POSTSCRIPT / December 20, 2015 / Sunday


Opinion Columnist

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Criminal intent mars Abaya management

TRANSPORTATION Secretary Joseph Emilio Abaya looks sane enough to be able to discern what is right or wrong and then act in favor of the riding public in his management of the Metro Rail Transit Line 3 (MRT-3).

The proper management options to take are obvious enough even to a junior on-the-job trainee, but why does this highly educated and supposedly experienced hand continue to bungle the MRT-3 like it were an alien system that has dropped on his lap?

Pardon our saying so, but it seems that although Abaya knows what is right and legal under the circumstances, his judgment may have been compromised by criminal intent.

The parade of questionable contracts passing the Department of Transportation and Communication since Abaya took over in 2012 from fake Wharton MBA graduate Mar Roxas keeps marching on.

Watch this: After the dismal performance of APT Global, the current MRT-3 maintenance provider, the DOTC thought of inviting four companies for another negotiated contract reminiscent of the smelly deal with APT Global.

Under APT Global, the running condition and the ridership quality of the MRT-3 system have deteriorated. For instance, to make quick dirty millions, no purchases of stock rails are being made even if its maintenance contract is for services and spare parts. With some critical parts not readily available, safety is being compromised.

Under the pretext of an emergency, which is actually self-inflicted or contrived, some substitute companies have been invited Abaya-style to make an offer to take over the maintenance of MRT-3 without bidding.

The no-bidding scheme looks like an under-the-table invitation for disaster marked by inefficiency, stoppages, accidents and losses similar to what had started to happen under former MRT-3 general manager Al Vitangcol III who is now facing graft charges with his cohorts.

The four companies that responded to the invitation are: Busan Metro, KORAIL (Korean Rail), SMRT (Singapore Metro Rail Transit) and DMCI (DM Consunji Inc.). Additionally, CommBuilders Technology requested that it be allowed to submit a proposal for the project.

Of the four firms, only three groups submitted proposals: (1) Busan, in joint venture with Edison Development and Construction, Tramat Mercantile Inc., TMI Corp. and Castan Corp.; (2) DMCI in joint venture with Hamburg Metro; and (3) CommBuilders Technology, in joint venture with Schunk Bahn-und Industrietechnik.

Creativity used to corner MRT contract

BUT ONLY the Busan joint venture qualified with a bid of P3.8 billion. How the group qualified is in itself an interesting study in business creativity under the aegis of “Daang Matuwid”.

Originally, when the DoTC opened invitations for a negotiated contract, the terms of reference required that a bidder has a net financing capability of 50 percent or half of the contract cost.

The contract worth is P4.2 billion, divided roughly into: P2.25 billion for three-year maintenance of the MRT-3 system, P1.1 billion for the general overhauling of 43 train cars, P900 million for the replacement of the signaling system, and P67 million for additional works.

Based on these figures, the terms of reference originally required invited companies to have net financial capacity of least P2.1 billion or 50 percent of the contract cost.

Yet when Busan entered the picture, the 50-percent requirement miraculously disappeared. Instead, the requirement was dropped down from 50 percent to just 25 percent of contract cost (or P1.025 billion, given the P4.2 billion contract).

The requirement now is that each member company of the joint venture must have a net financial capability of 25 percent of contract cost IF it owns 25 percent or more of the joint venture.

This is how Busan became qualified even if its partners each had a net worth way below P1 billion. Available records show that the net worth of EDC is only P383 million; Tramat Mercantile, P502 million; TMI, P150 million; and Castan, P4.5 million.

How did Busan’s partners get around the P1-billion requirement? The shareholdings of the Busan-EDC joint venture were structured as follows:

Busan owns 4 percent, while EDC, Tramat Mercantile and TMI have 24.5 percent each, and Castan 22.5 percent. Therefore, none of the smaller corporations, by owning less than 25 percent, need to meet the requirement of P1-billion net worth.

It is interesting that while Busan is the corporation that has the contractual capacity experience, it only owns 4 percent of the corporation. An examination of the other member corporations also reveals that their expertise lies elsewhere. For example, Tramat Mercantile is a farming or agricultural corporation.

With companies like this taking over maintenance, we can expect Abaya and Co. to transform MRT-3 into a legacy of the incompetence and corruption under President Noynoy Aquino and a reminder of Liberal Party presidential candidate Mar Roxas’ promise of “more of the same”.

Sometimes skeptics ask “why fix it when it ain’t broke?” This time it seems to have become a crazy, and criminal, case of breaking a mass transport system to have reason to fix it for a fat fee.

For 12 years before the Abaya wrecking crew came in, Sumitomo Corp. was quietly but satisfactorily handling MRT-3 maintenance. Then Roxas appointee Vitangcol and his relatives and Liberal Party mates took over the job of consigning MRT-3 to the junkyard — after milking it under “Daang Matuwid”.

(First published in the Philippine STAR of December 20, 2015)

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