On a clear day you can see the MRT

mrt-queuew

By Chempo

The MRT-3 is owned by MRTC (a private enterprise registered in Hong Kong) which is also responsible for the maintenance. The govt operates the trains. It started operations in 2000 with 24 trains handling a capacity limit of 350,000 pax per day. Today, the pax load is 600,000. The red line for capacity expansion was sometime in 2010 and there have been some private sector proposals which the govt were not interested in. Mitsubishi was the long-serving maintenance contractor of MRTC whose contract finally ended in October 2012 after several monthly extensions. Inexperienced local maintenance contractors took over under seemingly suspicious circumstances, and thereafter a series of accidents occurred. Lack of spare parts reduced running trains to only 14 as of January 2016 leading to epic gridlock in Manila, kilometre long queues and an incensed public.

Manila is caught up in a swirling acrimonious battle between the govt and MRTC shareholders whilst millions of commuters suffer every day. In the centre of this cauldron is ex-MRTC GM Soriano Vitangcol, the man responsible for highly suspicious way of bringing in 2 succeeding inexperienced maintenance contractors.  Vitangcol is currently facing corruption charges.

www.mrt3.com is not the official website of MRTC but one published by the private owners of the train system. They did an excellent job of explaining the whole fiasco and put the blame squarely on the govt. But are they really squeaky clean of blame?  And is the Dept of Transportation & Communication (DOTC) really bumbling good-for-nothing civil servants whose heads care for only political gains?


PRE-OPENING

With a country cash-strapped (thanks to the plunder of Ferdinand Marcos) and in need of infrastructure improvements, President Cory Aquino took the view that govt-private partnership was the way to go. The legislative requisite was put in place when Cory signed the Republic Act No. 6957  (BOT Act) on 9 Jul 1990. This is titled “An Act Authorizing the Financing Construction, Operation and Maintenance of Infrastructure Projects by the Private Sector, and For Other Purposes”. It covers only BOT & BT schemes and it came into effect 9 Oct 1990.

In late ‘80s the govt was looking for a mass transit system along EDSA to alleviate the terrible traffic problems. Israeli businessman Elihaju Levin (EL) presented a proposal to DOTC Sec Oscar Orbos on 3 Mar 1990 to construct a light rail transit system on BOT basis. Things moved very fast and within 2 weeks EL was in discussion with DOTC. On 1 Apr 1991, a pre-qualification bidding was held which drew 5 bidders. EL cobbled together a consortium of foreign and local partners (EDSA LRT consortium) for this. EL’s group was the only one to meet the criteria and on 9 May 1991 the pre-bid award committee confirmed the award to them.

On 31 May 1991, new DOTC Sec Pete Prado asked Cory for permission to negotiate with EL’s group and received the green light in July 1991.  By now the EL group had set up EDSA LRT Corp Ltd in Hongkong (ELC). In the same month, Prado sent ELC’s BOT contract to Cory for approval. In 19 Mar 1992, new Exe Sec Drilon advised the contract was disapproved for reason that the bidding was not in accordance with BOT Act (no public bidding) and the list of BOT projects had not yet been approved by Congress.

Enter new DOTC Sec Jesus Garcia who held the view DOTC can sign the contract without President’s approval under Executive Order 380 November 27, 1989. He re-negotiated with ELC and executed a “Revised and Restated Agreement to Build, Lease and Transfer a Light Rail Transit System for EDSA”, and a Supplemental Agreement on 22 Apr 1992. These were approved by new Pres Fidel Ramos (FVR) on 6 May 1993.

On 5 May 1994, FVR signed R.A. No. 7718 (BLT Act), an “Act Amending Certain Sections of Republic Act No. 6957 with an effective date 28 May 1994. The law expressly recognizes the BLT scheme and allows direct negotiation of BLT contracts.

Meanwhile EL incorporated in Philippines as EDSA LRT Holdings Inc (ELH), as shareholders of ELC           .

Enter Robert Sobrepena.

In 1995, a new group bought out EL’s group and names were changed – ELC to Metro Rail Transit Corp HK (MRTC) and ELH to MRT Holdings (MRTH – which eventually changed to MRT Holdings I).

On 8 Aug 1997, MRTC and DOTC signed new agreements (the BLT Agreement) to supersede the many agreements, revised agreements, and supplemental agreements previously signed. All terms remain unchanged except the project was split into 2 phases:

  • Phase I  — 16.9 km from Edsa North to Taft (13 stations)
  • Phase 2 —  MRT3-LRT1 Loop from Edsa North to Monumento.

Construction started on 15 Oct 1996 and the line was officially operational by 20 Jul 2000.


BOT/BT/BLT SCHEMES

BOT – Build Operate Transfer – contractor finances and constructs the infrastructure facility, and operates (and maintains) the same for a stated period, then transfers ownership and operation of the project to the government. (Republic Act No. 6957)

BT – Build and Transfer – contractor finances and constructs the infrastructure facility and, after completion, the ownership and operation thereof are turned over to the government. (Republic Act No. 6957)

BLT – Build Lease and Transfer – developer finances and constructs infrastructure facility and upon its completion turns it over to the government on a lease arrangement for a fixed period after which ownership of the facility is automatically transferred to the government. (Republic Act No. 7718)


TATAD Vs GARCIA

The constitutionality of the BLT Agreement was challenged by Senators Francis Tatad, John Osmena and Rodolfo Biazon. In Apr 6, 1995, the SC junked Tatad’s petition.

The petition and the SC decisions in brief :

(1) EDSA LRT Corp is a foreign entity, thus it is unconstitutional for it to own a public utility.

  • SC decision : EDSA LRT Corp construct and own the assets, thus they are not running a public utility.

(2) The BLT financing scheme is not defined in RA 6957 (BOT Act), thus it is illegal.

  • SC decision: RA 7718 now recognizes BLT schemes. Thus RA 7718 ratified the BLT contract.

(3) Contract was awarded on negotiated basis, thus violates RA 6957.

  • SC decision: EDSA LRT was already pre-qualified by PBAC after bidding process.

(4) Award violates the implementation rules and regulations of the BOT Act (no public bidding).

  • SC decision: (a) There was only one pre-qualified bid, thus public bidding was meaningless. (b) Presidential Decree No. 1594 allows the negotiated award of government projects in exceptional cases.

(5) The award violates Executive order 380 for failure to bear presidential approval.

  • SC decision: The discretion to award a contract is vested in the government agencies entrusted with that function

(6) The contract is grossly disadvantageous to the govt.

  • SC decision: The matter of valuation is an esoteric field which is better left to the experts and which the Court is not eager to undertake.

Note:

1. By saying RA 7718 ratified the BLT contract, the SC took a very dangerous stand on ex post facto law. This is a law that has retroactive effect. Many countries do not permit this, notably America. Since the Philippines are heavily influenced by the US, I was curious as to this decision. So I googled, and true enough, the 1987 Constitution of the Philippines categorically prohibits the passing of any ex post facto law. Article III (Bill of Rights), Section 22 specifically states: “No ex post facto law or bill of attainder shall be enacted.” It is left to us to wonder why nobody took issue to this. Retrospective application of legislation creates legal uncertainty.

2. A concurring judge opined that the case ought to be dismissed because the petitioners do not have standing to sue. This underlines the fruitlessness of an activist citizen’s action against the government. Such actions may be allowed only if a party can show that he personally has suffered some actual or threatened injury as a result of the allegedly illegal conduct of the government and the injury is fairly traceable to the challenged action.

3. The SC’s decision forfeited the last chance for Philippines to prevent the ‘original sin’ from prospering.


OWNERSHIP MAZE

Corporate names and shareholdings change all the time, there is nothing wrong in that. But it is difficult trying to understand the MRT deal.  The initial Eli Levin consortium in 1990 and the players that finally constructed the MRT 3 were totally different. We can’t even find a simple chart showing the corporate relationship. The chart that I drafted here seems to be the current status, but I am willing to stand corrected on this.
mrt-corp-org
The corporate structure is so hazy that Sen Escudero was prompted in Jan 2011 to initiate a senate hearing to look into this and determine who is who. I think this did not materialize. (This is different from the 2014 hearings into the MRT accidents).

MRT Holdings II (MRTH II)

This is the corporate vehicle to construct MRT-3 Phase 2 (North to Monumento MRT3-LRT1 link). I’m unable to determine the shareholders, but most certainly it will be the same as MRTH I shareholders. Sobrepena runs the show.

MRT Development Corp (MRT Dev)

This is the entity that acquired the development and commercial rights to develop the 16-hectare depot site and in the 13 stations, as well as the right to develop the air space above the 13 stations.

MRT III Funding Corp (MRT3FC)

The special purpose vehicle (SPV) that is used to issue the MRT-3 asset backed bonds. It is registered in Cayman Islands.

Metro Pacific Investments Corp. (MPIC) – Manuel Pangilinan

There have been many reports since 2010 on MPIC buying out Sobrepema’s stake and others in one form or another. It seems there is only some sort of “co-operation agreement” because MPIC is trying to get in on the MRT-3 act and made an unsolicited proposal to DOTC to buyout MRTC. It’s obviously an arrangement that will be conditional on the MRT-3 Phase 2 extension being accepted by the govt. From other reports, it seems MPIC has bought rights to purchase Sobrepena’s equity in MRTC. This undoubtedly creates yet another legal dimension.

Eli Levin:

One thing that is very puzzling is the role of Eli Levin. Every news article where his name turned up simply stated “Mr Eli Levin, an Israeli businessman” and nothing more. Absolutely nothing!  EL was involved in the LRT 1 and 2 projects, this MRT3 project, as well as MRT7. He simply fixes the deal, wins the concessionaire, and then he vanishes.  In this world of information overload in the internet, he is invisible. The only time  he seemed to be actually a real person was in a Manila Standard article March 01, 2013, by Emil Jurado who wrote “ . . . my good friend, Israeli businessman Eli Levin, a long-term resident of the Philippines and at one time married to a Filipina.”

Robert Sobrepena:

He is the front man at the MRTC with whom the govt has to deal with. He was in the center of 3 failed or problematic business dealings – Fil Estate group that ran into serious difficulties and losses from the 1997 financial crisis, the ill-fated College Assurance Plan and the controversial Camp John Hay development. It seemed at Camp John Hay, he collected rentals, paid out Php 900m in dividends in 1989-2000, and never paid lease fees to the govt. He is certainly not the kind of businessman who gives us great confidence in PPP.


BLT AGREEMENT

The system : Phase 1 – 16.95 km for Edsa North to Taft, comprising of 13 stations

  • $190.0m      – Equity (Capital put in by shareholders of MRTC)
  • $462.5m      – Project financing (comprising of 3 components –  a Japanese export credit in Yen, a Czech export credit,  and a syndicated bank loan)
  • $  23.0m       – Loans from local bank (2001)
  • $675.5m       – Total

Note: The total of $675.5m has been mentioned as total cost. Is that the total financing or is that actually the project cost? Is that only for Phase1 or does it cover phases 1&2? The additional $23m taken on in 2001 – was this for cost overruns? Is the govt supposed to pay for this? It is not included in the lease rental computation.

  • MRTC responsibility:
    • Provide capital and arrange project financing
    • Build MRT-3 Phase 1
    • Responsible for maintenance
    • Responsible for developing the govt land above the depo and provide the govt a share of the revenue.
  • Govt’s obligation:
    • Operate the system
    • Make a monthly Lease Rental Payment (LRP)
    • Pay MRTC a maintenance fee
    • Guarantee the loans for the project financing.
  • The Lease Rental PaymentPayable monthly over 25 years. It covers the following:
    • The loan amortization (principal + interest)
    • The Equity amortization (principal only)
    • Guaranteed economic return of 15% on Equity.
    • Some other expenses, such as LGU taxes

The LRP is not a fixed monthly sum because it has to follow the loan repayment schedule where interest is on reducing balance basis and principal repayment is on a tiered basis. Without internal info, it is not possible for us to compute the quantum of monthly LRP. For example, for the Yen loan component, is it converted to $ for the LRP purposes, if so, how is the exchange derived? For the other expenses, it is based on actual incidence as it occurs so it cannot be quantified. The guaranteed economic return is also quite impossible for outsiders to compute.

The economic return is based on the Internal Rate of Return of 15% on the Equity of $190m put up by shareholders. This is a fairly complicated way of computation so I’ll leave the mathematics out. This return is on after tax basis, and considering corporate tax was 35% before 2009 and 30% thereafter, this guaranteed return makes it an extremely lucrative deal. The question I would ask is : the lease payment includes equity repayment, so is this 15% based on the reducing balance of equity or on $190m for 25 years?

There are many who said that FVR did a great job in reducing the guaranteed returns from 21% during Cory’s time to 15%. It’s really such hogwash because we don’t know if the basis are the same, and more importantly, Cory never approved any deals.

Shortcomings in the BLT Agreement

  • There is no exit clause for the government after completion of Phase 1. The often touted EVBO (equitable value buy out) is an exit clause for the owners of the MRT-3, not the government.
  • The O&M responsibility should be held by one sole party. As operator, the govt has no control over maintenance nor the purchase of new trains.
  • The contracting basis left the govt with no control over all construction cost as well as maintenance cost.
  • Revenue sharing for income from other areas are not properly spelled out.
  • Why should the govt guarantee loans favor private sector?
  • The govt, being the ultimate transferee of the assets, is not adequately protected in respect of the assets (eventually locked up by the bonds).
  • The govt guarantees the loans, makes monthly lease payments and there is no protection to the govt to ensure the funds are utilized to service the loans.
  • The assets are to be transferred to the govt by the end of the lease, but there is no protection to the govt to ensure shares in MRTC cannot be encumbered; doing so may complicate asset ownership.
  • The economic rate of return of 15% on Equity on a net tax basis seems extraordinarily high for a project where the developer takes absolutely no market, currency, and interest rate risks.
  • The financing arrangement locked in the rates preventing the govt to re-structure the financing in a regime of extremely low rates in the last 2 decades thereby possibly saving millions in interest.
  • Nothing that got done has been subject to open bidding.

 

MAINTENANCE MESS AND SCANDAL

MRTC, as the MRT-3 owner, is responsible for maintenance. MRTH, the holding company of which Sobrepena is the CEO, ran the show and from 2000 to October 2012, with the maintenance contracted to Sumitomo Corp.

In 2009, the govt, through Landbank and DBP, bought a massive amount of MRTC bonds and by then held about 80% economic interest in the company, securing for them 11 of the 14 seats in the board. The govt now effectively controls MRTC and runs the show.

October 2012, the Sumitomo Corp contract was not renewed. A new maintenance contractor PH Trams CB&T was engaged. Sobrepena now cries foul and puts the blame for MRT-3 maintenance woes squarely on the govt. His claim seems pretty obvious – all the breakdowns and accidents occurred after October 2012.  When the govt took over, there were 20 trains running with 4 back-ups. By 26 Jan 2016, there were only 14 trains running.

Is it true therefore, that it is the govt’s interference, corruption, and mis-management that created the whole mess? The answer is an unequivocal NO.

There is clear indication that decay had already set in long ago. Way back in 1999, MRTC had already mentioned the need for upgrading some parts. Any new maintenance contractor would have to deal with an increasingly deteriorating situation as decay picks up speed. Vitangcol’s nefarious arrangement with a seemingly untrained new team simply rushed the ordeal to the breaking point.

