These nominees will decide according to policy dictate (assuming this administration is clear on its policy in the first place).

The “equity value buyout” has nothing to do with the adept maintenance of the MRT, which is the matter that seriously affects the riding public today.

The MRT today is still maintained by APT Global, the undercapitalized, crony-owned company that has made the service a curse the past few months. It is still there because no one participated in the bidding for maintenance contract undertaken by the DOTC a few weeks ago.

It is understandable that no one participated in the DOTC bidding. It is as if the DOTC was bidding out janitorial services for a building on the verge of collapse. No one wants to be the janitor-on-duty when the collapse finally happens.

The DOTC, after all, was bidding out a short-term maintenance contract to look after a system that needs comprehensive rehabilitation, a build-up of spare parts inventory and competent preventive maintenance. The needs of the facility and the contract offered by the DOTC are a complete mismatch.

When several rails broke at the MRT system a few weeks ago, the facility had to snitch spares from the better-managed LRT. DOTC said the responsibility for stocking up on spare parts belonged to APT Global. The maintenance contractor, on the other hand, said this was not part of their contract.

Before a congressional hearing earlier this week, Robert Sobrepena (representing the private owners, MRT Holdings) argued that a maintenance contract featuring a “single point of responsibility” be restored. This was the arrangement with the former maintenance provider Sumitomo. That arrangement was arbitrarily and abruptly changed by the forgettable Al Vitangcol, the former general manager of the MRT-3 accused of extorting from the Czech company Inekon (the original supplier of the trains now owned by Germany’s Siemens).  

A maintenance contract featuring a “single point of responsibility” assigns to the contractor the upgrade of the system, the stocking up of spare parts and preventive maintenance to prevent breakdowns. The contractor is penalized for every incident of breakdown in the system.

The old contract with Sumitomo featured this. It is a more robust but more reliable arrangement. It will certainly cost a bit more, but it will ensure a more reliable and safer service. When Vitangcol scuttled this arrangement, the facility turned from bad to worse. With increasing intermittence, service broke down and passenger safety turned doubtful. The trains now run slower and the queues grow longer.

Fishy

Filipino fishing companies are objecting to what they consider unreasonable provisions in the draft law amending the Fisheries Code, now being considered at the bicameral committee level. In a statement emanating from the Alliance of Philippine Fishing Federations, Inc., the fishing companies suggest the unreasonable provisions in the bill were adopted to appease European Union demands in exchange for trade concessions protecting our less competitive economic sectors.

The statement points out that the bill imposed more severe penalties for environmentally conscious fishing companies than those imposed on municipal fishermen who use dynamites and cyanide. While dynamite and cyanide fishers are penalized the equivalent of three times the value of their catch for each violation, the bill imposes seven times the value of the catch for violation of unreasonable requirements.

To begin with, local fishing vessels are required to install Vessel Monitoring System (VMS) devices that costs upwards of P240,000 each, plus the P20,000 monthly maintenance subscription for these devices.

Despite that requirement, the bill redundantly requires each vessel to host onboard fisheries observers. The salaries for these observers will be shouldered by the fishing company — an added cost that will be passed on to consumers by way of more expensive fish.

On mere suspicion of a violation, the “fisheries observers” are empowered by the bill to override the authority of the vessel captain and order the ship to sail to the nearest impounding port. This can only be an invitation for corruption.