The Market Monitor Minding the Nation's Business
Luis Leoncio
Vestiges of corruption, which President Aquino frequently cites as the source of most of the problems of his administration, have been a major source of the problems that sunk Metro Manila’s mass-transit systems, particularly the Metro Rail Transit (MRT) 3, into inefficiency, leading in turn to frequent breakdowns of the system, according to documents made available to The Market Monitor.
MRT 3 appears to have been turned into a favorite cash cow, with some P2 billion in “subsidy savings” realized from the increases imposed on the mass-transit system fares early this year by the Department of Transportation and Communication to be channeled into infrastructure buildup not necessarily related to train systems. The DOTC is headed by Secretary Joseph Emilio Abaya, president of the ruling Liberal Party and a major pillar of the administration alliance gearing up for next year’s national elections.
The government’s use of infrastructure funds is equated with massive kickbacks and commissions since the allocations are mostly infused in the congressional districts of administration political allies. This was the system employed in the Disbursement Acceleration Program (DAP), a supposed economic-stimulus package designed by Budget Secretary Florencio Abad, major parts of which were declared unconstitutional by the Supreme Court.
During a Senate hearing on the controversial stimulus program, opposition Sen. Nancy Binay said, for instance, that the P4.5-billion appropriation meant to fund additional coaches for MRT 3 under the 2012 General Appropriations Act was rechanneled instead to the DAP. Under grilling from Binay, Abaya admitted that the funds, indeed, were diverted to the DAP.
Sen. Francis Escudero also bewailed the deceit employed by the (DoTC) in implementing train-fare hikes last January. “They [DOTC] asked for budget allocation from Congress and said that was what they needed. We gave it to them already, but they did not even inform us that there would be a (fare) increase,” Escudero said.
He said had he known about the DoTC plan to increase the minimum fare, “we could have given them a smaller amount from the 2015 budget.”
Effective last January 4, the new LRT-MRT fare announced by Abaya was increased to P11 from the P10 base fare and P1 more per additional kilometer. This sparked an outcry from the commuting public.
The Aquino administration’s stock reply in defending the train-fare increases was that it wanted to remove government subsidies on utilities, including the railway system, which it claims would require the entire nation to support the spending of Metro Manila commuters.
Its target is the removal of all subsidies, which would cost a full trip for the elevated rail system P60 or twice as much as the already doubled P30 fare for an end-to-end ticket. The fares were increased from a maximum of P15 to P30 at the start of the year.
Senators disputed the administration’s argument that the subsidy is being paid for by other than Metro Manila residents. Most of the tax collections from which subsidies come are from the National Capital Region, according to Sen. Ralph Recto, citing 2010 figures.
Taxes collected in the cities of Quezon, Makati and Caloocan amounted to P281.8 billion of the total collection of P337 billion from the Bureau of Internal Revenue’s 19 regions, Recto said.
He said Quezon City’s P75.8-billion revenue collections, for instance, easily dwarfed the total P56.2 billion collected from Bicol to Tawi-Tawi.
Subsidies on public transport are also an essential government service since efficient travel within the capital and financial hub of the country is crucial to the direction on which the economy goes.
A blatant symptom of mismanagement
A recent study of the train-fare structure by James Matthew Miraflor, a fellow of Active Citizenship Foundation, and Akbayan Rep. Walden Bello, showed the timing and manner of the rate increase was the most blatant symptom of the mismanagement of a public utility jointly run by government and the private sector.
The increase in train fares would impact severely on the poor, the study indicated. The increases hiked the maximum fares for LRT 1, LRT 2 and MRT 3 by 50, 66 and 87 percent, respectively.
“Based on the 2013 Annual Poverty Indicators Survey, residents in Metro Manila spend around P42 a day on transportation—6.6 percent of the household budget,” according to the study.
For those earning P20,000 a month, the transport cost per day is around P27. If they use MRT from North Avenue to Taft, they would see their transport expenses shoot up by almost 96 percent, it added.
It said minimum-wage earners have it worse: spending about P18, they face a staggering 144-percent increase. “What has particularly infuriated commuters is that Abaya himself admitted that the fare hike would not go to system improvements. Instead, it would be used to pay P600 million in monthly fees to the concessionaire that owns MRT 3,” it added.
Sen. Grace Poe, who ran and won in 2013 under the administration ticket, showed courage in calling the move “treacherous” since Abaya could have requested additional subsidy instead of sticking it to the riding public.
The MRT-3 project started in 1997 as a 25-year build-lease-transfer (BLT) agreement between the DOTC and MRT Corp. (MRTC) during the term of President Fidel V. Ramos. MRTC was to construct the project in accordance with DOTC specifications. After completion, MRTC would lease it to the DOTC, which would then operate the system.
“Ironically, the DOTC cannot invest in the railway since all investments on facilities have to come from MRTC. When the DOTC attempted in 2014 to acquire 48 light rail vehicles (LRVs), MRTC petitioned and won a temporary order of protection from the Makati Regional Trial Court,” the study noted.
“But why won’t MRTC want the DOTC to buy additional rail vehicles? It turns out that MRTC wants to supply the LRVs itself,” it said.
Poor maintenance
One other major problem was the MRT’s poor maintenance and its rundown coaches, becoming the showcase of the deplorable state of public transportation under the Aquino administration.
The excuse that the DAP was meant to stimulate the economy was debunked through the reallocation of the funds for the MRT. The project to improve mass transportation is exactly what would have helped spur the economy.
Several problems of the train system also became evident after the supply deal for MRT 3’s coach expansion got held up because of a controversy.
Czech Republic Ambassador Josef Rychtar pinpointed the coach-expansion contract as having been infested with a high-level $30-million extortion attempt on the bidding. The Rychtar revelation implicated several presidential allies and even relatives as having cooked up the auction for the supply contract but eventually aborted the deal, leaving the Czechs hanging on a commitment made by their contacts inside the circle of Aquino.
Ombudsman Conchita Carpio-Morales formed the anti-graft body’s own investigating panel to look into the extortion allegations but nothing was heard of on the supposed probe. The last report about it was Morales saying it was still in the phase of inviting Rychtar to “shed light on the matter.”
MRT General Manager Al Vitangcol who Rychtar had accused of being the ringleader in the extortion racket, resigned without being investigated; no sanctions were imposed on him, either
In fact, the Palace even defended Vitangcol from criticisms on the sloppy operations of MRT-3 that commuters consider to be related to the anomalous expansion contract.
The MRT-3 expansion project was later awarded to Chinese firm Dalian Locomotive but Rychtar said his government’s Inekon would have been assured of bagging the deal had it acceded to the corrupt overtures from emissaries of certain DoTC officials.
DoTC insiders, however, said the deal was actually sealed and money likely changed hands but the high-level syndicate cooking up the deal took too much time in drafting the terms of reference that would have aligned the bidding to favor Inekon.
Rychtar, apparently in behalf of Inekon, now seems to be running after the members of the extortion syndicate after reneging on their promise to deliver the contract.
(To be continued)