Unscrupulous LRT 1 contract deal of the government with Ayala-Pangilinan consortium a bane for the public commuters

September 10, 2015


Scientist activist group AGHAM (Advocates of Science and Technology for the People) accused the Aquino government of selling out the Filipino people over the32-year concession agreement between the Department of Transportation and Communications (DOTC) and the Pangilinan-Ayala owned Light Rail Manila Consortium (LRMC).

“The Private Public Partnership (PPP) deal entered by the government is not only unscrupulous but reeks with corruption,” said Engr. Miguel Aljibe of AGHAM. “Filipino taxpayers and commuters are expected to pay billions in pesos for the contract, despite our proven experience with the privatization of the Metro Railway Transport (MRT) system that has only led to a deterioration of the MRT.”

The said contract of the government with LRMC which is composed of Metro Pacific, Ayala Corporation and Australian company Macquire Holdings covers the privatization and extension of the Light Rail Transit Line 1 (LRT-1) and the LRT-MRT Common Station Project. Among the questionable provisions is a sovereign guarantee requiring the government to pay a penalty to the LRMC should the government fail to fulfill certain provisions in the contract. Currently the government is set to pay the LRMC PhP 7,519,428,667 in penalties and fees. A total of PhP 105 billion in tax exemptions and government subsidies are also assured by the government within the 32-year concession contract.

“President BS Aquino and Finance Secretary Cesar Purisima’s admission that the government is legally bound to pay LRMC PhP 7.5 billion by 2016 demonstrates how flawed and corrupt the PPP program of the administration is,” added Aljibe. “President Aquino says that the PPP will generate income for the government but in reality, private and foreign companies are making a killing in the privatization of public utilities like the LRT.”

“The Filipino taxpayers, for several years, carried the burden of paying for the construction of the LRT but this government gave it away to LRMC practically for free, with an assurance of future profits,” Aljibe added.

DOTC Secretary Abaya has been requesting the release of funds from the Department of Budget and Management to anticipate the penalties to be imposed by the consortium such as the maintenance and operational costs of LRT1, the deficit payment for the discrepancy in the fare hike with the government paying the difference from the agreed fare, right of way acquisitions and the possible legal disputes pertaining to the contract.

“Another anomaly is what happened and who pocketed the billions of pesos allocated by the government for the maintenance of the LRT system in 2014. This must be thoroughly investigated and the culprits must be held accountable,” said Aljibe.

It can be recalled that the Commission on Audit (COA) has previously reported that P1.3 billion in funds allocated in 2014 to the DOTC under the illegal disbursement allocation program or DAP for the repair and maintenance of LRT1 and LRT2 has been unused. In fact, since the 2014 bidding for the LRT1 privatization and expansion, there has been a reduction of 23% to the number of operating light rail vehicles or LRVs. From 100 in 2014 it is now down to only 77 LRVs.

“From what we have experienced in the past, passing on the responsibility of providing public utility services to the private sector is doomed to fail because they are for profit and not oriented towards social service. LRT is a public transport system that should be under the governance and regulation of the government, most especially now, when our traffic situation has severely deteriorated. It is a disservice to the people if we allow the private sector to take-over a strategic public service in the country,” explains Engr. Aljibe.

“Nationalization of our train systems is the best solution to our public transport woes,” says Aljibe. “Such a system that is oriented towards benefiting stakeholders rather than shareholders will enable decisions regarding station location, energy sources, expansions and fare pricing to be done under the principle of maximizing social and environmental gains over profit,” ends Aljibe.###

Reference: Engr. Miguel Aljibe, AGHAM Advocates of Science and Technology for the People – 998-4226/09178971994