THE INSIDE MAN

The mentality behind the MRT fiasco

The mentality behind the MRT fiasco image

Text: Tito F. Hermoso / Photos: Brent Co | posted December 02, 2014 19:13

There is hope at the end of the tunnel

Just this once did we find something enlightening in a Senate hearing. Admittedly, we've come to associate Senate hearings, allegedly in aid of legislation, as pricey public theater where gladiators of the holier-than-thou, settle scores, without fear while currying favor. It is in the halls of the Senate where reputations are demolished, the mighty shamed, the ignorant, elevated to wielding enormous and sometimes harmful power, promenade their erudition or the sheer lack of it. For those with a taste for it, the Senate has become the venue for the ideal opportunity to exercise hypocrisy under the cover of moral indignation. The pinnacle of civility sacrifices civility itself in pursuit of the truth, the truth convenient only to the one who wields the most power.

Blame game target

That is why it was quite a surprise that Mr. Sobrepeña himself courageously gave testimony. As the head of MRTC, the consortium that built the MRT, he is the man who has been made the object of public hatred for the prolonged agony of MRT decline, through incessant pillorying/finger pointing over the past few administrations.

What's the LRT for?

First, the background. Back in the turbulent post People Power revolt, the Metro's traffic was congealing over the lack of infrastructure investment since the IMF meeting fueled building boom of the early 70's. Motley buses, mostly colorum, operating sans public service franchise, were all over the city. The underfunded Metro Manila Transit state-owned bus company was collapsing. The only working mass transit railway was the LRT-1 from Monumento to Pasay-Taft. The critical EDSA ring road was close to standstill.

Bus priority

The first palliative was then DOTC Sec. Orbos's yellow lane rule, an adaptation of exclusive bus lanes as per international practice. But our local wise guys thought they did one better by making not just one but 2 lanes exclusive to buses. Effectively, the yellow lanes crowded out the best means of surface transport, the private car. As for the bus riding public, the purchases of additional China made buses just moved the commuting crowds from the sidewalk into the buses, which ended up standing still in traffic anyway.

The deal

EDSA needed its own LRT. But because of the country's poor credit rating, the government alone could not finance the whole LRT-3, as it was known then. Eli Levin, the man who structured the LRT-1 deal with the Belgians, came forward and found the Czechs eager to supply the trams and railways. Eli's next problem was to find financing, which was hard to come by. It took time, but he was able to cobble together a broad consortium composed of CAP, National Book Store, Ramcar and Ayala Corp. But instead of a Monumento to Baclaran LRT-1 style elevated tramway, LRT 3 now renamed MRT-3, was forced fitted to a roller coaster semi-elevated structure, truncated to Trinoma. The added sweetener to the deal was real estate property development rights, similar to the profitable MTR of Hong Kong. All contracts, like the Sumitomo railway parts and labor maintenance, real estate development and advertising rights were long term just like international practice.

Odd-Even, coding and PHILTRAK

When the construction of the MRT finally got started, the Metro Manila Authority, anticipating traffic, instituted the odd-even rush hour ban on private cars with less than 3 pax for alternating days of the week. The promise to the motorists then was that their impaired mobility sacrifice then would yield a working light rail network on EDSA and the final banishment of buses from EDSA as the rail network didn't need competition. MRT, which started as BOT [build-operate-transfer] evolved into a BLT [build-lease-transfer]; built by a private company and leased to be operated by the government. Elsewhere, the PHILTRAK system, which was even more financially viable than the MRT and which predated the Bus Rapid Transit in Curitiba by a decade, was supposed to complement the LRT's on other circumferential and radial routes.

High fares, no crowds

By 1999, the MRT was up and running, with fares set at PHP30, end to end. Initial ridership was approx. 30,000 commuters a day, far lower than the railway's 200,000/day capacity and today's 500,000/day crush. Then, in an act of populist appeasement, the government of the day, dropped the fare to PHP10.00. Ridership leaped.

LTFRB hikes income

At around the same time, the LTFRB had its own answer to the commuter's problem. Formerly the Public Service Commission, the LTFRB's function was to dole out public service [public utility buses, jeepneys] franchise by juridical process of a quota based on forecasted mean passenger capacity of a route and vetting the competence and safety of the private sector franchise applicant to the said route. LTFRB decided to expand franchises in anticipation of an explosion of commuters and to legitimize as much as the many colorum operators as possible. Other government agencies required bus companies to build their own terminals if they were to be allowed to service the Metro routes; hence Cubao and Pasay-Taft became Meccas for scores of bus company owned terminals. As the years went by, government would change policy and require the bus cos. to vacate Metro CBD's like Cubao and deposit passengers from outlying provinces to intermodal terminals on the Metro's outskirts. It doesn't take rocket science to foresee that these foregoing flip flopping and discoordinated events were a recipe for a brewing perfect storm.

Harassing the MRTC

During the term of GMA, the MRTC was already groaning under the inability of the low fares to meet its operations and debt amortization expenses. Advertising income was hampered by constant battles with MMDA which was claiming that the Trackside advertising violated their billboard ban. Local governments were bizarrely harassing the MRTC for payment of real estate taxes for the stations, which were built on EDSA, national public property.

MRTC monitizes its debt

To ensure the survival of railway operations, the MRTC had to monitize projected government lease payments to MRT. These were in the form of bonds with attractive yields which were gobbled up by DBP and LBP. At this point in the early 21st century, the MRT didn't look like such a wise commercial venture anymore. Some of MRTC's partners bailed out by selling their shares to Metro Pacific Investments. Then a few years later, government stopped payment of this lease, which resulted in MRTC filing an arbitration case in a Singapore court.

