Bayan: DOTC to pay P7.5-B penalty to LRT-1 contractor

MANILA, Philippines - Militant group Bayan on Friday expressed alarm over the request made by the Department of Transportation and Communications (DOTC) to the Department of Budget and Management (DBM) for the release of P7.519 billion as penalty payments to the Ayala-Metro Pacific consortium Light Rail Manila Corp.  (LRMC).

 

The LRMC won last year the Light Rail Transit Line 1 (LRT-1) extension contract, which also included the management and operations of the existing LRT-1 and the construction of a common terminal at Trinoma in North Edsa.

 

"The penalty payments are the result of an onerous contract entered into by the Aquino government and the winning bidders. This is a form of sovereign guarantee that will be borne by the taxpayers. The amount is scandalous and unconscionable," Bayan Secretary General Renato Reyes Jr. said.

 

In his letter last August to DBM Secretary Butch Abad obtained by the group, DOTC Secretary Jun Abaya is asking for the release of P5.04 billion due to the government's failure to comply with obligations relating to the maintenance and operations of the existing train lines. 

 

Reyes said that the government also will pay LRMC some P106 million as a form of  'deficit payment' since the current minimum LRT fare of P11 is below the P12.13 minimum fare agreed upon in the contract. 

 

Under the agreement, if LRMC does not get its required fare hike, it is government who will shoulder the deficit.

 

Reyes said that Abaya also asked for the release of P500 million for the government 'blocked account' that will pay for future penalties to LRMC. 

 

Abaya anticipated that government will pay LRMC P1.05 billion should it lose a possible dispute regarding certain items in the contract.  The DOTC head sought the release of P444 million for right-of-way acquisition that needs to be settled by the third quarter of 2015, Reyes said. 

 

The DOTC's requested amount shall be drawn from the so-called P30 billion Risk Management Program Fund which was put up to cover government obligations to the private sector in relation to the government's Public Private Partnership programs and contracts. 

 

The lump-sum amount falls under the Special Purpose Funds in the national budget. 

 

"Government is set to pay LRMC a total of P7.519 billion in penalties and fees. In contrast, the LRMC has only paid government P935 million or 10 percent of its concession fees...The private concessionaire stands to get more from this than the government. It’s already as if government is the one financing the private investors," Reyes said.