After suing Sumitomo, gov’t hiring it for MRT-3

The Dept. of Transportation is suing Japanese giant Sumitomo Corp. for alleged faulty maintenance of the MRT-3. Yet it is borrowing hundreds of millions of dollars from Japan to hire Sumitomo to rehabilitate the commuter railway.

DOTr accuses Sumitomo of unfulfilled upkeep obligations. Supposedly the Japanese firm failed to maintain the tracks and stinted on rail parts. This allegedly led to the deterioration of MRT-3 trains, power supply, signaling, and stations.

Procurement laws require agencies to blacklist contractors that fail to deliver the agreed goods or services. Such contractors may no longer deal even with other agencies. Yet DOTr, while suing Sumitomo, repeatedly is declaring to hire it for much-needed repair of MRT-3.

DOTr in its lawsuit is demanding monetary recompense for Sumitomo’s maintenance breaches. At the same time, it will make Filipinos repay the Japan loan it is taking out to hire that firm.

DOTr’s duplicity can jeopardize its ongoing loan negotiations with the Japan International Cooperation Agency. JICA and Sumitomo engineers presently are inspecting the MRT-3 to determine the extent of needed repairs. In three months they are to advise whether to lend to DOTr.

Any more delay in rehab would worsen MRT-3’s dilapidation. Ever since DOTr took over the railway’s daily upkeep from a Filipino group in Nov. 2017, the number of trains have dwindled. Sixteen three-coach trains used to run at ten-minute intervals on peak hours, serving 420,000 riders per day. Now it’s down to eight to ten trains at 15 minutes’ headway, taking in only 300,000 daily passengers.

Trains, power supply, and signaling break down twice to thrice a day, like under the old servicer. Hundreds of passengers perilously are offloaded on the tracks, to trudge to the nearest station. Tens of thousands of commuters along the 17-km line are inconvenienced. Traffic has worsened not only on E. delos Santos Avenue that MRT-3 traverses, but in the entire megalopolis.

The other week smoke from under a seat filled up a jampacked coach, panicking passengers. MRT-3 managers belittled the incident, falsely claiming there was no fire or spark. Firemen water-hosed the train, drenching the electricals, further reducing the coaches in service.

DOTr’s complaint against Sumitomo’s poor maintenance work is little known in the Philippines. It was filed in Singapore by DOTr Sec. Joseph Abaya on May 31, 2016, a month before leaving office.

Present Sec. Arthur Tugade is continuing the case. DOTr pays tens of millions of dollars, or hundreds of millions of pesos, for foreign lawyers. The legal fees are taken from Filipino taxpayers, who will also shoulder the loan from Japan to hire Sumitomo.

The case is in arbitration at the United Nations Commission on International Trade Law, based in the island-state. Proceedings of the UN-CITL are strictly confidential. It is talked about only in whispers at DOTr.

Abaya filed the complaint against the Metro Rail Transit Corp., private owner-builder of MRT-3. But he blamed mainly Sumitomo for the maintenance breaches, since MRTC hired the Japanese for the railway upkeep for 12 years, 2000-2012. In pass-through arrangement, DOTr directly paid Sumitomo.

In press statements U-Sec. for Railways Timothy John Batan stresses the hiring of Sumitomo as justification for the Japan rehab loan. He says that Sumitomo, with partner Mitsubishi Heavy Industries, had designed, constructed, and equipped the commuter railway in 1997-2000, then maintained it in the subsequent 12 years. The Japanese giant is well-versed with MRT-3 needs, he also defends the hiring.

Batan has been with DOTr, formerly DOTC (Dept. of Transport and Communications), since 2012. He was assistant of U-Sec. Rene Limcaoco, Abaya’s deputy for legal and operations. Batan knows about the Singapore arbitration against Sumitomo, insiders say, and of talks with JICA to hire it.

Sources say Abaya revived the arbitration at the 11th hour to cover his tracks. He and predecessor Mar Roxas had caused Sumitomo’s sudden removal in Oct. 2012. It was replaced by a series of unqualified, inept, undercapitalized outfits: PH Trams, then Global Epcom, and lastly Busan Universal Railway Inc. (BURI). Behind all three were Liberal Party mates of Abaya and Roxas, who served as LP presidents.

At least P3.5 billion was paid to the three LP companies from 2012 to 2017. They only took the money but did not maintain MRT-3, overhaul the trains, or buy necessary parts and components. Insiders say they even used up $17 million (P850 million) in parts and equipment left behind by Sumitomo in 2012.

Records show there were glitches during Sumitomo’s time, but minor and infrequent compared to the LP contractors and the present. It fielded up to 21 trains at five-minute intervals, serving 560,000 riders. Although MRTC got Sumitomo under a build-lease-transfer scheme, DOTr directly paid the Japanese $1.2 million to $1.4 million a month. In suing MRTC, Abaya in effect also sued the government, which in 2011, had taken over ten of its 15 board seats.

Sumitomo was the single point of responsibility to repair all subsystems and procure all parts. It supposedly charged little but staked its reputation in MRT-3 in order to bag other train contracts in Asia and America.

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My piece last Wed. correctly was titled “Dengvaxia vaccinees need ‘lifetime watch’.” It was about public health specialists advocating lifelong monitoring of children harmfully injected with the vaccine. In the online edition “vaccinees” was altered to “vaccines,” so the title lost sense. Sorry for that.

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