Short of calling President Aquino and Finance Secretary Cesar Purisima liars, Transportation Secretary Joseph Abaya on Tuesday said it was simply not true that the private concessionaire of the Light Rail Transit (LRT) Line 1 Cavite extension project was demanding P7.5 billion in compensation from government even before taking over the project.
According to Abaya, neither the Department of Transportation and Communications (DOTC) nor the Light Rail Manila Consortium (LRMC) has made a request for the Department of Budget and Management to access P30-billion from the 2016 risk management fund—set up to cover for government’s shortcomings with private partners—in order to pay the P7.5 billion being demanded by the LRMC.
No sovereign guarantee
Speaking at a House hearing on the DOTC budget, Abaya noted that the letter from him asking Budget Secretary Florencio Abad for P7.5 billion was “unsigned, look at the records.”
“It (P7.5 billion) is not a sovereign guarantee or performance undertaking, there is no commitment to pay this. It will pass through the eye of the needle before we pay them (LRMC) anything,” he said.
It was the President himself who confirmed at an Inquirer multimedia forum last Sept. 8 that the LRMC was demanding P7.5 billion in compensation from the government for the latter’s failure to fulfill certain obligations in their October 2014 contract.
The President’s statement was amplified by Purisima who explained that the LRMC was demanding that the DOTC fulfill its sovereign guarantee for failing to deliver its commitments under the contract.
Cavite extension
According to Purisima, the DOTC and the Light Rail Transit Authority (LRTA) being the implementing agencies of the project, the contract carried with it a sovereign guarantee, or a promise from the government to discharge the contingent liabilities of the DOTC and the LRTA.
The LRMC—composed of Metro Pacific Investments Corp., Ayala Corp. and Australia’s Macquarie Infrature Holdings (Phil.)— won the P65-billion LRT 1 public-private partnership project to build the 11.7-kilometer extension from the present end of the LRT line in Baclaran to Bacoor, Cavite, as well as the operation of the entire line.
However, Aquino clarified that it has not yet been determined if the government would accede to the LRMC demand as the two sides were still in preliminary discussions on the matter.
Misinformed?
Abaya told lawmakers the the President and Purisima were probably misinformed when they made these statements at the Inquirer forum.
“With so many problems facing the President, I wish I would’ve been there at the Inquirer interview. If I was there, I could’ve advised them but I wasn’t invited. The closest (to an adviser) with him was Secretary Purisima. But he was not briefed on the DOTC’s day-to-day engagement with the LRMC,” he said.
When Bayan Muna party-list representative Neri Colmenares asked if he thought the President was wrong, Abaya said: “The issues are getting mixed up. I didn’t hear the President and what you read (was probably) not accurate.”
Gov’t commitments
But whether or not the LRMC was demanding compensation or the DOTC was asking for compensation in anticipation of an LRMC demands, it was confirmed during the hearing that the DOTC indeed committed to certain conditions before turning over the facility to the LRMC. These include delivery of 100 fully operating LRT vehicles; repair of seismic and fire defects of the LRT 1 structure; and fare increases.
“There are provisions in the concession agreement on these but the amounts are inaccurate. We will fight that. We will not pay, and if do pay, it will be minimal,” said Abaya.
He also insisted that the penalties were “the least of the concerns” of the LRMC.
This prompted Colmenares to lament the low priority that the government is giving to the millions of LRT commuters.
“Our commuters suffered through the LRT which operated over its capacity for four years because the government could not pay for new train coaches. But now that it has been privatized, the government is quick to provide 100 LRT vehicles to big concessionaires. What a big shame,” he said.