Note: This article does not go into all the contentious issues regarding MRTC General Manager Vitangcol and PH Trams/APT Global. Those are separate matters.


ORDER FOR 48 LIGHT RAIL VEHICLES

The govt moved to acquire 48 new light rail vehicles (or coaches) from CNR Dalian Locomotive and Rolling Stock Company, China, which was frustrated by Sobrepena obtaining TROs. The Court of Appeals in May 2014 ruled in favor of the DOTC and cleared the way for DOTC to proceed with the purchase.

Sobrepena’s position is that he has no objection to new trains, but merely wants to be given the right to go and inspect the trains to make sure they are compatible. They fear Dalian has no record, and also the fact that the new trains may jeopardize the Phase 2 system. DOTC’s view is that Sobrepena’s non-cooperation makes it difficult for the govt to solve the MRT problems.

Arbitration #2

Jan 2014, MRTH II started arbitration in Singapore. This time, the dispute is the purchase of 48 light rail vehicles from Dalian. As part of the MRT-3 capacity expansion, the govt is contractually bound to the BLT agreement. Thus it should be the owners of the MRT responsible for new purchases, not the govt. Note that it was MRTH II and not MRTC that filed for arbitration. They felt MRTH II had concessionaire rights to Phase 2 and thus have the right to petition.

I share the concern for compatibility issues. Empty train shells will be coming from Dalian, and engines coming from somewhere else, running on old Czech technology. Here’s hoping this will not yet turn out to be another turn of events of bumbling govt officials running the show. Meanwhile, first prototype vehicle arrived in Aug 2015. After testing, if all goes well, the balance will arrive in batches starting Jan 2016. Here’s keeping our fingers crossed.


SECURITIZATION MESS

Under the BLT contract, the govt makes monthly Lease Rental Payments (LRP) to MRTC for 25 years (2000-2025). For composition of LRP, see Contract details above.

Sobrepena’s group of companies faced financial difficulties in the aftermath of the 1997 financial crisis. In 2003, a scheme was created to monetize the future cashflows from the LRP. This took the form of Bonds backed by the future LRP cashflows.

The mechanism works like this. A special purpose vehicle MRT III Funding Corp (MRT3FC) was used to issue the Bonds to shareholders who are free to sell them in the capital market for immediate cash. The government pays LRP to MRTC each month. The funds are distributed to each shareholder who in turn course it to MRT3FC’s paying agent (and possibly the securities depository) Bank of New York NY. Out of these funds at the bank, the obligations for coupon payments, bond redemption and ‘pass-through’ funds will be satisfied.

Bonds issued:

mrt-bonds

  • Zero-coupon means it carries no interest payment, the bonds are priced on a discount basis.
  • Pass-through securities are not exactly bonds but let’s just call them all simply as bonds. The LRP payments by the government for years 2015 to 2025 will be coursed through the paying agent to holders of the bonds. The bonds will be priced on a complicated discount basis.

It is apparent only a portion of the quantum of LRPs  are monetized.

  1. There is a Yen component, so was this left out, or do they have a basis for forward conversion rates?  
  2. There is an expenditure component, so it cannot be quantified 18 years forward, furthermore, this is probably in pesos, so how was the conversion made?
  3. The economic returns can only be computed post fact, so it is likely equity repayment was also omitted.
  4. It also appeared not all shareholders monetized their share of LRP.

The LRP cashflow from the govt is guaranteed under the BLT contract, thus the Bonds take the form of a sovereign risk which enhances its credit rating.  This is of course very good for the bond holders.

Bond valuation
Let me explain a bit on this because lack of knowledge has led to lots of mis-information on the MRT bonds. A bond has a face value which is the future cash flow of the LRP. This cash flow (let’s say in 1 years time) is made up of loan repayment ($100,000)+ interest let’s say @ 9%pa.($9,000). So the bond face value is $109,000. Shareholders are selling this away but at what price?

  • Bond prices are driven by market forces such as interest rates, market sentiment of interest rates, whether it’s a junk bond, or AAA-rated bond, etc. Some bonds are quoted, some are not in which case the parties need to do their computation.
  • For Tranche 1 it is simple, the price is $109,000 and MRTC need to pay coupons (interest) of 9.5%pa. It is basically like a time deposit. So the price is par for a zero risk bond.
  • For Tranche 2 & 3, the price is on discount basis –  what is the present day value of $109,000 in ‘x’ years time. If it’s for 1 year and the discount rate is say 5%, net present value is $103,810 and the price is 95.24. If it’s a stream of income, like Tranche 3, the calculation gets complicated.
  • Price for bonds is inversely related to interest rates. If rates go up, bond prices fall, and vice-versa.

What’s in it for the bond holders? In the case of Tranche 1 (with coupons), bond holders earn at the rate specified in the bond. In the case of Tranche 2 & 3, if bond holders hold to maturity, they earn at the discount rate, which can be recomputed to arrive at the yield (the rate of interest per annum on the cost for the number of days to maturity). If they sell before maturity, they make a gain or loss in the buying and selling price differential. Be very clear on this point — the interest on the loan has nothing to do with the bond holders.

What’s in it for MRTC shareholders? For Tranche 1, they got a lot. They received the future LRP now, which earns them interest (but they need to pay coupons to bond holders). For Tranche 2&3, they received much less than the face value of the bonds because present value of money is always less than the future value. And here’s the worrisome part. The LRP comprises of equity and bank loan amortisation. If the bonds allow shareholders to cash out their equity + economic returns, that’s all prim and proper. But the portion of LRP for loan amortisation is not theirs to keep so why did they cash out on that too? That is a big holler

So what does securitizing the LRP mean to the govt?

It means when problems arise, the govt now has to deal with MRTC shareholders and entities with economic interests (bond holders). As the bonds are bearer securities, the holders could be any investor. And, indeed, a situation did occur in 2007/2008 when the govt was 8 months in arrears on the LRP and maintenance payments. It was not a case of the RP gone burst, but rather a matter of delays in the budget process so funds could not be allocated on time. MRTC threatened to bring a case in Singapore courts (Arbitration #1).

In the case of a buy-out scenario, the situation becomes very complicated.  That is where we are today. The govt has made a decision to buy out the MRT3.

One serious question that needs to be asked is, why was this securitization allowed in the first place? If the future cashfows from LRPs are monetized, where then is MRTC going to get the funds to service their bank loans?


GOVT BUY-OUT OF SECURITIES

In Dec 2008, delays in payment of LRT forced MRTC to file Arbitration #1 in Singapore which eventually did not proceed. The arbitration was forced by bond holders Goldman Sach and Elliot Partners. These are vulture hedge funds, one does not play punk with them. Their holdings were bought out by the govt, hence the case in Singapore never proceeded.

Arbitration carries great implication as the country’s sovereign risk standing may be negatively impacted making it more expensive for the country to borrow in the capital markets. To pre-empt arbitration filing, the Arroyo govt made a decision to buy out the bonds and MRTC. The Dept of Finance instructed the Land Bank and the Devt Bank of Phils to buy up all the MRT3 bonds.

The numbers I got from a PPP presentation showed that by 2009, the 2 govt financial institutions’ (GFI) holdings of interest in MRTC was :

  • DBP with $676.25m  of the bonds
  • LP with total of $376.87m (a) unsecuritised equities payment, (b) Preference shares – $54m (c) bonds.

It is not clear how much of the bonds have been redeemed by now. We can only assume the bonds are those from Tranche 3 maturing 2025, and the rest have matured.  Mrt3.com website indicates that the GFIs currently hold 78% of outstanding bonds. Tranche 3 bonds have a total face value of $1,197,155,666 so 78% would be $933,781,415 which is fairly consistent with the PPP presentation.

Land Bank’s holdings raised some questions:

  1. There are preference shareholders in MRTC, who are these? Could it be MRTH I are the preference shareholders, and Sobrepena has the ordinary shares, that’s why he is calling the shots? Does it mean the govt already owns 25% of MRTC?
  2. Unsecuritized equities payment – that means not all the LRP cashflow was securitized. So the actual payments by the govt for the LRP all the way to 2025 will be much higher than the total bonds issued (as I suspected above).

The 2 GFI’s holdings appear to be in breach of some banking regulations. So arrangement was made for the MRTC preference shares to be parked with the National Devt Corp. The rest of the holdings remain at the GFIs.

So what does this govt acquisition of the bonds mean?

  1. In terms of cashflow, the bonds are a damning exercise for the govt because the right hand had to cough $180m upfront to buy the bonds, and the left hand continues to make the monthly LRP payments to 2025. A major portion of the govt’s monthly LRP money finds its way back to the 2 GFIs as bond holders, some to other bond holders and balance for MRTC.
  2. The big holding of the bonds gave the Arroyo govt 11 of the 14 seats in the MRTC board. The govt does not own the MRTC, but it is effectively running the business of the company that owns the MRT-3 by virtue of board control. This is what pisses off Sobrepena and why the Pnoy govt is directing the show – putting appointees in the general manager post, ordering new trains, changing maintenance contractors, etc.
  3. There are some who said the buy back of the bonds is a good turn of events because now when the govt remits the LRP, 78% is coursed back to the GFIs, thus recouping substantial portion of the loan interest. Claims of $300m to $400m savings have been mentioned. Not true. The GFIs earn on the yield on bonds (as explained in “Bond valuation” above), the loan interest has nothing to do with them. The bonds were purchased in 2008 when Fed rate was about 3% and since 2009 has been flat at under 1%. So the bond holdings in the GFIs’ books are most likely giving them some book revaluation gains at the moment, but nowhere near to $300m.

Bond acquisition scandal?

The 2014 Senate enquiry brought into the open the circumstances of how the 2 GFIs acquired the bonds. The purchases were done through Global Air Services (GAS). The banks explained that they would be in breach of banking regulations to book the purchases directly, so they had to do it via a $180m loan to a third party to buy the bonds. The facts are – GAS was a $2 company, registered in Virgin Islands, managed by Presidio Capital (a Singapore trust fund management firm) and owned by Robert Ongpin, and fees of US$5 or 6 million were paid for the transaction. It just smells fishy. It tells me of a round trip arrangement for the purpose of camouflaging the actual purchase price. With a $180m transaction, a simple compromise of a few basis points in the price would have allowed millions to be siphoned away.  What I’d like to know is, were the bonds purchased by GAS who then sold to the banks? Or did GAS buy on behalf of the GFIs? Either way, what was the price? Was there valuation done —  a comparision of purchase cost to the net present value of the securities?  Senator Osmena immediately exclaimed “plunder” when the $180m loan was revealed. That’s barking up the wrong tree.  No one asked about the pricing. The Senate enquiry did not ask intelligent questions.

Could Senators Escudero and Poe have asked their 2016 election backer Mr Ongpin pertinent questions, and could they be privy to information they didn’t share at the inquiry?.

The bonds are now carried in the GFIs’ books. We do not know of the purchase price nor its valuation then and now. The loan to GAS was $180m so it is possible the cost of the purchase was in that ballpark figure.


PRIVATE SECTOR INITIATIVES

Sobrepena insists that that they expected capacity would be breached by 2002 and they made several requests to buy additional trains which the Arroyo govt refused to approve. There are in fact 3 private sector initiatives for capacity expansion, and MRT Phase 2. All these have been mothballed by the Pnoy govt despite the fact that these plans would have eradicated the current MRT problems. According to Sobrepena, it is the govt’s refusal to entertain private sector initiatives and maintenance failures that dragged the MRT to its current sad state of affairs.

Sobrepena appears to be pushing MPIC’s unsolicited proposal to the govt for obvious reasons – he has made certain tie-ups with Pangilinan . The fact is, most,if not all, MRTC shareholders have cashed out on MRT 3. There is nothing in it for them, except the opportunity for another sweet deal on Phase 2. That’s the reason they have not left town.

It is being bandied about that these private sector initiatives are financially advantageous to the govt, will increase capacity tremendously and new signaling/communication systems will improve safety, will have new trains for free, no more govt subsidies, etc. It’s the developer’s soundbites. The MPIC proposal, for example, will not cost the govt a single peso, the monthly Php 7.2m subsidy (where did that come from?) will not be necessary and the guaranteed equity ROI will be decreased from 15% to 11%. It’s so beautiful . . . so why is the govt not biting? It is impossible to form any opinion on these proposals since the public has no access to details and operational data.

My take on this is both Arroyo and Pnoy govts saw the onerous nature of the BLT Agreement. That, coupled with financial troubles of Sobrepena’s group, led them to believe taking over ownership of the MRT-3 is the best course of action.

More importantly, the Pnoy govt has learned that it needs to be very prudent when dealing with private entities as it does not want a repeat of the PIATCO fiasco.  Contrary to Sobrepena’s statement that the govt is not interested in looking at these proposals, it is in fact studying them for a long time and has sought high level international legal assistance. The very fact that Sobrepena criticized the DOTC for the high consultancy fees incurred by Sec Abaya attest to this. The details of the MPIC proposal is so terribly complicated that it will lead the DOTC into many new rabbit holes. For those who have time and like to drill into minute details, you will see I tell no lies if you check out this article: ” Gov’t cautious on MPIC’s MRT 3 scheme“.


GOVT GAME PLAN

Public perception is that the govt is fumbling and DOTC is inept in its handling of the MRT problems. In reality, the govt has a well defined game plan. Aquino’s Executive Order (EO) 126 of 28 Feb 2013 says in no uncertain terms, the govt is buying out the MRT-3. The buy-out is taken under the EVBO term of the BLT Agreement. The DOTC is pursuing the buy-out and system upgrading in parallel. That is why, despite the fact there has been no progress in the buy-out, upgrading work has already started.

Vitangcol’s corrupt machination is a side show that detracts public attention away from the DOTC’s real work. Let’s put Vitangcol aside and let the court deal with him. Let the govt focus on the difficult work on hand and may detractors be damned.  Now without a plan, there would be no direction. The DOTC’s website clearly defines what the govt is doing, and it makes a lot of sense. Let me restate briefly :

On the buy-out:

  1. They have Congress approval on the buy-out and Php54b has already been allocated in the 2014 budget for this.
  2. The legalities are overwhelming and they are currently working it out, seeking lots of high legal advice.
  3. When they have finalized the legal aspects, they will then approach the shareholders.
  4. Due to the delicate nature of the situation, DOTC cannot disclose any proceedings for the time being.

On upgrading:

  1. 48 new light rail vehicles (LRV) have been purchased. Prototype is being tested. The rest expected to be delivered Q1 2016 in batches, total delivery by December 2016
  2. Current the train configuration is one engine pulling 3 LRV. After upgrade it will be 4 LRV to one engine.
  3. Automatic ticketing system has been installed which will cut queue time.
  4. Elevators/escalators to be replaced
  5. Portions of the rail will be replaced
  6. Train engines to be replaced
  7. Signalling systems – both hardware and software, will be replaced.
  8. Ancillary systems will be added — depo bays, power substations, etc
  9. New radio systems will be installed
  10. Construct an additional footbridge at North Avenue
  11. Overhaul existing 72 trains

Post buy-out

The govt will own the assets, maintain regulatory responsibilities, bid out Operations and Maintenance to private sector.  The govt feels operations and maintenance are best left to private sector who can manage this better.

These upgrading works have either been completed in 2015 or are work-in-progress.  Overhaul of existing trains will be completed by 2017. Life for commuters will be tolerable within this year. So let’s give DOTC a chance. It will be a sad commentary on Filipino culture if a non-LP candidate wins the 2016 election just in time to take credit for all the work that has been done.


