Filtered By: Money

Private concessionaire takes over LRT-1 O&M

Private concessionaire Light Rail Manila Corporation (LRMC) took over the operations and maintenance (O&M) of the Light Rail Transit Line 1 (LRT-1) on Saturday.
“After months of preparation, we are pleased to take on the operations of LRT 1,” LRMC Chairman Manuel V. Pangilinan said in a disclosure to the Philippine Stock Exchange (PSE) on Monday.
LRMC took over the operations, maintenance, and extension works of the LRT-1 on Saturday, September 12.
“We consider the Department of Transportation and Communications and Light Rail Transit Authority to be our partners in this project, and will work to improve the line over time, and make it a system that our commuters will not only enjoy riding, but one they can be truly proud of,” Pangilinan said.
LRMC will manage the LRT-1 for 32 years, during which the concessionaire will also extend the line by 11.7 kilometers (km) to 32.4 km from 20.7 km.
Once the extension work is complete, the mass rail line will run from Muñoz in Quezon City to Bacoor in  Cavite. Its current endpoint is in Baclaran.
“The extension will serve future high-growth centers in the south like Cavite,” MPIC said, noting that this may increase the commuters LRT-1 currently serves from an estimated 500,000.

'Severely deteriorated'
In the same statement, however, the LRMC controlling shareholder, Metro Pacific Light Rail Corp., through its parent company MPIC, noted the current conditions of the LRT-1 as “severely deteriorated.”
Out of the 100 light rail vehicles committed by the government to LRMC, only 77 are in running condition, according to MPIC. 
“It will take time to fix the fleet and restore the system to optimal operating levels. The real benefit of an improved train system will not be felt by the riding public immediately, but will come in due course particularly when the new trains are delivered by the government,” MPIC said.
The new trains are scheduled to arrive only in 2017.
MPIC intends to start improving the facilities in all the stations, for the safety and security of the commuters. Nine of the 11 substations are up for renovation.
For his part, Ayala Corp. Chairman and CEO Jaime Agusto Zobel de Ayala said the company is looking forward to the project.
“We are excited to work with our partners MPIC, Macquarie, the DOTC, and the LRTA,” he said in another  disclosure to the PSE.

'Burden the commuters'
In a separate statement late last week, Bagong Alyansang Makabayan (Bayan) said its disapproved the takeover by the private concessionaire.
“This truly marks the end of an era, and the beginning of a period of unending fare hikes and sovereign guarantees that will burden the commuters and Filipino taxpayers for the next three decades,” Bayan Secretary General Renato M. Reyes said.
According to Bayan, the public should know the details of the 32-year takeover.
It claimed that the contract allows the private operator to impose a 10.25-percent fare increase every two years and a 5-percent increase once the extension project is complete.
Bayan noted that if the fare set by the government is less than the fare demanded by the private operators, the government will have to shoulder the difference – fares will be adjusted based on the prevailing inflation rates.
“Right now, the government-approved minimum fare is P11.00 while the notional fare in the contract is P12.13, a difference of P1.13. For the remainder of 2015, government estimates the deficit payment at P106 million,” Bayan said.
It noted that the government may pay as much as P5 billion in penalties if the infrastructure and train system to be turned over by the government  do not meet what was stipulated in the contract.

'Privatization gone sour'
The property taxes will also be borne by the government, and is expected to reach P64 billion for the term of the contract.
“The Aquino administration has not learned from the experiences with the MRT, power, water, and many other privatization deals that had gone sour. In the end, it will be the public and the commuters who will shoulder the burden of Aquino administration’s folly,” Reyes alleged.
As such Bayan said it is urging the Congress to review the government guarantees that have been pledged to the LRT-1's private operator, and the Supreme Court to act on the petition to stop the deal.
“Both the government and the private sector have commitments to meet under the concession framework. It is imperative that we work together to ensure the successful delivery of this project for the benefit of the riding public,” Zobel said.
“We are excited to work with our partners MPIC, Macquarie, the DOTC, and the LRTA,” he added.
LRMC  is a joint venture among MPIC' Metro Pacific Light Rail Corporation, Ayala Corporation’s AC Infrastructure Holdings Corporation, and the Philippine Investment Alliance for Infrastructure’s Macquarie Infrastructure Holdings (Philippines) PTE Ltd. 
On October 12, 2014, the consortium signed a concession agreement with the Department of Transportation and Communication and Light Rail Transit Authority for the P65-billion LRT-1 Cavite Extension, Operation and Maintenance Project, which is part of the 2011-2016 Philippine Development Plan to accelerate infrastructure development. – Jon Viktor Cabuenas/VS, GMA News