POSTSCRIPT / September 4, 2012 / Tuesday


Philippine STAR Columnist

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Abaya inherits Roxas’ LRT bidding problem

MOBILE!: If you have not noticed yet, when you type on your mobile device (smartphone, iPad, minitablet, and the like) to access our online edition, the address automatically changes to, “m” standing for mobile.

What then appears on your mobile’s screen is not the regular PhilSTAR homepage, but a knocked-down single-column version that is mostly uncluttered text. No razzle-dazzle layout. Minimal photos and ads. Just the heads (organized by sections) and a lead sentence. Touch one item and the story appears in full.

The site’s content is lighter and loads faster. You save browsing time, save money on charges, save your eyes and nerves. You also save yourself the trouble of rotating your device to get a better view, because you can stick to a vertical (portrait) orientation.

Try it on your mobile. Only with

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SUDDEN SHIFT: Among the unfinished business that newly installed Secretary Joseph Emilio Abaya will have to sort out at the Department of Transportation and Communication is the sudden changing of the terms of reference of the Light Rail Transit (LRT-1) extension project.

In the evening of Aug. 17, the Friday just before a four-day holiday, some prospective bidders were surprised to see on the DoTC website an announcement that the deadline for pre-qualification bids originally set Aug. 22 had been moved to Sept. 28.

Reputable bidders who had prepared for this big-ticket project asked if this last-minute postponement was meant to favor less qualified businessmen who needed more time to recalculate while hunting for operator-partners.

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REQUIREMENT EASED: The alarm is not without basis. Earlier, the DoTC Bids and Awards Committeehad revised also the terms of reference. It lowered the qualification requirements for the partner bringing in experience on light rail operations.

The bids committee reduced the future ridership requirement from 50 million to 30 million per year. This means that the operator-partner need only be capable of catering to 18 percent of the current LRT ridership and just 10 percent of the future ridership.

The LRT is one of the busiest public railway systems in Asia in terms of ridership, with an average capacity of 600,000 commuters a day.

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SMALL OPERATORS: This gross understatement of requirements opens the door for low-capacity light rail or airport-connection operators to pre-qualify for this important transportation infrastructure and possibly get a piece of the action.

A light rail operator used to carrying a small number of passengers is likely to be overwhelmed when hit by the full brunt of the peak hour rush, emergency management, and the service demands of unexpected disruptions.

The government, the DoTC in particular, should think big long-term, having in mind the millions of commuters who will use the line every day.

Preparing for his transfer to the Department of the Interior and Local Government, erstwhile DoTC Secretary Mar Roxas may have missed the implications of the standards being lowered.

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PAGING ABAD: The LRT-1 extension will link Baclaran and Bacoor, Cavite, and possibly go as far as Dasmariñas. Whoever wins the contract will also take over operations and management (O&M).

The estimated project cost is P60 billion, P30 billion of which will be financed through Official Development Assistance (ODA). The other half will be covered by Public-Private Projects (PPP) and O&M.

The present LRT-1 line runs between Roosevelt in Quezon City, Monumento and Baclaran. The interconnection of the LRT station at Roosevelt and the MRT terminal on EDSA (at Trinoma mall, QC) is another contract also up for bidding.

Why is the DoTC lowering the bar by dropping the equity requirement and qualifying operators without the necessary capability and track record to operate, improve and overhaul the railway system?

Why is the safety and convenience of the riding public being compromised to favor inexperienced players?

Secretary Abad, a straight-shooting Annapolis graduate, may want to zero in on those aspects of the bidding.

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LONG HAUL: The LRT-1 line is not a new system. It requires a strong operator partner to support the diverse train fleet running on 30-year-old infrastructure and see it through modernization and integration with the new extension. An organization that transports only 80,000 passengers a day will not have the experience, technical expertise or spare management capacity to support LRT-1 operations while modernization is in progress. Experienced hands say that the light rail operator partner should be able to run a viable operation from day one to the end of the 30-year concession period. They add that the winning proponent should be able to guarantee a reliable design, and be always in a high state of readiness for the planning, recruiting, training and launching of the fully integrated system.

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BEST PRACTICE: In the PPP business, the original consortium partners must commit to stay in the game (that is, continue to maintain and improve the system, and invest in the comfort and safety of the riding public) until the very end of the concession. A built-in equity requirement with rules on share transfer gives the government, lenders and investors the confidence needed to ensure the long-term success of the project. Dropping this prequalification requirement for bidders can lead to sub-contracting where, after a few years, the winning consortium swaps the reputable international operator for a local or less reputable company just to make more profit.

By dropping this industry best practice, the government may be acting against the interest of the public and the consortiums that have secured internationally recognized light rail operators that are firm in their long-term commitments.

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(First published in the Philippine STAR of September 4, 2012)

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