GOVT BUY-OUT

But just what exactly is the govt going to buy out and how did they arrive at the Php54b valuation is not clear. The valuation need to consider the following:

(1) MRTC bonds

The bonds need to bought back so as to extinguish economic interest holders. Whether the govt will buy back the bonds held by Land Bank and Devt Bank of Phils is academic because it’s a case of govt settling with itself. Technically, it would probably need to be done so that the GFIs can clear their books of the 78% holdings of bonds. The balance of the 22% need to be bought back from other bond holders.

How much then would these bonds cost? We are unable to compute due to lack of information.

Critics are quick to point out the Php54b is hardly enough to buy out the roughly $900m bonds held by the GFIs so how is the govt going to buy out shareholders.  It should be noted the $900m is only the face value, and we don’t know what is the balance they hold. The valuation of these bonds is based on net present value of the pass through cashflow stream of LRP from the govt. Since we are talking of remaining 10 years stream of monthly cashflow that these bonds represent, the value of these outstanding bonds will be substantially lower than $900m.

Another thing to consider is we don’t know how the two GFIs manage their interest sensitivity ladders. It seems these are not booked under trading a/c, but as being held to maturity. If so, taking such a hugh amount off their books will unwind their asset-liability positions with bottomline impact.

(2) Shareholders of MRTC

The govt needs to buy out all the shareholders of MRTC who put up the $190m capital. Does it mean we need to pay all these shares at par value? Of course not, it needs to be assessed and negotiated.

  • MRT-3 Phase 2 : Can the govt opt out this part of the BLT Agreement? If so, the shareholders have no economic interest. If the govt has no exit rights, then damages need to be negotiated.
  • MRT-3 Phase 1: The value to shareholders is basically the future cashflows from the LRP to the extent that it has not been monetized. Sounds complicated, right? To recap, the LRP are future cashflows to pay off: (a) loan amortization, (b) equity + guaranteed ROI, and (c) some expenses.  Since (c) can only be quantified post-fact, they are most likely left out of the bonds, that is, not monetized. This non-monetised portion of the LRP is due to shareholders. In addition, as regards the bonds, it seems not all shareholders are alike. There are some who did not participate in the bond issuance, which means their share of a portion of the LRP is not monetized. Furthermore, some shareholders who did not monetize their share of the LRP have already sold the unsecuritized portion of the LRP to Land Bank. Are you beginning to see how difficult it is?
  • Preferred shares: Some of these have already been purchased by Land Bank. On what basis were these shares valued? I cannot see anywhere at all that Land Bank had a valuation basis when they purchased these lots in 2008/2009. It was really very clumsy work. Did they simply acquire it on par value? These are currently parked with National Devt Corp, so the govt may need to buy them back from NDC, but at what cost?  Probably at the same price at which it was transferred to them from Land Bank. We don’t know how much this is.
  • MRTC shareholders cannot sell their shares because that is one of the bond convenants. That means the govt must first buy in all the bonds.
  • Some shareholders have already assigned their shares to MPIC, most notably, Sobrepena. Pangilinan is keen to get into the MRT-3 Phase 2 act and has made proposals to the Govt, and made some arrangements with some shareholders. These shareholders would thus be unable to dispose of their shares to the Govt.
  • Some shareholders may have pledged their shares elsewhere for other purposes. I have read somewhere that substantial MRTC shares are in fact been held as collateral at Penta Capital. These shares are encumbered and cannot be sold.

(3) Project loan amortization – another scandal?

And here is the most troubling part. Under the BLT Agreement, MRTC obtained loans totaling $462.5m (Japanese export credits, Czech export credits and a syndicated loan). These loans are guaranteed by the govt under Dept of Finance Undertaking Letter dated Oct. 17, 1997. The Commission on Audit revealed in 2012 that the govt has paid out a total of $632m (principal and interest) from 2000 to 2010 because creditors have called on the guarantee. In other words, MRTC defaulted on the loans and the govt has been servicing the loans for the project. According to the COA, this sum is recorded in the DOF books under a/c 962 designated as Loss On Guaranty.

Loan servicing is the obligation of MRTC and their source of income to do that is the monthly LRP from the govt. The LRP are lease payments which should be expensed off in the books of DOTC. Is the COA referring to this LRP out of DOTC budget, or an entirely different payment out of DOF budget?  If it is the latter, then it is a scandalous double payment. This is possibly the case and it is easy to see why. Shareholders have already monetized their LRP cashflow stream. When the govt remits the LRP to MRTC, the funds flow to bond holders. Where is MRTC going to get funds to service their loans?

If God forbid that I am correct and there has been double payment, the $632m should not be expensed off under a/c 962, but recorded as a receivable due from MRTC. If it is in fact a receivable, then the computation of how much it will cost the govt to buy out MRTC may become ridiculously crazy –  shareholders may have to pay the govt to buy them out!

Further logical questions beg to be asked – How did that happen and who was responsible for it? What happened after 2010 – is the govt still servicing the loan?

(4) MRTC balance sheet

The govt needs to do some due diligence on the MRTC balance sheet. Are there any liabilities that will be assumed by incoming shareholders? Since govt appointees are already running the show in MRTC, this should not be a difficult undertaking.

There was another loan from local banks in 2001 of $23m loan. This was not factored into the LRP. Was this a cost over-run and not part of the project cost? What is the status of this loan in the books of MRTC?

(5) MRT Dev Corp

This is the MRTH I subsidiary set up to develop the govt land above the MRT-3 depo, on which Trinoma Mall now sits. I believe under the BLT agreement there is a revenue sharing arrangement with the government.

“Anglo Philippine Holdings Corporation reported that its net income surged 278 percent to P359 million in the first half of 2015 from the 95 million earned in the same period last year due to the sale of assets”  Businessworld online December 03, 2014

Anglo is one of the shareholders of MRTH I. The asset sale above refers to some properties on that plot of land. There are reports of lots of activities and money being made on the plot of land above the MRT-3 depo. The land is red hot real estate with the MRT-7 and the LRT1-MRT3 loop in the pipeline. In contrast, there is a dearth of information regarding any revenue flows to the govt. Whatever happened to the govt’s share?


SENATE INQUIRY 2014

The senate convened in Q4 2014 to look into the MRT maintenance problems. The Senate inquiry in 2014 was a good opportunity indeed in aid of legislation for PPP. The Senate missed a great opportunity by focusing instead, on the quarrels between DOTC Sec Abaya and Sobrepena and offered no solution to the ownership problems. The highlight of the inquiry was Senator Chiz Escudero saying “You two should work it out” and that would have solved the MRT problems.

The MRT problems are not technical but legalistic. Maintenance issues can be resolved, especially with the govt now controlling MRTC. It’s a matter of having good and capable people in place. We now have Roman Buenafe, a mechanical engineer, in charge. Gen Manager Vitango’s shenanigan tainted the DOTC and he should be marched to jail and the key thrown away. There is no doubt DOTC fumbled terribly on the maintenance side and the Pnoy admin is paying a high political price for not taking immediate action against Vitangcol. However, it’s the legal matters that cannot be resolved easily. Pres Arroyo could not solve it during her terms and Pnoy has wrestled with the same problem of ownership. Arroyo did right in gaining control of the boardroom. Pnoy is right in issuing executive order 126 to buy out the owners and the LP admin has a concrete plan to resolve the MRT crisis. The Senate provided no additional wisdom in dealing with the matter. Wouldn’t it be great if senators had done their homework when they attend the inquiry and asked all the questions that this article prompts?

 

CONCLUSION

I should warn that facts and figures here are presented on a best efforts basis. It’s not easy to obtain data. The Land Bank’s holding of the bonds is reflected in their Annual Report 2013 on their website. The Devt Bank showed this in Annual Report 2011 and, thereafter, it’s not highlighted, perhaps they have been transferred out.  The DOTC has a website DOTC Metro Rail Transit Line that provides good info including some financial reports. A sample report is MRT3 2014 Financial Report.

Unfortunately, the mrt3 report isn’t very helpful. The govt’s expenditure on the mrt3 can be split into payment for the assets (the lease payments) and on the operations, including maintenance. With operation financials we can assess govt subsidies for running the trains. In the reports mentioned, we can’t see collection figures, so I wonder where the fare revenues go.  It is not possible to assess govt subsidy for the operations. The mrt3 report may be good DOTC internal financial accounting, but it is not good management reporting material.

Moving forward, the govt’s plan is the logical way. The hard assets (the tracks, stations, power stations, the land on which the hardware stands, etc) should be owned by the govt. This should not be construed as govt subsidies, but a country’s investment in infrastructure. There should be an independent Regulatory Commission to oversee fair rates, safety and quality service. Private enterprise should operate and maintain the MRT on a commercial basis. This is the model common in many other countries.

Two major ideas I would recommend are :

(a) Instead of bidding out the O&A, the govt could incorporate a company for this purpose. Let it run as a fully independent commercial unit under professional management. Make it profitable then float it on the stock exchange and the govt can retain some shareholdings. If it is bid out, some fat cats will get the pie that comes with heavily socialized infrastructure cost to benefit only them.

(b) To recoup part of the heavy investment on the hard assets required in a MRT project, the govt should be allowed to acquire the land surrounding the stations (say within a radius of 50 meters). That way the govt can recoup investment cost by commercial re-development of these land. It is also a way to maximize the land to its full potential. Unfortunately, the byzantine laws of the Philippines make this impossible.

The govt buy-out of MRTC has to happen. Let the DOTC work out the legalities, after which, as Secretary Abaya indicated, they will approach the shareholders. As this article shows, the bitch is the legalities which are the shareholders’ doing. Commercial disputes are best settled through negotiation. Investors are due their fair profits, but if they have already cashed out long ago, let’s hope concessionaire rights to Phase 2 will not justify greed over national interest.

It is very clear that the core of the problem is the “original sin” which is the anomalous BLT contract signed by FVR. It is also very telling that FVR has been absolutely and conspicuously quiet in all the uproars over the MRT these past few years. I’m just wondering why.

 

Comments
385 Responses to “On a clear day you can see the MRT”
  1. Joe America says:

    Thank you, chempo, for this extraordinary report that details the condition of the MRT in ways that have been sorely lacking both in mass media and from DOTC directly. We can finally grasp who the players and interests are, and where the financial knowns and unknowns reside. We can see how the problem started, way back under FVR, and grasp that dumping this whole load on Secretary Abaya is a tad unfair. Well, more than a tad.

    If journalism awards were granted in the Philippines to bloggers for jobs well done, this report would move to the top, for sure.

    I’m sure it will be read where it needs to be read, and I hope we get some additional inside information and insights during the discussion.

    • chempo says:

      You are too kind, Joe. You just changed my red angry face to a bashful one.

      • imabureaucrat says:

        Joe is right. What a well-researched piece. Will give some of our so-called investigative journalists a run for their money. After reading your article, I decided not to be a silent follower of this site anymore.

        • Joe America says:

          Well, excellent, imabureaucrat. The discussions are typically rich, and it is good when “lurkers” (used affectionately) emerge to engage. Thanks as well for your kind words on the JoeAm page. I’m glad you find the blog informative and thought-provoking.

    • caliphman says:

      It’s not an issue of whether and to what degree It is Abaya’s fault or not. It is a huge problem as chempo so clearly points out and it is obvious that finger pointing is not going to solve it. It’s also clear that that it is beyond Abaya’s competence to even begin fixcing it as well intentioned as Abaya may be. The first step to any solution is defining the problem and Chempo has done a remarkable even if very preliminary effort in doing that. Great job, old chap!

      • It seems they are working on solutions now.. measures which chempo has detailed. Buying the MRT and fixing stuff, and the plans look sound. Now why does a Singaporean have to tell Filipinos this in a blog run by an American immigrant to the Philippines? (c) Trump

        Because the major Filipino weakness is COMMUNICATION. Making things understandable to the other side, and listening to the other side as well. Both on the government side and on the side of the citizenry. In fact there are the following aspects to communication:

        1) Sender… the one talking should make sure the other side gets it. Must simplify it if necessary. Must reach both head and heart of the other side if possible.

        2) Receiver… must not only listen. Must also take time to understand. Must also take time to empathize… try to put oneself in the place of the sender, get his situation.

        Now I have had a learning curve on aspect Nr. 2) – but I guess many Filipinos who are strong in aspect Nr. 1) have that. If one looks at the things that have happened in public debate – and in all our blogs – it all boils down to communication, to missing dialog.

        • caliphman says:

          Chempo’s piece is just rife of solutions which must have sounded good in theory but self-destructed because of corruption, conceptual flaws, incompetence and just poor execution. So please me if I hold the hallelujahs and remain a skeptic until I feel comfortable its not just more of the same. Are there many here who are convinced like me that if Binay wins this election, his MRT program will be a giant opporunity to make money?
          It is true that communication is one of the key problems responsible for this sordid mess. But it is just one. This is not Deutschland where bureaucratic incompetence, corruption,inaction, are not huge hurdles in getting a good result even with a plan that is clearly communicated and agreed upon.

          • I didn’t say communication is the only weakness… I only wrote it is the major weakness. But I think that after thinking properly, communicating properly is a major factor in getting things going… then of course you have all the other stuff to fix, lots of it. But Chempo has done the job of putting everything on the table for all to see… of course we have to watch what is going to happen next. But this article is a good reference for further follow-ups.

      • Joe America says:

        It may be that, as we unravel what is going on, we will discover that Sec Abaya’s main incompetency is public relations.

  2. Jonathan says:

    Sorry to be “that guy”, but: one spelling correction here: the corrupt ex-GM is Vitangcol, not Vitangco.

    Still digesting this report, may react later.

  3. Annalissa M. Valdez says:

    Thank you for this. Now my only task is how to explain this in concise form to my students. This country need to thank people like you, and this blog, for bringing clarity to this issue.

    • Joe America says:

      Hard to explain simply. I had to skip the financial detail myself, as I couldn’t tell a bond from a baby buggy. But it is clear that the problems were caused by commercial interests (greed) and the paper they produced (a poor contract). Sec. Abaya is just a guy with history on his back and paper chains around his wrists.

  4. “Wouldn’t it be great if senators had done their homework” chempo, a Senate that has people with fake Oxford degrees cannot be expected to do their homework.

    Too many numbers for Filipinos. Nobody will read this I am sure. 🙂

    Seriously, the lack of attention to detail AND big picture – and papers absolutely not putting both together for the reading public (well I guess that is also market-driven, nobody cares until things do down South) is the reason why the country is so often disadvantaged.

    Paying the MRTC guaranteed LRP including this strange mix of government and private is sick.

    1) If one lets a private company run things, then completely by themselves and at their own enterpreneurial risk or profit depending on how well they manage. After a number of years they give the facility to the government, hopefully they did well to earn enough, if not bad luck.

    2) The other alternative is the government running things and farming out individual stuff to subcontractors. The government also earns on tickets, but is fully responsible and in charge.

    In simple terms, this was a total sucker deal for the government. The MRTC gets the money, the government the headaches and even the blame. Chempo have I misread or isn’t that the gist?

    Thanks chempo, this article shines light on the dirty kitchen of the Philippines one more time.

  5. Sup says:

    Send it to Grace by email please?

  6. karl garcia says:

    Very extensive!

  7. Amazing article Chempo the rigor, clarity and non adversarial tone of your writing deserves a front page from the Inquirer.

