MRT-3 rehab: DOTr extols P17-B loan; still no details

The Dept. of Transport sent a lengthy reply to my May 23 piece, “Why Is P17-B MRT-3 Rehab Double Sumitomo’s Offer?” It is borrowing ¥34.48 billion (P17 billion) from Japan International Cooperation Agency to rehabilitate and maintain MRT-3. Work will take 31 months, DOTr said, plus 12-month defect liability period (warranty). Scope: trains, power supply, catenaries, radio, CCTV, PABX/public address, signaling, tracks, road rail vehicles, depot equipment, elevators, escalators, other station equipment.

There was no itemization of the P17 billion, though. Transparency is a must. Filipinos, even non-MRT-3 riders, would be repaying the loan.

JICA and DOTr stated preference for Sumitomo Corp. as service provider. The Japanese giant had erected MRT-3 in 1998-1999, and maintained it in 2000-2012, under private owner-builder Metro Rail Transit Corp. (MRTC).

The commuter railway began to rot in 2012. Sumitomo had been replaced by a series of three inept but well-connected outfits. MRT-3 needed restoring to previous safety and reliability. MRTC in Dec. 2014 relayed to DOTr a plan by its old Sumitomo team to do it in 26 months, no need to shut down the rails. Scope: power supply, catenaries, radio, CCTV, PABX/public address, signaling, track replacement, Unimog emergency vehicles, station facilities, elevators, escalators, depot equipment, overhaul of 73 coaches, automatic fare collection system. Price: $98 million for rehab, $53 million for maintenance, total of $151 million (conversion: roughly P7.5 billion).

Same work but nearly P10 billion less than the P17 billion that DOTr would announce four years later.

MRTC reiterated Sumitomo’s plan to DOTr in 2016 and 2017. Fund could come from fare collections. Sumitomo can be paid through MRTC, as build-lease-transfer franchisee till 2025. Sumitomo’s reentry would return the single point of responsibility, lost in the addled blaming under the three inept firms. A work schedule was submitted preparatory to technical meets. DOTr did not seek details of Sumitomo’s plan.

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A good part of DOTr’s rejoinder, nothing to do with my article, dwells on its beef with MRTC head Robert Sobrepeña. Their disputes over the BLT deal are under arbitration in Singapore. Parties are bound by confidentiality; any breach can cause defeat, DOTr insiders caution. I’ll skip that part, lest it hurt the government that is spending millions of pesos on foreign lawyers. DOTr, though, has circulated to all media its rejoinder (hala, lagot!). For fairness and balance here’s what pertains to my column:

“DOTr addresses point-by-point Mr. Bondoc’s statements:

“1. Mr. Bondoc: ‘Why is DOTr borrowing P17 billion from Japan ... despite giant Sumitomo Corp.’s offer of only P7.5 billion ... to do the work?’

“DOTr Reponse: First, DOTr is borrowing from Japan finally to fix MRT-3 with a comprehensive, single point of responsibility solution, by a highly qualified, experienced provider, backed by the government of one of the leading railway powerhouse countries in the world. Second, Sumitomo Corp. has no offer to DOTr to do the work for P7.5 billion. Mr. Bondoc makes it appear that the Sobrepeña-MRTC proposal is an offer from Sumitomo. It is not.

“The Sobrepeña-MRTC proposal consists merely of 5 pages and a series of 1- to 3-page letters (essentially containing the same thing). The Sobrepeña-MRTC proposal does not refer to a P7.5-billion cost, and it does not refer to an offer from Sumitomo. In fact, in its own letters to DOTr, MRTC states that it is still ‘in discussions with Sumitomo Corp.’ There is no offer from Sumitomo to undertake the scope of the JICA-financed MRT-3 rehabilitation-maintenance, and there is no offer from Sumitomo to do it for P7.5 billion.

“2. Mr. Bondoc: ‘[It] was sent to Malacañang in 2016, and to Tugade in 2016 and 2017. Sumitomo and MRTC have not received any reply.’

“DOTr Response: Perhaps Mr. Bondoc can quick-dial Mr. Sobrepeña to ask about MRTC’s letter to DOTr dated 15 Sept. 2017 stating: ‘This is in reference to the letter of the DOTr dated 31 Aug. 2017 conveying the DOTr’s denial of the recent proposal of MRTC to rehabilitate and maintain the MRT-3 System [i.e. the Sobrepeña Option].’ Following DOTr’s written denial of the Sobrepeña-MRTC proposal on 31 Aug. 2017, DOTr reiterated the denial in another letter dated 11 Oct. 2017.

“3. Mr. Bondoc: ‘Last week’s DOTr press release stated the following rehab works, with no corresponding amounts to justify the P17-billion total...’

“DOTr Response: The indicative terms, scope, and cost for the JICA-financed MRT-3 rehabilitation-maintenance is the product of several layers of diligence employed by DOTr. Measures taken by DOTr to ensure that it is responsibly utilizing taxpayers money include:

“- Conduct of a comprehensive 2-month system inspection of MRT-3 by a 150-man JICA study team from Feb. to Mar.;

“- Review by JICA headquarters’ railway, finance, and economic experts in the course of a 2-month Fact Finding and Appraisal Mission in Apr. to May; and

“- Further review by a team of railway experts from Asian Development Bank and Australia Aid.

“Meanwhile, the Sobrepeña-MRTC Option, which Mr. Bondoc refers to as ‘Sumitomo’s offer,’ appears to be based on nothing more than a 5-page proposal signed by Mr. Sobrepeña and MRTC president Frederick Parayno.

“(Signed) Goddes Hope Oliveros-Libiran, Director for Communications”

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Note: There’s still no breakdown of the P17 billion for each work item in DOTr’s reply. Where’s transparency? Train experts in the country and abroad can tell the price fairness if those are itemized.

JICA likely consulted Sumitomo. Hence, the same work scope in 2018 as in 2014, and terms like “single point of responsibility.” Remnant MRT-3 overseers had broken that rule in contracting the inept firms starting 2012, and further subcontracting to seven groups in 2015.

Rebutting DOTr’s rejoinder, MRTC said Saturday that Sumitomo did turn in a $150-million offer in 2014 and 2016 valid till today.

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