Buy out

To solve this impasse, there were plans during the final days of the GMA term to buy out the MRTC so as to end the multi-billion peso lease due to it. The current administration is still mulling on proceeding with this plan.

2011 onwards; how it got worse

Bigger problems then ensued in the recent few years. There was this impression in the new DOTC leadership that the MRT deal was grossly unfavorable to government because of the “high” lease payment. What they failed to see is that this “high” lease payment was because the low fares couldn't even support operations. Politically, these low fares were a government subsidy of something like PHP50.00 per riding commuter. That's 50 pesos paid for by the rest of the country – Mindanaoans, Visayans and other Luzonians – who do not benefit from the MRT.

Disasters one after another

With an anti-MRTC mindset of a poorly executed deal, the DOTC decided to reinvent the wheel; hence the short term maintenance contract awarded to a new entity, priced nearly like the Sumitomo contract, but allegedly without the supply of imported spare parts for the trains, which was 60% of the cost of the Sumitomo contract. DOTC claims that their terms of reference for the O&M bid do not exclude spare parts. So why did the interim O&M contractor run low on parts?Ironically, it was the DOTC's failure to permit Customs to release the spare parts for the MRT that became the cause of the “failure” of Sumitomo to fulfill their contract obligations. We won't horrify you further by recapping the unprecedented accidents and breakdowns that has continued to bedevil the MRT ever since the DOTC has been reneging and endlessly tinkering with the operations contracts of the railway. Naturally, in the ensuing blame game, the government side demonizes the “greedy selfish” motives of private sector businessmen. In the meantime, the latest DOTC bidding for the MRT-3's new three year extended O&M contract attracted no bidders.

Not Abaya's fault either

As we find Mr. Sobrepeña's explanations rational and revelatory, clearly the muddle that the government has made of the MRT doesn't necessarily point to Sec. Abaya. He is only as good as the advice that he gets from those underlings tasked to understand the MRT mess, who, by lack of understanding and/or in pursuit of some agenda against any deal that was constructed under the Ramos or GMA administration, contributed much to the MRT mess. Meantime, the Palace is still stuck with the impression that the MRT was an amateurly negotiated contract during the Ramos years, a lopsided deal that puts the government at a gross disadvantage. A deeper look into the events and changes in policies over the past years will show that the Palace's pronouncements as to the causes and effects of the MRT mess, is in grave error.

We the victims

In the end, the victims are us. We suffer the mistakes and erroneous perceptions of government in the problems from the unnecessary conflicts government ignite. Hence our daily congestion. But the DOTC can take heart as it is not the only guilty agency. Look at the missteps of DoE in the power sector. Power output shortage? Propose emergency powers to legislate even the setting of thermostats in air conditioners. Never mind how one is to police that. In all truth, the solution lies in implementing the EPIRA law in its entirety. Not having done this, the government effectively disincentivised the building of additional power plants. Bowing to popular pressure not to fulfill contracted power price increase further discourages private sector investment in power generation.

Rather rich of LTFRB

Still, DoE aside, most of the problems we suffer emanate from the missteps of the DOTC. We've mentioned LTFRB's reckless franchising of buses, aggravated by an opinion of an LTFRB officer that private cars should be banned from EDSA during the morning rush hour, apparently unaware that the original intent of the EDSA LRT or MRT was to ban the buses and not vice versa.

Misguided sidetracking at LTO

In its desperate efforts to sidetrack Stradcom and other current LTO suppliers, LTO ended up with inferior registration sticker tags that fell off in weeks and drivers' licenses that faded in 3 months time. LTO had an opportunity to improve the license plates with its new Dutch supplier, but now that the 7-alpha-digit plates are out – after a year's delay- where is the improvement in the plate number size? Instead of elongating it, the new plates use nearly the same dimensions as the old plates, the only difference being the fonts which are now condensed to fit tighter kerning, like the duplicate-replacement plates of the old system even as the new plates use European zeroes and fours.

TSA-security obsessed mentality

This dumbing down of the making of regulations forces the public to bear the brunt and suffer more in the cause of expediency, supposedly for the greater good. This psyche is an unfortunate result of a world wide backlash from the security lapses to anticipate the 9-11 tragedy. If you recall, the military-industrial complex Cheney-Rumsfeld indoctrinated knee-jerked by creating the TSA [Transport Safety Agency], which in turn spawned the mentality where everyone, even the law abiding, are suspects whose civil liberties can be disregarded for the sake of the greater public good. Let the public suffer for so long as government is seen to be doing something, anything.

Police state

So now you have the police saying that mall robberies can be prevented by banning the wearing baseball caps indoors. Local governments are requiring all business owners to have CCTV surveillance cameras. The spate of crimes committed by men tandem riding motorcycles spawned oppressive regulations on motorcycle riders like the “plaka” or license plate high visibility vests, the ban on tandem pillion passengers and the ban on wearing of safety helmets. If only one can ban sloppy thinking. Its as if cops, with nice new pistols and nice new private cars cannot commit crime. Whatever happened to their motto “to serve and protect”?

It's the cause, stupid!

The problems above, just like the MRT mess, are the result of decision makers making decisions and law makers making laws, without understanding what are the causes that deliver such dire effects that they want to correct. To be quick to action without knowing the cause and effect does more harm than good and it is us who suffer.