  8. edgar lores says:

    *******
    1. This is a work of genius.

    2. I may be a financial illiterate, but I can sense genius. (Perhaps because I do not understand the work.) If there is such a field as financial shenanigans forensics, this is it.

    3. This MRT mess smells. It smells like day-old, partially eaten spaghetti leftovers mounded on a paper plate.

    4. And what Chempo has done is to unravel the spaghetti strand by strand, separate the meatballs, separate the sauce, and separate the herbs in the sauce… so we can see the original ingredients, the bitten off bits, and see what can be reconstituted and recovered if we dare. Eww.

    4.1. And he did this while standing behind an opaque screen that hides the mounded paper plate.

    5. He has also detailed and intimated what the cooks – for there were many of them – have done and not done. It is clear that the government cooks were outwitted by the corporate cooks. And we – the consuming public and every tax payer – have had to partake of the badly cooked spaghetti and pay the hefty bill, the bill wherein the tip to the corporate cooks (spell that with an “r”) is even larger than the cost of the meal itself.

    5.1. And it may even be that we have been charged twice for the same meal.

    6. It appears that in PPP ventures in the country, business has the government over a barrel. Why is this so? It may be that government lawyers are inept compared to their private counterparts. It may be because government regimes change hands more frequently than corporations. And it may be that government greed is geared to earn public praise (and private profit) whereas corporate greed is just to earn private profit.
    *****

    • Cookery sometimes can become crookery. (c) MRP

    • chempo says:

      Edgar I was working with gas mask on.
      5.1 — Damn it’s difficult to laugh behind a gas mask.
      6. One big problem in the Philippines is that the civil service has no core. Civil service should be an institution unto itself. They will be led by political heads as departmental secretaries, but it’s the civil service that provide the professionalism and continuity of service to the people.

      • sonny says:

        Chempo, you have exemplified by your authorship the truly erudite composition of the many experts reading and driving this blog (I belong to the studentry). Here I find technical expertise and magisterial qualifications, (humor also many times). There is more to say but I will stop short of maudlin. (I will have to re-read many parts of Chempo’s materpiece in order to learn and live. I now have gained a lot of respect for those commissions of mass transits in New York, Chicago, Los Angeles and San Francisco. I also include those in the other populous cities of Tokyo, London, Germany and many others)

        • Manong Sonny, there is a wealth of insight from a Filipino traffic expert in this blog: http://d0ctrine.com/ – it seems he is a homegrown expert who has not been listened to a lot and prefers to stay anonymous. There is also stuff about MRT and more there.

          • sonny says:

            Visited the blog and marked as resource for much information on the “physics” of traffic management. Thank you.

          • Jonathan says:

            That particular blog has linked to this entry, too.

            • From that blog, that is like being Knighted…

              A friend referred an article to me today and I thought it would be a very good read to a lot of people interested in what has happened and what is happening to the EDSA MRT 3. I think that this article is so far the most comprehensive, not-necessary-legal treatment of events leading to what we now have as a mass transit system along arguably the country’s busiest thoroughfare:

              On a clear day you can see the MRT

              It’s a must read for a lot of people who want to know about the dealings related to MRT 3 and perhaps understand how complex this has become. I would also recommend people read the very good discussions in the comment section of the article. It’s good to see the healthy exchange of opinions rather than have trolls ruin them.

              Sir Chempo, always remember…

              Once a King, Always a King… But Once a Knight is Enough.

          • NHerrera says:

            Irineo, thanks for that link where a lot of traffic, queues, etc items were discussed. But I found a gem for the day — the item entitled

            “The benefits of walking”

            and the two links given there on walking. (I love walking myself.)

        • chempo says:

          Thank you Sonny. You are no studentry but one amongst the many commenters here from whom I have learn a lot. It’s not mutual back-slapping, it’s the truth.

          • sonny says:

            You’re too kind, Chempo. I do feel I take more than I “pay into” when reading through the conversations in this blog. One time the lady of the house saw me smiling while reading an earlier (on another topic) comment of yours and she got curious. So I read your reply aloud to her and in less time I can remember she actually sat down to listen to more. Mind you, she is quite jealous of her time. I don’t dare repeat that episode I might end up ordering out for my lunch. (She cooks, I don’t). 🙂

  9. Bert says:

    “Robert Sobrepena:
    He is the front man at the MRTC with whom the govt has to deal with. He was in the center of 3 failed or problematic business dealings – Fil Estate group that ran into serious difficulties and losses from the 1997 financial crisis, the ill-fated College Assurance Plan and the controversial Camp John Hay development. It seemed at Camp John Hay, he collected rentals, paid out Php 900m in dividends in 1989-2000, and never paid lease fees to the govt. He is certainly not the kind of businessman who gives us great confidence in PPP.”
    *************************

    There you go. ROBERT SOBREPENA…mark that name!

    One more time: ROBERT SOBREPENA. This guy right at the center of three large bankrupted companies under his personal management, namely:

    1. Fil-Estate Group of Companies…the largest real estate company during its time
    2. College Assurance Plan (CAP)…the leader in the field during its time
    3. Camp John Hay Development.

    All bankrupt.

    And now this: 4. MRTC

    Were they doing the same thing then expect a different result? DAMN.

        • karl garcia says:

          duplicate of what Sup was doing.
          now I know why Col. Marcelino got into trouble for doing his own thing.

          • karl garcia says:

            last on eli levin

            http://www.philstar.com/business/316399/when-will-bleeding-stop

            for more on eli levin google mrt 7 or lrt 7 with eli levin

            • karl garcia says:

              Eli Levin really is putting us in a disadvantage.
              Good thing MRT7 remained on hold.

              “Future projects
              Now comes another ambitious mass transport project, the MRT 7. As discussed in my earlier column (Decongesting Metro Manila, Philippine Star, Dec. 12, 2005), this project, as recommended by the Dept. of Transportation and Communication, will link SM City in Quezon City to San Jose, Bulacan. The project proponent is a group called Universal LRT Corp. headed by Israeli businessman Eli Levin.

              The $2-billion mass railway project has a real estate component where the consortium is committing to construct 2,500 residential units and 300 office units each a year on its 174-hectare lot in Bulacan. The group also promised to build a 22-kilometer road in Bulacan and a 20-hectare bus and train depot to improve the access to and from MRT 7.

              In exchange, the government will subsidize some $108 million each year for the MRT 7’s first 10 years of operations. The project proponents say that the government can easily raise that amount from the taxes that the real estate project will generate.

              Learning from past mistakes
              The consortium wants the government, in effect, to pay its loans while getting a guaranteed return of 11.9 percent. Is this MRT 3 all over again? Surely, the government cannot afford another MRT 3. Now Levin’s group, according to newspaper reports, is even asking for a higher rate of return than the 11.9 percent that the NEDA-ICC had approved.

              MRT 7 proponents are saying that the project’s real estate component will subsidize the recommended P20 fare per passenger, a far cry from the computed economic fare of P80.56 per person. What if the real estate component doesn’t click? Will our cash-strapped Philippine government come to the rescue again?

              The consortium line-up though, is quite impressive. Levin claims that the SM Group of Henry Sy owns 60 percent of the real estate arm and 25 percent of the railway project.

              Other supposed investors are Siemens, Alstom, China Railway 18, EEI Corp. of the Yuchengcos, Merlin Capital of the Tong family, George Go of Equitable PCI Bank, and exporter Sergio Ortiz-Luis. Levin is also wise to have on board influential economists like Roberto de Ocampo and Romeo Bernardo.

              Can’t afford another burden
              There are kinks that Levin’s group has to iron out before the project can commence. More than securing the final approval of the Cabinet level NEDA-ICC, they must show that this project will not turn out to be another burden to the Filipino people. If the potential of the project is that good together with the backing of credible industrialists and capitalists, then financing can be generated without government guarantee.

              The government has been bled dry by many projects that showed a lot of promise but in the end could not deliver. It is about time, for instance, that the government gets out of the railway business.

              It can start by privatizing the LRT lines. It can also try to sell the Philippine National Railways although at this point, no investor in his right mind would want to buy it. The PNR is, perhaps, the best example of why the government is not fit to run mass transport systems”

              • Bill in Oz says:

                What an extraordinary proposal..Every time a passenger steps onto a train the company loses 60 pesos… And this loss is to be made up getting the government to chip in $108 US a year for 10 years.

                Meanwhile the Real estate arm makes heaps from selling condo & office space along the proposed line ….That’s where the real money is & the profits.

                Sure there are soem extra taxes to be made frommthe improved real values but isn’t this money supposed to go on providing other government services ?

                This is what’s called privatising the profits and socialising the losses..

                Not a clever idea.

              • @Bill and @Chempo @Karl

                Can’t help going back to this article from the atlantic:

                http://www.theatlantic.com/china/archive/2013/09/the-unique-genius-of-hong-kongs-public-transportation-system/279528/

                Same reason why the NGC should never have been privatized.

                You cannot privatize the most profitable part of the system. In the case of train systems as Bill has said the profitability is in the selling/leasing of real estate.

              • chempo says:

                Agreed Gian.That’s why the real estate around the stations should be accquired by the govt. Privatise the operations part. The operator has no hardware cost, so it is possible to make money on it. If the govt wants to, it can subsidise the fares. But for me, fare subsidy is not a good way to go. If operation needs subsidy, then it is not a cost effective solution to city transportation.

              • karl garcia says:

                Thanks for the input Bill.

              • karl garcia says:

                Thanks folks!
                Within the past few months my views about Privatizatization has changed a lot.

              • karl garcia says:

                so is public private partnerships,the same banana as this bot blt foul ups ?

              • That is what I don’t quite understand… what exactly is the different between BOT, BLT and PPP? Is the one green banana, the other one Dole export, and the last cooked saba?

              • PNR is, perhaps, the best example of why the government is not fit to run mass transport systems same same as in Spanish and subsequent periods – the PNR northern line to Pangasinan was built by English contractors and run by them, guess the Spanish were to inept and lazy to do so themselves at that time… the line to Bikol was built by the Americans… this scene from Heneral Luna shows him negotiating with the English, then he has the Englishman arrested before he himself runs out of English.. now that will not happen to modern Filipinos anymore… all they may run out of are real arguments.

          • Sup says:

            hahahahhaha

            • Bill in Oz says:

              As the article about the Hong Kong metro system makes clear, a profitable mass transit system can be done..Mass transit systems cause property value increase when they are built..If a government owned corporation builds the system then that corporation should be able to harvest some of the improved value..Socialising the profits; and eliminating the losses !!

    • chempo says:

      “mrt7 – investors urge the govt to push project’….

      Karl this reminds me of a interior fittings project I handled long ago. When I took over, I saw too many stuff I did’nt like so I demanded several decrease in prices. The designer boss approached my boss, his fellow Brit, asking for project to push forward, no changes. Lucky for me, my boss told the guy to refer to me, I’m the boss as far as the project was concerned.

      Here, Eli Levin should be told there is a new boss, his name is Pnoy.

  10. Words and names that leaped out from the article are : Roberto Ongpin, Land Bank, Escudero and his Senate Inquiry that did not ask pertinent questions from one of his wedding sponsors, except to issue the order “you guys better get your acts together”.

    Why couldn’t the Central Bank stepped in in the case of LBP’s involvement in the government buy back plans to resolve the banking rule issues instead of circumventing it using a $2.00 capitalized entity owned by Roberto Ongpin and having to pay him with plunderous amounts (involving hundreds of millions)? Why, oh why is the past and present government so generous with this guy? How many other government transaction is this Ongpin involved in aside from DBP stocks (and insider trading issues that were not resolved in the Senate hearing), BSP stocks that had him earning billions of pesos with almost a minimum of capital, just his close association with Binay who was able to allegedly appropriate for himself hundreds of millions for his never ending campaigns since 2010.

    These are just a few of the reasons why I don’t want a Poe-Escudero tandem to win in the May election. No amount of Escudero’s poetic explanations that he retains his independence after having these Marcos Mafia members invited to act as wedding sponsors. What is in it for Ongpin for sponsoring that Balesin Island wedding?

    More comments, later.

    • chempo says:

      Mary, regarding the purchase of MRTC bonds by Landbank and DBP, I think Bangko Sentral was not privy to the case. It was the DOF which handled it. GFIs are under DOF wings, not the central bank.

      • DOF Head Cesar Purisima has some explaining to do…isn’t it lot of unnecessary expense, the one paid to that entity headed by Ongpin..some Filipinos call it “laway lang ang puhunan”….. “Capital is just their saliva”…meaning because you know someone, you can broker billions of transactions for a fee without that big capital outlay, same story with BSP, DBP

  11. Madlanglupa says:

    I am trying to comprehend this, digesting the how and why, but it goes down to one thing: somebody or some entity is actually making it costly to have people ride the MRT, while hiding behind a seemingly impenetrable web of corporations, real or mere offshore shells; profiting hugely and quietly. Well, what is also astounding is that this scam was planned with unusual farsightedness and patience, a 20-year-old project that’s only now having problems in the last five years, enough time for the schemers and the ringleader to stash the cash in quiet places before the balloon goes up.

    And it is both infuriating and amazing to peer into that can of worms. No wonder why the administration is holding the bag and thus getting a lot of flack in social media. No wonder why some object to the idea of privatizing certain public services.

    Made me also wonder why there were no more advertisements on MRT3, whereas the other LRT lines were bursting with color.

  12. NHerrera says:

    MRT is a human activity which is good example for the illustration of entropy — a measure of chaos and disorder whose natural direction is an increase of entropy or chaos. That is, without a strong continuous “force” or guiding hand and a long-view to keep the chaos from increasing.

    On a clear day one can indeed see the physical MRT. But not the broad-scope MRT, its essential history; the what, why, who, when, where and how. But chempo saw and narrated a reasonable version of it. As narrated, it is a confused mixture or mismash of rightful objective, greed; political, judiciary interventions; populated with unlikable characters.

    Thanks for the comprehensive view, chempo.

    • chempo says:

      Glad you like it NHerra.
      Can you look into your crystal ball and tell us what is the probability of the MRT3 returning back to an acceptable level of service in 2016?

      • NHerrera says:

        Here goes:

        Using only numbers from your blog-topic:

        – 350,000 person initial capacity served by 24 trains; current 600,000 persons served by 14 of the 24;
        – 48 new vehicles @4 wagons or vehicles per train with new engines phased in from January to December 2016;
        – assumed new engine replacements so all 24 train (bodies/engines) are working as they should by December 2016, rehab phased relative to entry of the new purchases;
        – assumed rail replacement/ rehab during a few hours window with no trains plying

        then by end 2016 we are back to the situation of relative passenger comfort at the start of the system (year 2000) but considering hitches, technical-mechanical and man-made ones, we may, by end 2016, be at 75%(?) relative comfort. The desired comfort of the year 2000 may come only by mid-2017 (?).

        Well, I gave it a try on reading your note this morning. I will be happy to get a 70% grade. (I have got to buy that new chemical to clear-up that normally reliable crystal ball.)

        🙂

        • chempo says:

          You have not factored in Poe’s drive to march many DOTC chaps including possibly Abaya off to jail.

          • NHerrera says:

            Yep. There you go. The effects of man-made hitches greater than technical-mechanical ones. A start of a new cycle; no lessons learned?

