This is an article repost.
The government is looking for a better and more financially viable way to privatize two of Metro Manila’s commuter train lines, with the previous proposal to bid out an operations and maintenance (O&M) service contract to be dropped.
Newly installed Transportation Secretary Manuel “Mar” Roxas II earlier ordered a review of the proposed O&M contract for the Light Rail Transit (LRT) line 1 and Metro Rail Transit (MRT) systems to determine if it was the best option for the government and for commuters.
In an interview Wednesday, Roxas said the government already had several other options on the table, although no official decision to drop the O&M contract altogether has been made.
“We will have a decision once we’ve completed the assessment,” Roxas told the Inquirer.
However, an official of one of the local companies interested in the contract said firms were notified earlier this week that the bidding for the O&M deal had been cancelled.
The official said companies that acquired bid documents sold by the DoTC for P500,000 each would also be refunded. At least 16 local and foreign firms, including conglomerates Ayala Corp. and San Miguel Corp., had bought bid documents for the project.
The prospective bidder’s official, who refused to be identified because he was not authorized to speak publicly on the matter, said they were told that the formal bulletin notifying the public about the cancellation would be issued soon.
The O&M contract was conceptualized by the DoTC under former Secretary Jose de Jesus, Roxas’ predecessor. The winning bidder would have been paid a total of P14 billion for the duration of the deal. The bidding process, however, was put on hold following De Jesus’ resignation.
Roxas, a former senator and the current president of the ruling Liberal Party, earlier raised doubts on the benefits of having one O&M contract for both train lines.
“Privatization is just a means. It is not an end in itself,” Roxas earlier said. “What the government wants is that we earn money from the privatization of projects. But in this contract, we are the ones spending money.”
Roxas said this ran counter to the administration’s policy of promoting public-private partnerships (PPP), a method of funding big-ticket infrastructure projects by passing on bulk of the financial burden to the private sector. Companies are then allowed to charge fees from the public to recover their investments.
The LRT line 1 runs from Baclaran to Roosevelt in Quezon City and the MRT line traverses Edsa. One of the original O&M contract’s goals was to seamlessly link both train systems.
One of the problems that arose, however, was that the MRT line is still under the control of private shareholders, now led by the group of business executive Manuel V. Pangilinan.
The government has a significant stake in the MRT in the form of securities backed by state equity rental payments. These securities, which are held by state-run Land Bank of the Philippines and Development Bank of the Philippines, do not have a voice on the MRT Corp. board.
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By Paolo G. Montecillo
Source: Philippine Daily Inquirer, July 21, 2011
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