Sunday, May 8, 2011

Bidder winner to get 15 billion peso price tag for privatization of MRT-LRT

SENATE OFFICE, Manila, May 9, 2011-Sen. Ralph G. Recto, who chairs the Senate ways and means committee revealed that the P15 billion price tag for the bundled Metro Rail Transit-Light Rail Transit (MRT-LRT) privatization is the amount that the government to pay to the winning bidder and not the amount that it would earn from the transaction where he asked the government to be forthright to the Filipinos by disclosing that price tag for the privatization of MRT-LRT is actually a ‘pay-out’ to the winning private bidder and not the other way around.

“The first project under the Public-Private Partnership (PPP) program would instantly cost the government some P15 billion instead of deriving fresh revenues from its decision to let go two crucial mass transport rail systems,” Recto said, adding that the P15 billion would be paid by government to the winning bidder, which would operate and maintain the MRT-LRT lines.

He said that the government is oblige to pay the winner bidder to operate the rail lines plus perhaps they would avail tax holidays, cheap loans from state banks and an almost sure option to jack up fare prices.

“Under the O&M contract (operate and maintain), the winning private operator is not obligated to pour in new money in terms of additional rolling stocks or coaches and rail infrastructure,” he said, pointing out that if such is the case, this will give the PPP project a bad name. Later on, if that will always be the case, people will be angered.

“To maintain low fares for MRT riders alone, the palace economic managers may justify the P15 billion ‘pay out’ to the private operator if compared to the almost P7 billion to P8 billion that government shells out in yearly fare subsidies,” he furthered.

“The P15 billion ‘pasalubong’ to the winning private bidder may be justified but the prospect of commuters eventually paying higher MRT-LRT fares negates such justification,” Recto said, adding that the PPP auction of the MRT-LRT lines should redound to cheaper fare rates since the PPP dictum should be race to the bottom (lower fares), not race to the top (higher fares).

“Such imminent fare hikes in MRT-LRT would be unfair to taxpaying commuters while jeepney and tricycle drivers are getting direct subsidy through the government’s ‘Pantawid Pasada’ program,” Recto explained.

Out of the 44 companies that have expressed interest in the project, the government has slated the bidding for the MRT-LRT contract on July 11 with at least eight big groups landing in the short-list of the Department of Transportation and Communications (DOTC).

The winning bidder will get to operate and to manage the two rail lines that would be integrated eventually for four years, with an option to extend by another year.

LRT-1 runs along Taft Avenue from Baclaran in Paranaque City to Roosevelt-Munoz, Quezon City while the MRT runs from Taft Avenue in Pasay City to North Avenue in Quezon City.

The Pantawid pasada program will also be adapted by the Indonesian government as assistance to their driver-operators of transport vehicles. This was disclosed by the Indonesian leader during the ASEAN meeting. (Jason de Asis)

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