          • edgar lores says:

            *******
            Poe is scapegoating. As Enrile was attempting to do on Mamasapano.

            “I/he/we didn’t do it. You/he/they did it.”

            As I think about it, scapegoating is deeper and more prevalent in the human make-up. It is not only a modality of thinking but almost a modality of being. We are never responsible for the way things are.

            o In our social interactions, we automatically divide people into groups: the in-group and the out-group. It is very Filipino as Irineo observed, the “tayo/kami” and “sila” division. But, in truth, it is a universal pattern. Proof: religious conflicts.

            o At present, refugees represent the global out-group.

            o Sometimes, the out-group is not a group but an individual. For example, Abaya… and Poe herself.

            o In 1956, Colin Wilson came out with the watershed analysis of The Outsider. And in 2008, Malcolm Gladwell came out with “Outliers”. The outsider and the outlier are opposites — one a social failure the other a social success — but both represent the atypical individual. Both stand out, and typically are targets of scapegoating and demonization. (Perhaps not Bill Gates but Steve Jobs.)

            o There are atypical individuals that are insiders but also outsiders. For example, PNoy and Obama. And Sereno.

            o Jesus is the scapegoat of humanity.
            *****

  13. Micha says:

    Since the national gov’t will end up paying for it anyway, the BOT or BLT scheme is superfluous.

    • Yep. That is another example for the shortsightedness of many Philippine governments.

      My father already noticed that in Europe while studying in the 1960s: the Indonesians BOUGHT all their Embassies and Residences, the Filipinos kept renting and still are.

      • Micha says:

        Foreign lending institutions, including the IMF, are able and willing to grant the loans for the dollar requirement of the project. Why the gov’t should outsource the funding to a private third party for-profit corporation is indeed shortsightedness, if not outright stupidity.

        Then again, Ramos’ boys and Cory’s “bulong brigade” and Gloria’s mafia may have an entirely different motive for adopting such a scheme.

        • Bill in Oz says:

          Micha At the time the Philippines was not able to access such loans from the IMF or the World bank; because of the level of foreign debt already owed or perhaps because of evident corruption and an unwillingness to see good money disasappear down a rabbit hole

          • chempo says:

            Bill, when Cory took over, Lee Kuan Yew asked Henry Kissinger to persuade Ronald Reagan to put up substantial aid package to help stabilise the govt. RR did that before his term ended 1989. But dozens of coup attempts chased away lots of investors, the coup leader now a vice-presidential candidate.

            • Bill in Oz says:

              Any of those things would do it for private investors, the IMF or the World bank.. Thanks Chempo

              • Micha says:

                Control and management over a major public infrastructure such as a rail system in the heart of the metro should not be delegated to a for-profit private investor, especially when the national gov’t is involved and being asked to foot the bill.

                It would be understandable if only the local governments of Manila, Caloocan, QC, Mandaluyong, Makati, and Pasay would undertake this project via a BOT/BLT scheme with profit seeking motives.

                The national government, on the other hand, is not in the business of seeking profits for providing public infrastructures.

  14. Bill in Oz says:

    Congratulations Chempo on this well researched and thorough report..There are big gaps in my understanding re the financial info….My brain just greys out at that kind of stuff..But I sense you have gone a digging in this MRT dung heap where no one has ever gone before. and found things that were meant by the MRT originators to stay hidden… ”

    It is interesting that Levin enters to set the whole thing up and then exits having made his pile with nobody any the wiser as to his real identity, location or role in the whole cock-up…

    • Bill in Oz says:

      Although there are probably good reasons why an Israeli would want a level of anonymity.

    • chempo says:

      Thanks Bill. Actually “research” is a misnomer. It’s just at the keyboard. There are probably some errors in my work I have no doubt of that. Just hoping readers can inject more info.

      Regarding Levin — I don’t know if you have experience of this, but doing business in Philippines is funny. They have another layer of players — the “fixers”. These are redundant scums, but very prevalent. I have seen this very often, up close and personal. Sometimes these fixers know nothing and has no direct contact. Woe to you if you deal with a fixer who needs to deal through another 2 or 3 other fixers. If they don’t fix the deal up, they may fix you up.

      • karl garcia says:

        In my experience of having a dad who knows some one who knows some one who knows someone.
        I get to join in some meetings for “exploratory talks” for many projects that remain in the drawing board.
        I remember encountering people who was trying to look for someone to broker a deal for a german interested in biofuels,someone interetested to setup solar panels,genarator sets after yolanda,vts for the ppa…..
        Airbus trying to sell drones,etc,etc. including the frigate project.

        Not all were succesful,puro drawing.

  15. chempo says:

    Anglo Philippines Holdings Corp is part of the Ramos Group of companies (National Bookstore group) headed by Alredo Ramos. Does anybody know if FVR is related? I have no opinion on this.

  16. Chempo On upgrading:

    48 new light rail vehicles (LRV) have been purchased. Prototype is being tested. The rest expected to be delivered Q1 2016 in batches, total delivery by December 2016
    Current the train configuration is one engine pulling 3 LRV. After upgrade it will be 4 LRV to one engine.
    Automatic ticketing system has been installed which will cut queue time.
    Elevators/escalators to be replaced
    Portions of the rail will be replaced
    Train engines to be replaced
    Signalling systems – both hardware and software, will be replaced.
    Ancillary systems will be added — depo bays, power substations, etc
    New radio systems will be installed
    Construct an additional footbridge at North Avenue
    Overhaul existing 72 trains

    means my proposal in this article: http://filipinogerman.blogsport.eu/task-force-mrt-3/ becomes superfluous… of course BRT still makes sense, the Quezon one is already planned and maybe the C-6 BRT that came out of Karl’s and my “jamming” in the discussion thread makes sense.

    What surprises me though is that it does not come through clearly that there is a plan like that. And my FGLC FB page “likes” and therefore subscribes to the DOTC FB page… but then again the Filipino public is so “mareklamo”… articles that the LRVs are being delivered are commented with cynicism as a manuever to fool everybody before the election… plans being documented are met with the comment “plano na naman, wala na namang mangyayari” (plans again, nothing is going to happen as usual) – but thanks chempo for making many many things much clearer.

    http://filipinogerman.blogsport.eu/kabuhayan-kaligtasan-karunungan-kakayahan-kaunlaran/ – this article also tackles why I am against FOI. People would just nitpick on mistakes they find and not see the big picture. Better have clearer big-picture public information at every level.

    • chempo says:

      Irineo — regarding the BTR:

      Mary had some info from Philtrack who first proposed their idea to DOTC prior to MRT#. Their proposal was for a basically articulated bus system more or less akin to BTR. According to Philtrack they were the first to come up with this idea, which later was first used in Brazil (who may have independently came up with the same idea). Philtrack was initially received with some enthusiasm by DOTC but eventually nothing happened.

      I don’t know how Phils do things, but in Singapore what we did before we decided on MRT was we did lots of public discussion, form bodies to look into all the pros and cons. We engaged international professionals in the fields. Finally there were 2 camps — one for mass rail transist system, one for special bus system, more or less like BTR. The financial numbers supported buses, but the gut feeling was MRT. In the end, we went for gut feeling. The rationale? — we look 20 years ahead. Buses will choke roads, and may no longer support a growing population. History has proven us correct.

  17. This article is another eye opener:
    http://www.straitstimes.com/asia/east-asia/dubbed-the-best-in-class-6-things-about-hong-kongs-mtr-rail-system

    One that really intrigued me is :
    There are 155 stations, including 87 railway stations and 68 light rail stops spread over nine main commuter lines which serve Hong Kong Island, Kowloon and the New Territories.

    The MTR, first built in 1979, now carries more than five million passengers daily. There were a total of 1.9 billion trips in 2014.

    It runs about 8,000 train trips for about 20 hours each day. Adult fares start from HK$3.50 (S$0.63).

    The combined length of Singapore’s five MRT lines, the North-South, East-West, North-East, Circle and Downtown Lines, is currently 162km.

    LRT1 500,000
    LRT2 300,000
    MRT3 600,000

    LRT System 1.2 Million Passengers a Day
    Roughly Thrice that in daily commuters which would be around 3.6M excluding the Bulacan Rizal Laguna Cavite Areas.

    Let’s just have the MTR handle our train system. Give them the keys to the kingdom and leave them be.

    • They might be scared of dealing with the Philippines. It’s not like Heneral Luna would arrest them today. But the Senate might conduct a hearing. They might be forced to appear. The Supreme Court might stop everything for years on end after TROs stop their work.

      • Bill in Oz says:

        TRO’s would be guaranteed. After all only Philippinos can own or acquire land…And the ownership of adjacent land is essential to the working profitable model..Better to have the HK MRT come in as a consultant for the build phase and then as an operator when built..Bugger as a profitable corporation it may even pay company tax…

    • Speed says:

      I think Shanghai is more impressive (evening not considering the high speed trains).

      After the first line opened only in 1995 as a north-south axis from the Central Station to the southern suburbs, by the end of 2015, the Shanghai Metro system had reached a total length of 588 km (excluding the 29 km Maglev line)!

      http://www.urbanrail.net/as/cn/shan/shanghai.htm

      • The Maglev was built with German technology.

        Soon after the Chinese came up with their own clone.

        • Speed says:

          Irineo B. R. Salazar

          Are you saying that the Philippines can’t “clone” ?

          Seems contracts are the specialty of the Philippines, strange !

          The MRT-3 (originally LRT-3) project officially began in 1989, five years after the opening of the LRT Line 1, with the Hong Kong-based EDSA LRT Corporation winning the public bidding for the line’s construction. However, construction never commenced, with the project stalled as the Philippine government conducted several investigations into alleged irregularities with the project’s contract.

          • There are other variants.. joint ventures with agreed-upon technology transfer. win-win.

            Not what China is doing, which is basically ripping off partners. Filipinos are at least just zero-sum gamers, while China is playing a “lamangan” (rip-off) game most of the time.

            Don’t know the details about how Indonesia worked with Germany when Habibie was in charge of industry, but from what I gather there was a lot of technology transfer, with both sides happy, now Indonesia builds a lot of stuff by themselves, Germany earned money.

          • karl garcia says:

            “Are you saying the Philippines Can’t clone?”
            There were rumors that one of our VP candidates is just a clone.

            http://philurbanlegends.blogspot.com/2012/02/true-bongbong-marcos-is-already-dead.html

            During the IBM PC cloning era, The Philippines provided an alternative non branded pc for its people.
            You have to buy IBM PC’s license to have your Lenovo.

          • chempo says:

            Speed, I think you wrong on this one.
            You are right in that it took a long time after agreement signing to commencement of construction. My guess is that Eli Levin’s group were just fixers, they could not get the job done. Sobrepena’s group got the job done in record time, within dateline in 2 years. Credit to him, where it’s due. But then again, there were lots of peripherial work required— arranging the right of way and clearing the land for the dvelopers — so work was well-coordinated with the various govt departments and LGUs involved. They all did a fine job in this. Perhaps lots of representation had to be paid left right and centre, that’s why the developers said they incurred high undertable costs.

        • Speed says:

          Looking deeper into the time frame, this was around 1995 in Manila, time that Shanghai started to build their subway.

          In 2015 Shanghai has 588 km subway in the city.

          For going from absolute zero in 1992 to eight lines, 144 stations, 236 kilometers of track and 1.2 billion passengers in 2008, and for the upcoming 48-minute express-trip to Hong Kong (opening in 2015), Guangzhou must get a mention.

          Now, more talks as you are making yourself and the Philippines ridiculous.

      • Bill in Oz says:

        You are right..But a rich ‘dictatorship’ can do a lot very quickly.No TRO’s, no senators, no lawyers, nothing unless you know the right connected person to help with a fix

        • Speed says:

          That’s the advantage of the system.

          “The Maglev was built with German technology” and then ? has nothing to do with their public transportation in the city.

          Are you saying that all cars that came after Nicholas Joseph Cugnot were clones ?

          • Chinese stuff is mostly a nearly one-to-one copy of the original.

            The Japanese at least improved on the stuff that they copied.

            The jet fighters on the Liaoning are copies of Russian fighters.

            R&D for Transrapid – German maglev – took several decades.

            Be careful China, you may lose many partners in years to come.

            • Speed says:

              Irineo B. R. Salazar

              Have a look who has the most hanging patents now.

              Give China some more time and they will run over you (yes hard to swallow but the truth, i don’t have any problem with this).

              Do you remember the first Japanese cars entering in Europe ? The were Sh.t
              Seems certain things in your memory are lost.

              • Schauen mir mal. Let’s see. It’s not over till the fat lady sings. 🙂

              • Come to BMW world in München. If you give your name I will take you around.

                Let us see if China manages to be better than BMW in 20 years or so.

              • Micha says:

                @Speed

                Would you care to mention/identify at least one of those “hanging patents” because I seriously doubt real innovation from a communist country like China. If any, the enabling technology were most probably borrowed wholesale or stolen from the West.

              • sonny says:

                The Japanese miracle in cars and other technologies did not happen until after the Quality Control revolution of W. Edwards Deming!

              • The Japanese perfected quality control to create Kaizen. In fact they got to be so good that Porsche got Japanese to get their production up to speed in the 1990s, who sternly taught the Swabian (Southwestern German) factory workers their notion of quality.

                Filipino Sarao was a good manufacturer of jeepneys. But at some point they stopped improving and modernizing. Had they not been pwede na they would be making Filipino SUVs by now. But DOST has shown that some lessons have been learned… let’s see.

              • karl garcia says:

                Yan ang kailangan natin Kaizen kaya lang it is kept inside the four corners of a Toyota car manufacturing factory.
                When they go out,no more kaizen.
                the Toyota way.

              • karl garcia says:

                people were even blaming Detroit,why the jeepney did not develop.
                We blame OPEc for not allowing the water ran vehicle ah maybe that is just a hoax i dunno.
                I know we are good at blaming everyone but our selves.So to the future generations:
                Do what we tell you,not what we are doing,Ok!

              • sonny says:

                Nephew, gasoline & water combustion to extract exothermic energy for propulsion are both economically and chemically doable but no longer equivalent. Too bad the hydrocarbon pathway was the one the whole world tooled for. Our huge cost now for doing so is an extremely high hydrocarbon print. The Philippines can opt for sponsoring a water driven (actually hydrogen gas & electricity) propulsion economy just for the reason that our dependence on hydrocarbon carburetion is not as extensive as Detroit and Europe. The difference between the end-products of Carbon dioxide vs water-only is staggering. (at first sight, anyway)

              • sonny says:

                Read just now.

                http://www.bloomberg.com/news/articles/2016-01-31/ten-million-reasons-why-falling-oil-might-hurt-the-philippines

                The irony of things, cheaper oil for the rest of the world translates to leaner Filipino OFW earnings. Do the 90 million gain?

              • karl garcia says:

                @Uncle Sonny,
                Say what? Combustion,propulsion….hope wont have a convulsion.

                Lots of oill price roll backs,now they will raise the prices again.
                It us more costly to stock oil, because one Shell has a depot before,but due to Nimby,it got threw out of Pandacan.
                decision ,to stockpile pile is not feasible.
                But in the middle east it is not that simple, just to minimize production,if they do that,more problems
                I have a brother in law in Saudi,friends in Dubai,and they are nervous.
                Now enter Iran, with India as a new partner in Oil requirements,and there will be more to follow,soon Supply will be too much.
                Nostradamus said or some other doom sayer,that the next war will be about water.

              • “Give China some more time and they will run over you (yes hard to swallow but the truth, i don’t have any problem with this).”

                That’s if they don’t die of cancer first, Speed.
                http://www.techtimes.com/articles/129497/20160201/more-than-7-500-die-every-day-in-china-because-of-cancer.htm

                OT—- http://boston1775.blogspot.com/2008/01/colonial-boston-vocabulary-caucus-part.html

                Congratz on Rubio, sonny! (Cruz is an aberration, Trump is finally in decline, and we’re finally seeing the Republicans’ nominee… Rubio’s ascendant)

                A very interesting night, indeed. I hope Hillary gets indicted soon.

              • Speed says:

                Irineo B. R. Salazar

                I’m not interested in Munich because the MRT gives me more fun to read.

              • Joe America says:

                Speed, would you mind answering the basic profile questions I ask of people new to the blog who seem to be bringing in an agenda of disruption? Please let us know your nationality, location and interest in the Philippines.

                Thank you.

              • sonny says:

                LC, watch the movie 13 if you haven’t yet. Good stuff. Where was Hillary in all that Benghazi tragedy? Dunno who’ll come out after the incumbent. I just want to see if someone will enlist Gingrich as Secretary of State.

                Nephew, sorry to go chemical on you. Sarao could go gasoline or water. Exploding gasoline will produce carbon dioxide & water. Exploding hydrogen & oxygen gas will produce water only. Either chemistry can produce propulsion for your average 2-ton vehicle.

              • Hey, sonny,

                I watched ’13 Hours’ when it came out.

                I’m saddened that it didn’t get seen as much as “Zero Dark Thirty” (justification of torture, pure fiction), “Lone Survivor” (pretty much bs, both book and movie), “American Sniper” (a memoir catered to 12 yr old boys, but Eastwood made it into a solid movie about PTSD and the Odyssian process of returning home— hated the book, loved the movie).

                ’13 Hours’ both book and movie were really good— book contains more details, but movie pretty much stuck to the book, w/out all the fluff, bs that happened in “Lone Survivor”. Michael Bay did a good job, and I hope more people read the book after watching the movie.

                Benghazi was the reason Hillary’s emails were placed under a microscope.

                I don’t think the FBI has anything on her, since basically the bulk of what the Obama administration is trying to hide (hence Bill Clinton’s plead to released the classified emails) is about the drone program, me and Joe talked about here, https://joeam.com/2015/11/22/the-islamic-renaissance-in-the-philippines/#comment-150086 ( Joe and I also talked about Benghazi in a separate thread, but I don’t think he cares much about it, same with most people over here ).

                This whole email scandal is a fool’s errand, Hillary can get indicted, but can always plea bargain and throw a couple of sacrificial lambs under the bus. the Republicans politicized the investigation so much that, they missed the whole point of Benghazi,

                which is what happened from 10pm to 5am?

                By 10pm, everyone that needed to know knew what was going on, that the temporary Dept. of State mission/consulate was over-runned, by 1130pm a surveillance/no weapons drone was overhead— giving Tripoli and DC a bird’s eye view, though not the folks in Benghazi (not until the Delta Force 2-man element got there, who had the drone feed).

                Marine Fleet Anti-terrorism Security Team/FAST (one platoon, about 50 Marines) were activated.

                Commander’s In-extremis Force/CIF (one platoon of specialized Green Berets, also around 50) were activated.

                FAST may have taken awhile, because they’re actually tasked first with protected Naval installations, not consulates/embassies. The CIF in Croatia though, their whole reason for existence is to respond to Benghazi-type scenarios.

                Read more here about CIF: https://soopermexican.wordpress.com/2012/10/30/ex-special-operations-benghazi-was-absolutely-avoidable-panetta-obfuscating-truth/

                A hop and a skip, CIF could’ve made it to Crete/NATO Naval base or Sicily/US Naval base— only 1 hour from Benghazi.

                Instead,

                The Marine FAST platoon got to Tripoli at 9pm, 12 Sept. and the CIF from Croatia got to Sicily at 9pm, 12 Sept. The CIF that responded from the US got to Sicily around 930pm, 12 Sept.

                There should be another book titled, “13 Hours II: the other 13 Hours” (the time it took the rescue elements to get to Libya, and why it took so damned long!!!). Only the State Dept can refuse help from the Dept of Defense, so Panetta again plays the fall guy for Democrats.

                I’d be happy with a cost/benefits explanation on why they felt it unnecessary to respond in Benghazi (ie. better 2 or 6 die, than a whole lot more… which is fine but that’s just not how military and police think),

                but Hillary and Panetta’s answer has always been that everything that could’ve been done was done, and that’s just not the case— Aviano Air Base, didn’t even get jets readied (at the very least get them ready). Those congressional committees should’ve called on junior officers and senior enlisted, I’m sure they’d have a different take on what happened.

            • “Have a look who has the most hanging patents now.”

              How about the Philippines patent/intellectual property laws? How robust is it? Are people’s ideas and inventions protected? Does anyone have more info on patent laws and enforcement?

              As a parallel to Bam Aquino’s Negosyo Centers, I would hope the patent process is streamlined and enforced over there.

      • Shanghai Train system is impressive but just shows they learned a thing or two from the existing trains systems. What would be surprising is the Philippine MRT not learning anything from 50++ years of train systems in the world.

        • karl garcia says:

          The HK system is successful,because they do not use their cars around there.
          Chicken and the egg.If we have a mass transport system and still have cheap cars,cheap motor cycles,cheap bicycles,will they leave them at home or a parking facility.
          PNR was pre 20th century,what good is being one of the first movers,if others can over take you,and leaving you biting the dust.
          Stagnant decelopment exemplified by the jeepney.

          Now that it is too late.But it is never too late.
          Irineo is proposing we start with the simple things,like our own technology,or all the tech that us around us,then go kaizen from there.

  18. Bill in Oz says:

    @Irineo
    PPP : Public Private partnership : private money to provide a public service for a fee for a given period of time ( Eg in Oz Toll roads ) After the fixed period it goes into public hands

    BOT : Private money builds & runs a public service for a stated period of time..Usually no subsidy involved but if a government interferes with the fare charged ( eg. Estrada ) then there will be demands for subsidies to compensate. After the fixed period it goes into public hands

    PLT : private money builds a public service and leases the ‘infrastructure’ to someone to operate for a fixed period..Then it goes into public hands.

    Thems the basics..But there are all sorts of permutations that can put governments up a dry creek with no likelhood of rain or a paddle

    • OK, many thanks. PPP is at least a clear deal, with one responsible and in charge.

      This is in fact basic project management stuff they teach to junior consultants in any international outfit. Have only ONE responsible/in charge party at every project level.

  19. bauwow says:

    @chempo, thank you for this piece. I may need a couple more readings to comprehend and digest it, but this has to be shared extensively. Hope you won’t mind if we share it.

    Thank you for putting on the light in an otherwise damp and dark room!

    • chempo says:

      Thank you Bauwow. The good thing about the Society is all stuff here are for free. You don’t charge anything to promote positiveness. Go ahead and share every which way you want, but a reference to the Society blog would be great, not just for the sake of readership building, but for the values of goodness for the Philippines that this blog purveys.

  20. Bill in Oz says:

    Good work has been done this day here for the Philippines. Again thanks are owed to Chempo..But the discussion has also added to ideas and ways of working through similar issues in the future..I hope someone in the government is looking… !

    As for me it’s 1.30 am..So goodnight all…Keep up the great work !

  21. karl garcia says:

    Maybe I will post this here.
    This case it is not about BOT and its variants,but it is about our whole infrastructure projects that is foreign funded,it also has to do with executive agreements.

    I will post an except of the exchanges in the Bicameral conference,while they were deliberating on the procurement bill.
    This is how a law is cooked.

    “It is the contention of the petitioners that RA 9184 is applicable to both local – and foreign-funded procurement contracts. They cite the following excerpt of the deliberations of the Bicameral Conference Committee on the Disagreeing Provisions of Senate Bill No. 2248 and House Bill No. 4809:20

    REP. ABAYA. Mr. Chairman, can we just propose additional amendments? Can we go back to Section 4, Mr. Chairman?cralaw library

    THE CHAIRMAN (SEN. ANGARA). Section? Section ano, Del, 4? Definition – definition of terms.

    REP. ABAYA. Sa House bill, it is sa scope and application.

    THE CHAIRMAN (SEN. ANGARA). Okay.

    REP. ABAYA. It should read as follows: “This Act shall apply to the procurement of goods, supplies and materials, infrastructure projects and consulting services regardless of funding source whether local or foreign by the government.”

    THE CHAIRMAN (SEN. ANGARA). Okay, accepted. We accept. The Senate accepts it.21

    x x x

    THE CHAIRMAN (SEN ANGARA). Just take note of that ano. Medyo nga problematic ‘yan eh. Now, just for the record Del, can you repeat again the justification for including foreign funded contracts within the scope para malinaw because the World Bank daw might raise some objection to it.

    REP. ABAYA. Well, Mr. Chairman, we should include foreign funded projects kasi these are the big projects. To give an example, if you allow bids above government estimate, let’s say take the case of 500 million project, included in that 500 million is the 20 percent profit. If you allow them to bid above government estimate, they will add another say 28 percent of (sic) 30 percent, 30 percent of 500 million is another 150 million. Ito, this is a rich source of graft money, aregluhan na lang, 150 million, five contractors will gather, “O eto 20 million, 20 million, 20 million.” So, it is rigged. ‘Yun ang practice na nangyayari. If we eliminate that, if we have a ceiling then, it will not be very tempting kasi walang extra money na pwedeng ibigay sa ibang contractor. So this promote (sic) collusion among bidders, of course, with the cooperation of irresponsible officials of some agencies. So we should have a ceiling to include foreign funded projects.22″

    http://www.chanrobles.com/cralaw/2007februarydecisions.php?id=200

  22. karl garcia says:

    Nampucha naman ina araw-araw na tayo ng mga troll. Buti sana kung walang superiority complex sa bawat post.

    • Madlanglupa says:

      At least walang robot na sabay-sabay na mag-post ng comment.

    • Micha says:

      Nagalit ang mga komunista kasi lumayag na naman ang barkong pandigma ni JoeAm malapit dun sa ginawang punso sa gitna ng karagatan.

      • Bill in Oz says:

        Micha unfortunately I do not understand Tagalog,,And when I ran this past Google the translation seems bizarre :

        But the communists because sailed again the warship’s JoeAm dun made mound in the middle of the ocean.”

        Can anyone clarify this ?

        • Joe America says:

          Yep. That’s what Micha actually said. It’s the technical language of economists. We lay people aren’t meant to understand. 🙂

          • Bill in Oz says:

            But Joe I know the odd economist.. I think they would be equally flumuxxed here..But maybe the important bit is that YOU haven’t made mounds in the middle of the ocean..
            Yes Joe too much time spent napping for sea mound building…:-)

            • Joe America says:

              Micha uses JoeAm as iconic symbolism for the whole United States of America. It is a common mistake. The Chinese trolls do that, too, but at least Micha is making an intelligent point.

        • karl garcia says:

          Fair Dinkum,Mate!

          • karl garcia says:

            The communists got angry,because JoeAm’s warship set sail near the ant hill or mole hill in the middle of the ocean.

            • karl garcia says:

              the chinese reclamation on WPS Bill, that is were the Warship is headed.

              • Bill in Oz says:

                Ahhhh The US navy frigate that sailed past them the other day..Poor misunderstood communists….Nobody likes them

            • Bill in Oz says:

              No self respecting ants or moles would set up camp on an artificial sea mound…Even one built by Joe Am ! Too typhoonish there. And the sea levels are rising because of all the CO2 being pumped into the air by Chinese coal power plants etc…Time will see these mounds turn back into low tide reefs…:-)

        • sonny says:

          Bill, in case you’re still in the market for a translation of Micha’s Tagalog:

          The communists are furious because Joe’s warship set sail again against their mound (fort) in the middle of the high sea. (I’ll visit with Google’s Tagalog staff after this 🙂 )

  23. Jean says:

    Wow! I hate to be repetitive but this piece is awesome. I’ve tried to follow the MRT history before and I drowned, got frustrated and I set the issue aside for something which I found less convoluted.

    That all changed, though lengthy ( I didn’t really notice the length at first as I was so engrossed ) you presented your findings quite nicely. Like Edgar said, you broke things downs into nice and manageable chunks. Bravo.

    Your opinion at the end is also spot on and I agree entirely.

    Thank you for this

    • chempo says:

      Thank you Jean. It’s a subject all Filipinos should be concerned and informed. Thanks for bothering to read through.

      • sonny says:

        We’re lucky edgar, Irineo, Karl, gian and others (I suspect Joe and Joseph and Bill) have very good systems grounding . Of course you are the head analyst, Chempo. in this “project” 🙂

        • “Joe and Joseph and Bill”.

          Sina Jack and Jill wala pa dito.

        • Joe America says:

          I’m trained in Fortran and punch cards.

        • Bill in Oz says:

          Not sure about systems training with me Sonny…I think the basic training is good old fashioned sleuthing for evidence..the ‘bits’ of the jig saw..Then gradually the pieces fall into place..But without the sleuthing no bits and no big picture..
          I admire Chempo for going out and finding all those thousands of bits ( lots from 15- 20 years ago ) and making sense of them for us to understand…

          • sonny says:

            Not to worry, Bill the systems solution is in the head of specialists as yourself who will give the requirements of an information system solution. The IT specialists in turn will recommend to you the manual and computerized snap shot solution to your requirements. That’s where experts such as edgar or Irineo come in. They are the architects who will look for the programmers (carpenters, electricians, plumbers) or off-the-shelf software to do the automated parts.

  24. chempo says:

    Here is another point which I had wanted to include in the article, but I felt more prudent to discuss as a comment because it could be speculation on my part.

    EDSA LRT Consortium comprised of the following:-
    1. Kaiser Engineers International, Inc.
    2. ACER Consultants (Far East) Ltd
    3. Freeman Fox, Tradeinvest
    4. CKD Tatra of the Czech and Slovak Federal Republics
    5. TCGI Engineering
    6. All Asia Capital and Leasing Corporation
    7. The Salim Group of Jakarta
    8. Eli Levin Enterprises, Inc.
    9. A.M. Oreta & Co. Capitol Industrial Construction Group, Inc,
    10. F. F. Cruz & co., Inc.

    By the time Sobrepena took over and renamed the company MRT Holdings, none of the original consortium partners remained. We can only speculate what happened.

    The original party to the BLT contract is EDSA LRT (HK) which is owned by EDSA LRT Holdings (Phils) which then changed to MRTC (HK) and MRT Holdings (Phils) respectively. This was due to change of Eli Levin’s group to Sobrepena’s group.

    There is nothing unusual for businesses to structure an operating unit and a separate holding unit. In this case MRTC is the operating unit, the company that will develop the MRT3. The investors taking equity in the holding unit. However, in this case, the govt is stuck with a contract with MRTC, but investors have changed 100%. This is a situation where the govt can be given a sucker punch because it is no longer dealing with the parties that they contracted, with whom perhaps they have done due diligence.

    My point is this – whilst the govt is bound to the contract with MRTC, surely such a change of ownership means the essence of the contract has changed. Perhaps Calipman or D’aigmas or any commercial law experts here can share your views.

    This seems a good ground to void the Phase2 of the BLT since basically the Sobrepena group has sold out to PMIC.

    This is the thing that amazes me in Philippines. I see often people going around cashing in on concessionaires of all sorts. It’s ridiculously funny to me from the business point of view.

    • karl garcia says:

      In relation to that based from the article about MRT 7.Eli Levin is just a shell company owner and not the oil company kind.He just assembles the investors.

      “consortium line-up though, is quite impressive. Levin claims that the SM Group of Henry Sy owns 60 percent of the real estate arm and 25 percent of the railway project.

      Other supposed investors are Siemens, Alstom, China Railway 18, EEI Corp. of the Yuchengcos, Merlin Capital of the Tong family, George Go of Equitable PCI Bank, and exporter Sergio Ortiz-Luis. Levin is also wise to have on board influential economists like Roberto de Ocampo and Romeo Bernardo.””

      Now as to consortiums being replaced by other consortiums

      salim Group is well tepresented by Manuel Pangilinan.
      All Asia Capital is of the Tanco group of companies, former owners of the now Dubai Ports owned Asian Terminals Inc.
      FFCruz has ties with Mike Arroyo who has ties with Enrique Razon.

      The collusion among the everybody happy consortiums and everybody hsppy competetive bidding,is in the thing I posted earlier.

      REP. ABAYA. Well, Mr. Chairman, we should include foreign funded projects kasi these are the big projects. To give an example, if you allow bids above government estimate, let’s say take the case of 500 million project, included in that 500 million is the 20 percent profit. If you allow them to bid above government estimate, they will add another say 28 percent of (sic) 30 percent, 30 percent of 500 million is another 150 million. Ito, this is a rich source of graft money, aregluhan na lang, 150 million, five contractors will gather, “O eto 20 million, 20 million, 20 million.” So, it is rigged. ‘Yun ang practice na nangyayari. If we eliminate that, if we have a ceiling then, it will not be very tempting kasi walang extra money na pwedeng ibigay sa ibang contractor. So this promote (sic) collusion among bidders, of course, with the cooperation of irresponsible officials of some agencies. So we should have a ceiling to include foreign funded projects.22″

      • karl garcia says:

        Tanco owns STI and Philippine Women’s University

      • Joe America says:

        I think Levin is actually MLQ3.

      • karl garcia says:

        Oreta and FF Cruz

        “Authority (LRTA) has reconsidered two disqualified potential bidders for the structural works of the MRT-LRT Loop project.

        Last week, the LRTA bids and awards committee (BAC) disqualified Leighton Construction Philippines, Inc.-A.M. Oreta Construction Corp. and F.F. Cruz and Co., Inc.-Filipinas Systems, Inc. joint ventures for the bidding of the 2.744-kilometer stretch of Package A or the construction of viaduct and pedestrian overpass.

        Leighton-Oreta was declared ineligible to join the financial and technical bidding for Package A2 for not submitting the company’s statement of completed projects, while F.F. Cruz-Fil Systems was disqualified because officials could not read the copies of tax documents the group submitted.

        In a phone interview, LRTA Deputy Administrator Cesar B. Chavez said the agency granted the motion for reconsideraton filed separately by Leighton-Oreta and F.F. Cruz-Fil Systems. This means their qualifications will now be considered. – See more at: http://www.gmanetwork.com/news/story/74397/money/gov-t-reconsidering-bidders-excluded-from-rail-loop-line#sthash.rI7JDzpC.dpuf

        • karl garcia says:

          Kaiser.

          “FAIRFAX, Va., Dec. 14 /PRNewswire/?– ICF Kaiser International, Inc.
          (NYSE: ICF) today announced that the first 10 stations of the light rail
          transit system along the Epifanio de los Santos Avenue (EDSA), for which it
          serves as program and construction manager, will open on December 15 in
          Manila, The Philippines. Philippine President Joseph Estrada will preside
          over the grand opening ceremony on Wednesday.
          Phase I of the system includes 13 stations. One additional station will
          open in April 2000, and the last two stations will come on line by June 2000.
          When the entire, $655 million, 17-kilometer system is completed, it will
          relieve traffic on EDSA, which is one of the world’s most congested traffic
          corridors. Manila is one of the most densely populated cities in the world,
          with a population of approximately 13 million. The EDSA system is designed to
          carry 600,000 passengers per day and is expected to be one of the most
          intensively utilized mass transit systems in the world.
          “The EDSA MRT project, which uses the build-lease-transfer concept, is a
          model for other turnkey projects in Asia,” said James J. Maiwurm, Kaiser’s
          Chairman and Chief Executive Officer. “We are very proud of the work of our
          people in Manila, and we anticipate that the completion of this project will
          be a springboard for Kaiser’s involvement in similar projects in Asia and
          elsewhere around the world.”
          Kaiser recently was awarded a $1.5 million extension of its existing
          contract that will carry work through scheduled completion of Phase I of the
          project in mid-2000. At that time, it is anticipated that work will commence
          on Phase 2 of the project, a 5.5-kilometer extension with three additional
          stations, which will connect the ESDA MRT project with another existing light
          rail system. Kaiser’s contract to continue providing program and construction
          management services for the $245 million extension is valued at approximately
          $5.5 million.

          About the Company
          Headquartered in Fairfax, Virginia, ICF Kaiser is one of the United
          States’ largest companies providing engineering services, project management,
          construction management, and program management. Its more than 3,000
          employees, located in 40 offices around the world, serve the market areas of
          transit and transportation; alumina/aluminum and mining/minerals; facilities
          and water/wastewater; iron and steel; and microelectronics and clean
          technology. ICF Kaiser reported gross revenue of more than $1.2 billion for
          the 12 months ended December 31, 1998. All references to ICF Kaiser indicate
          ICF Kaiser International, Inc. and any of its subsidiaries.

          Forward-Looking Statements and Certain Factors Affecting ICF Kaiser and
          Its Businesses
          This release contains “forward-looking statements” within the meaning of
          the Private Securities Litigation Reform Act of 1995, which are identified by
          the use of forward-looking terminology such as “may,” “will,” “could,”
          “should,” “expect,” “believe,” “anticipate,” “aim,” “intend,” “plan,”
          “estimate,” or “continue” or the negative thereof or other variations thereof.
          Such forward-looking statements are necessarily based on various assumptions
          and estimates and are inherently subject to various risks and uncertainties,
          including risks and uncertainties relating to the possible invalidity of the
          underlying assumptions and estimates, that may cause actual results to differ
          materially from those stated or implied by these forward-looking statements.
          These forward-looking statements also are subject to company-specific risks
          and uncertainties, such as: the company’s access to commercial lines of credit
          and commercially satisfactory contract performance guarantee mechanisms,
          including performance bonds; the ability of Kaiser-Hill Company, LLC to enter
          into a new contract with the U.S. Department of Energy concerning provision of
          services at the DOE’s Rocky Flats (Colorado) site; and the company’s ability
          to: maintain existing contracts (including contracts with the federal
          government) at their existing or at improved levels, accurately estimate and
          recover costs incurred on fixed-price contracts, sign new contracts in
          established or new markets (including international markets), conclude and
          implement successfully certain acquisitions and joint-venture relationships,
          retain and attract key personnel, manage significant contingent liabilities
          arising out of prior operations and contacts, and avoid significant
          environmental fines, penalties and liabilities.”

      • chempo says:

        Karl…thanks for follow up links to the various parties of the original consortium.
        You should have done the honors of summarising it.
        The end game was — original parties to the consortium were the mechanical people, the actual train and equipment people. They were replaced by property developers and moneyed investors. The train / Equipment people became contractors to the new group. Guess what this means to tax payers? Another layer of profiteers — so Sobrepena group earns 15% net-of-tax economic returns on Equity, on top of whatever they jack up on the train/equipment people’s prices, at least 30%.

        • karl garcia says:

          You have done a good summary.

          Construction companies,train manufacturers,trade investors,management consultants,a conglomerate and a shell company

          All them were hit by the 1997 Asian Financial Crisis,once there is a crisis to hell with long term computations of profit.Then what you call legislative interference combined with judicial interference happened in Tatad vs. Garcia.

          Enter another batch of oligarchs. who is in real estate in fil estate,greenfield and ayala,then national bookstore owner…..

          one common denominator is Manuel Pangilinan through Salim group,he was with the Levin consortium and through proxies had a stake in Mrt said to be 48%

          MPIC was turned down in its expansion plans, and offer to be the savior,but as you say we can only speculate on How deep is the involvement of Mpic here.

    • karl garcia says:

      Sobrepena group appeared after the Decision Of Tatad,Biazon,et,al vs Garcia happened.
      Lot’s of goodwill and all those trust issues have been lost.The consortium is no longer happy,to make them happy they must sell their stake.So the sobrepena group bought 85% of the consortiums stake.The former consortium continues its pursuit of happiness in other ventures.

    • karl garcia says:

      One more controversial company-The Czech CKD Tatra.

      “The LRVs are well matched with the 54 remaining of MRT-3’s 73 original LRVs. Supplied in 1999, those originals were made by the Czech Republic’s CKD Tatra, later bought by Siemens. Then Siemens spun off its heavy equipment division, which Czech-owned Ine”

      http://www.philstar.com/opinion/2015/12/21/1534838/abayas-christmas-scam-philippines

  25. Bill in Oz says:

    Incorporation is used to cover all the shareholders arses I suspect..I wonder if the original contract had any conditions in it providing the government side with guarantees in the event of a major change of ownership or management.

    Such a clause should have been part of the contract.

  26. karl garcia says:

    The movie The Big Short told us that even AAA bonds can be good as junk.

    throwback year 2004.

    “The consortium that operates the MRT system expects to raise at least $300 million to $500 million from the secondary offering of bonds in both the international and local markets.

    Fil-Estate Land Inc. president Robert John Sobrepena said about 60 to 70 percent of the bonds will be offered to international investors while the balance will be offered locally.

    The bonds, which are backed by future rental fees from the government, will be listed at the Luxemborg Stock Exchange and eventually to be listed in the soon-to-be-established fixed-income exchange to be operated by the BAP Consulting Inc.

    Sobrepeña said as soon as the MRT III Funding Corp. Ltd. secures a triple A rating from the Philippine Rating Services Corp. for its bond issue, the consortium will file a registration statement with the Securities and Exchange Commission (SEC) covering the sale of asset-backed securities.

    “We’re looking forward to an improvement in rating. We’re expecting a triple A rating, Sobrepena said. PRS Aaa-rated securities are defined as those with the smallest degree of investment risk.

    The bonds were issued a PRS Aa rating, which is defined as: “Margins of protection may not be as large as in PRS Aaa-rated issues. Fluctuation of protective elements may be of greater amplitude or there may be elements which make the long-term risks appear somewhat larger than for PRS Aaa-rated issues.” The MRT bonds were earlier issued a PRS Aa rating and are under continuing review as no settlement or restructuring has yet been finalized with respect to the $21 million past due maintenance fees payable to Sumitomo Corp. of Japan.

    The MRT bond issue is considered the biggest and most significant securitization ever completed in Philippine capital markets. Its success is expected to generate more interest in ABS as alternative financing for companies while the market has yet to show signs of stability and banks have remained reluctant to lend more money.

    “Ideally, we would like more foreign funds to come in. We need to encourage this kind of thing,” Sobrepeña said.

    Members of the consortium involved in the offering are the Fil-Estate Group, Anglo-Philippine Holdings Corp., Railco Investments, Sheridan LRT Holdings, and DBH Inc., which together hold 77 percent of MRT stock.

    The ABS will be available only to qualified institutional buyers and investors which include banks, insurance companies, trust funds and pension funds. Penta Capital was tapped as financial adviser and issue manager for the bonds.

    The bonds will have several maturities ranging from four years to 23 years and are expected to generate yields of 10.5 percent to 13 percent a year.

    Proceeds from the offering will be used by members of the consortium to retire debts or strengthen operations.”

    • karl garcia says:

      “In 2009, Goldman Sachs and Elliot and Associates (who controlled the bulk of MRT bonds issued by the original shareholders) filed an arbitration case in Singapore to force an EVBO. To avert costly arbitration proceedings, then President Gloria Arroyo ordered the DBP and Land Bank to buy up the MRT bonds in the open market. This is the reason the two GFIs now hold a majority of the bonds (but not the shares) of the MRTC.

      Although government now controls the MRTC board, the arbitration case in Singapore somehow remained live.

      President Arroyo issued EO 855 that outlines a plan for the National Development Corp. to eventually buy up the DBP-LBP bonds, the rest of the bonds still in private hands and the shares to that government acquires full ownership and control of the MRT. Aquino’s EO 126 repeals Arroyo’s EO 855, although the former contains no specific plan for a buyout.

      With Aquino’s EO 126, no buyout can possibly happen – simply because it is such a terribly flawed order. The private owners cannot be compelled to sell their shares (a large part of which were already sold to Metro Pacific). Government cannot single-handedly make EVBO happen.”

      • chempo says:

        Karl, every tidbit of report we find in the media contains some mis-info one way of another. That’s the frustration.
        (1) The 2009 arbitration#1 is no longer persued because Elliot and Golman Sachs are no longer in the picture, they have sold their bonds.
        (2) Metro Pacific is not stupid — they have not yet bought over shares of private owners. They have entered into some mumbo jumbo legal arrangements, obviously, contingent on govt accepting their MRT3 expansion and Phase2 proposals. But these legal arrangements might screw the govt because private shareholders may now say we can’t sell our shares to govt now.

        That’s why I say the best challenge the govt might be able to use is “the essence of the contract is lost” thus void the BLT contract and pay off shareholders at proper valuation, if any. But zero $ for phase2. But it’s just me saying after reading “Commercial Law for Dummies” long time ago.

        • karl garcia says:

          It came from Arroyo’s yes man in the DBP. Alex Magno.

          http://www.philstar.com/opinion/2015/01/15/1413053/crunch-time

        • karl garcia says:

          Is the essence of the contract is lost like the dog ate my homework?

        • karl garcia says:

          #2
          The mumbo jumbo legal arrangements

          “Pangilinan: Proxies hiked MPIC’s stake in MRT-3 operator to 48%
          ABS CBN News
          MANILA, Philippines – Metro Pacific Investments Corp (MPIC) now controls the operator of Metro Rail Transit 3 (MRT 3) through proxy rights, which increased the stake of the Pangilinan-led group in the railway operator to 48%. …
          First Pacific eyes P59B capexInquirer.net
          Water, toll businesses drive up MPIC net incomeistockAnalyst.com (press release)
          MetroPac core profit up by 88% to P3.9BBusinessWorld Online
          Reuters Africa”

          The rest is history

    • chempo says:

      Karl I hope this raises eyebrows. Your info says they hope to raise $300-$500m from bond issues, and what was the face value of bonds issued — $1.5b !

      • karl garcia says:

        Damnit!
        The media,those numbers experts with a 20/20 hind sight,did not see this?

        • karl garcia says:

          The masa don’t know about bonds.Heck, me too !all I know is I lend my money and earn intetest.
          all that face value to me is a solution to no ID no entry. and par value is used in Golf.

      • karl garcia says:

        The Hope of raising 500 million USD,was 2004

        http://www.philstar.com/business/240883/mrt-consortium-raise-500-m-bonds

        In 2003 they only hope to raise 100 million USD

        http://www.philstar.com/business/217642/mrt-plans-raise-100-million-sale-bonds

        I am still connecting the dots on how much did they actually raise.

        • karl garcia says:

          issued last 2002 with a present value of 387 million usd.

          if the bonds are rental backed, does that mean,no rental the bond holders get screwed?
          for 2010
          so by 2008 they wanted to file arbitration
          because of unpaid rentals amounting to 122 million dollars(?)

          they paid the bond holders in 2007 60 million usd
          and another 30 million a year later

          so they raised 387 million usd?
          was not able to get rentals amounting to 122 million.
          paid bondholders 90 million.
          They filed arbitration.

          damage control buy bond from them at 1.5 million usd?

          @ Chempo,like Bill i think i am doing a jigzaw puzzle.
          I am already in a maze.

          • karl garcia says:

            scrap that numbers game

            all i know is issued at 387 million usd present value last 2002
            i dont know how to arrive at 1.5 million face value upon maturity after 25 years.

            maybe duterte is right that children need to learn business math.

          • @Karl @Chempo I think the bonds look like REITs.

          • chempo says:

            Karl — a couple of points to clear the dust.

            (1) Bond holders got nothing to do with the govt and LRP. When issuers got problem, bond holders get screwed. But those bonds have some worked-in insurance that relate back to the LRP. So bond holders screw MRTC who go after the govt thus arbitration#1. There is no direct liability of govt to bond holders.

            (2) Bond face value about $1.5b but MRTC shareholders cash out on discount basis and collected net present value of $387m (assumed). If bondholders hang on till maturity, they will end up with $1.5b. For MRTC shareholders, if they take the $387m and invest it, it will compouind to $1.5b by the same maturity date of bonds. That’s the mathematics if interest rates remain constant. But of course interest rates go up and down, so the actual outcome may be different.

            • karl garcia says:

              thank you chempo, many thank yous.
              like Bill said it is indeed privatizing the profits and socializing the losses.
              sorry for the dust that needed clearing.m

  27. chempo says:

    Poe said Abaya is “the beginning and end of the anomalies” in the signing of the P3.81-billion MRT-3 maintenance contract since he signed and approved it. And she is in prosecutorial mood.

    Legislative interference reminds me of many similar situations in our daily life. For example, many condo residents experience this. Everybody has something to complain about their condo — gardens not kept, security no good, cracks here and there, pool not clean etc. Come re-election of Association members, those with the loudest complaints never stand forward. Those with ideas and good intention offered themselves. New members climb on board various committeess, only to face the same complainers.

  28. Sup says:

    O.T.

    This is a comment i made in inquirer a few seconds ago.

    Cynthia Padilla

    Ellie Magsayo

    Francis Gomez

    Peter Victoria

    Dexter Maliwat

    Manya Kesa

    Cheska Moni

    Dess Locio

    Ann Barbara

    Megan Salvador

    Ester Rillo

    Sonny Alejandro

    Alexandria Cuevas

    Daniel Bautista

    Martin Ocampo

    Jeffrey Reyes

    Ian Santos

    All payed by Cayetano, working for a telemarketing agency…

    http://newsinfo.inquirer.net/760380/cayetano-junk-ombudsman-appeal

    • karl garcia says:

      Sup,can you do a profile of each? joke.

      • Sup says:

        If you enter the disqus profile of each of them you can see they respond only to Duterte / Cayetano subjects, nothing else…Maybe Mar en Leni should do the same by using all the commenters from JoeAm and Raissa….50 peso per intelligent comment…whahahahaahahha 🙂 Irineo is a fast typer…Mar will go bankrupt 🙂 🙂 🙂

    • Madlanglupa says:

      > telemarketing agency…

      More like one of those shady outfits that are paid to run a spam operation using fake commenters with fake identities; clients include celebrities, politicians, businessmen, all who want to artificially increase their viewership on, say, Facebook, by liking or sharing. Anything that mentions their client favorably, say, an article about the client in the Inquirer, the bots usually pile up on the comments, so that it becomes more visible on search engines.

      Yeah, Cayetano can afford such an operation.

  29. karl garcia says:

    RAMCAR Group of Companies is RAILCO

    “Rail Transit
    In the late 1990s, Ramcar was part of the consortium that was awarded the contract for the MRT-3 rail project. The other consortium members were Ayala Land Inc. (Ayalas), Greenfields Development Corporation/Unilab Group (Camposes), Anglo-Philippines Holdings Inc./National Bookstore (Ramoses) and the Fil-Estate Corporation (Soprepenas). A few years later, because of the decision of the government to securitize and sell the rail operation’s cash flow, the consortium members, which included Ramcar, decided to sell its stake on the project.”

    They are deep sh_t or debt

    “with some P7.6 billion debts incurred during the Asian Financial Crisis. The company was affected with the sky-rocketing interest rates after the Bangko Sentral ng Pilipinas hiked interest rates to defend the local currency. In December 2001, the company filed a debt moratorium or suspension of payment as it is unable to meet the demands of its creditors.
    In January 2002, the Quezon City Regional Trial Court (RTC) issued a stay order and prevented its creditors from seizing the company’s assets. The amendment for rehabilitation plan was amended twice in December 2002 and in February 2003 before it was finally approved by the court in August 2003. Ramcar initially proposed debt-for-equity but in the end, the bank creditors settled for dacion en pago.
    Out of a total P7.6 billion debts, about P6.1 billion-worth in unsecured bank debts was settled via dacion en pago, which included personal properties and parcels of land; while the P1.5 billion of secured debt, on the other hand, were restructured.
    By 2006, Ramcar was able to climb out of receivership after implementing the court-rehabilitation program. Its structured debt was trimmed down to just P500 million. In 2008, Ramcar used the P1.3 billion additional paid-in capital from Ramcar Holdings, Inc. to wipe out its remaining P761.98 million debt. The additional paid-in capital came from the conversion of Ramcar’s debts into equities.”

  30. karl garcia says:

    Next is Anglo

    Ramos holding firm open to sale of MRT stake
    By Neil Jerome C. Morales (The Philippine Star) | Updated October 29, 2013 – 12:00am

    MANILA, Philippines – The Ramos family’s investment holding firm, Anglo Philippine Holdings Corp., is willing to unload its minority stake in the company behind the Metro Rail Transit (MRT).

    The firm will join a government-planned takeover of the mass transit at the right price, company executives said.

    “Anglo Holdings still has its residual ownership in the holding firm company that owns the operating company,” said Anglo Holdings director Adrian Ramos, adding that the company is open to all possibilities.

    “If the price is right, we sell. And also if it’s a reasonable compensation,” said Anglo Holdings executive vice president Adrian Arias.

    Anglo Holdings owns 18.6 percent of consortium MRT Holdings Inc. (MRTH), the owner of MRT Holdings II Inc. that controls operating firm MRT Corp. (MRTC).

    Last week, Finance Secretary Cesar V. Purisima said the government plans to start buying out at least 20 percent of the economic interest in MRT next year. He valued the private sector stake at $200 million.

    Anglo Holdings has yet to peg the value of its shares in the mass transit system.

    “That’s what we are talking about with the government, how to value our residual interest,” Arias said.

    Anglo Holdings is one of the stockholders in MRTH, along with Fil-Estate Corp., Railco Investments Inc., Sheridan LRT Holdings Inc. and DBH Inc.

    “We’d like to believe we can negotiate (for the price),” Arias said.

    In February, President Aquino signed Executive Order 126 to formalize the government’s plan of a complete buyout of the mass transit’s operator MRTC.

    Arias said the takeover program will include the exit of private stockholders as the government will retire the MRT bonds and buy out existing stockholders for a complete control of MRT’s facilities and economic benefits.

    The government owns roughly 80 percent of the economic interest in the MRT operator although without voting rights. However, the government needs to buy out these interests from the banks for around $800 million as the Bangko Sentral ng Pilipinas has ordered Landbank of the Philippines and Development Bank of the Philippines to unload them.

    Anglo Holdings, for its part, will focus on natural resources and the property sector in the medium term.

    In the next three to five years, majority of the income will come from oil production, followed by the property business, Ramos said.

    • Bill in Oz says:

      Slightly off topic …. re Corporations law in the Philippines..After most of the shares have been acquired in a takeover can the minority ‘holdout’ share holding be compulsorily acquired.

      Here in Oz this can happen ..It prevents minority shareholders blackmailing for a higher price than the rest..

      It is relevant here because the government is now majority shareholder ( 80% )..Can it compulsorily acquire the rest of the shares at an equitable value ? Or can Anglo holdings hold out for a over the top buy out ?

      • You mean squeeze-out? In Germany I think you can do that with 95% of the stock.

        But I know of a company where one of the founders bugged those taking over and still found ways to prevent the squeeze out for years, just for fun in my opinion and knowing him well.

        • chempo says:

          Before handphones there was the cellular vehicle phone, the one fixed in the car. My brother in law had one of those. It was very useful for him so he hang on to it. Until one day the service provider called him and begged him to terminate the service, he was the last subscriber.

      • karl garcia says:

        I hope the answer is here.

        “If a stockholder achieves a certain amount of ownership in a corporation, is the stockholder obligated to buy the shares of the other stockholders who want to sell?

        Indeed, the law makes it mandatory for the acquiring person to offer to buy the shares of the other stockholders.

        Under Rule 19 (2) of the Implementing Rules and Regulations of the SRC, “any person or group of persons acting in concert, who intends to acquire thirty-five percent (35%) or more of equity shares in a public company shall disclose such intention and contemporaneously make a tender offer for the percent sought to all holders of such class. Any person or group of persons acting in concert, who intends to acquire thirty-five percent (35%) or more of equity shares in a public company in one or more transactions within a period of twelve (12) months, shall be required to make a tender offer to all holders of such class for the number of shares so acquired within the said period. If any acquisition of even less than thirty-five percent (35%) would result in ownership of over fifty-one percent (51%) of the total outstanding equity securities of a public company, the acquirer shall be required to make a tender offer under this Rule for all the outstanding equity securities to all remaining stockholders of the said company at a price supported by a fairness opinion provided by an independent financial advisor or equivalent third party. The acquirer in such a tender offer shall be required to accept any and all securities thus tendered.”

        While the SRC does not distinguish between direct and indirect acquisitions of the equity shares in a covered corporation, the Supreme Court ruled in Cemco Holdings vs. National Life Insurance Company that “the mandatory tender offer rule covers not only direct acquisition but also indirect acquisition or any type of acquisition. The legislative intent of Section 19 of the SRC is to regulate activities relating to acquisition of control of the listed company and for the purpose of protecting the minority stockholders of a listed corporation. Whatever may be the method by which control of a public company is obtained, either through the direct purchase of its stocks or through an indirect means, mandatory tender offer applies. What is decisive is the determination of the power of control. The legislative intent behind the tender offer rule makes clear that the type of activity intended to be regulated is the acquisition of control of the listed company through the purchase of shares. Control may be effected through a direct and indirect acquisition of stock, and when this takes place, irrespective of the means, a tender offer must occur. The bottom line of the law is to give the shareholder of the listed company the opportunity to decide whether or not to sell in connection with a transfer of control.”

        The tender offer rule gives minority stockholders the opportunity to exit a public company by selling their shares at the same price as those of the majority stockholders in case they are not contented with the new stockholder taking over their company.

        Therefore, laws and jurisprudence are in place to protect the interest of the minority stockholders of a company. Moreover, Securities and Exchange Commission (SEC) regulates the acquisition of control of the listed company. But there are certain issues which the Cemco Case and SRC have not addressed, for instance in acquisitions resulting in indirect control, there are no guidelines for the price in the tender offer to the subsidiary corporation. To aid the public, I believe the Congress and the SEC should find ways to address and clarify the same.”

        • chempo says:

          Karl + Irineo — you are both going the wrong way. You are talking of minority interest.
          Bill’s question is are there regulations/laws that prevent minority shareholders from fighting a takeover and demanding the sky for their shares.

          • karl garcia says:

            Ok,I had a feeling I was going the other way,but I think Irineo got it right.

            • karl garcia says:

              Still on mandatory tender offers,but this time the minority refused.So they can refuse.

              “MANILA, Philippines – The new controlling group in dormant holding firm Southeast Asia Cement Holdings Inc. (Seacem) failed to buy out the minority shareholders in a mandatory tender offer.

              In a regulatory filing, mass housing developer 8990 Group of Companies said the minority shareholders refused to let go of their Seacem shares.

              “A total of 72,119 shares were tendered and accepted,” 8990 Group said. The tender offer ran from June 17 up to July 12.

              The purchased shares, however, represent a mere 0.01 percent of the 709.54 million common shares the 8990 Group planned to buy at P0.4083 a piece.

              Given the low offer price, minority shareholders held on to their stocks. During the tender offer period, Seacem shares traded at P1.02 to P1.30 each.

              In June, IHoldings Inc., Kwantlen Development Corp. and Januarius Resources Realty Corp. – collectively known as the 8990 Group – entered into a purchase agreement to buy 89.87 percent of Seacem from Calumboyan Holdings Inc., Lafarge Philippines Holdings Philippines Inc. and Seacem Silos Inc.

              8990 Group, one of the leading low-cost housing developers in Visayas and Mindanao, spent P2.75 billion for the acquisition.

              A mandatory tender offer is triggered when an investor buys more than 35 percent stake in a public firm. The acquiring entity should then offer to buy all shares held by minority stockholders.

              In April, Seacem finalized the divestment of its 1.11 billion shares worth P11.35 billion in listed cement firm Lafarge.

              The 8990 Group is behind mass market brands Deca Homes and Urban Homes. Early this year, it acquired IP Converge Data Center Inc.”

          • Bill in Oz says:

            Yes that’s right Chempo..Thank you…..The MRT strikes me as one of those occasions when a minority shareholder may want ‘prevent’ or harrass a takeover by the government to maximise the value of it’s shareholding compared to other shareholders who have already sold out..

  31. Bing Garcia says:

    Chempo, thank you!

  32. tristanism says:

    Just logging in to say: That is one heck of a blog entry. Thanks, chempo and joe. Been looking for something like this for a really long time. Now, i just need some aspirin for my headache. 🙂

    • chempo says:

      Glad u find it useful tristanism. Also glad u mention aspirin instead of panadol. Aspirin is good for the heart — an un-intended but beneficial side-effect.

      • karl garcia says:

        a good blood thinner,so do not take it if you are anemic.

      • sonny says:

        Caution, everyone. Be sure to run things by your pharmacologist/internist, your trusted ones. I’m on 326-mg Aspirin therapy ‘cuz I’m also a stentized foodie! 🙂 Am now trying to clear the Metformin-alcohol combo. Remember each of our metabolisms are unique to each individual.

  33. cha says:

    Ayy Chempo, you’re a winner.

    “What I found out — what I discovered at City Paper — was that journalism is a done thing. In other words, there is no real “better than you.” There’s just the story you produced. That’s what it is. Either you repeatedly asked questions or you didn’t. But you made a choice. Someone else might be more curious than you, but the functionality of them being more curious than you is that they just asked more questions. That was a deep sort of lesson — that the winner is the person who keeps asking questions. That’s the winner.”

    – Te Nehisi Coates, The Atlantic

    http://nymag.com/news/features/beginnings/ta-nehisi-coates/?mid=nymag_press

  34. karl garcia says:

    I found an article that summarizes the patch work,the digging,the mounding I have done.You don’t have to agree.
    Heck,Jun Abaya is a friend of the family and I don’t agree with most of the negative feed back.
    I said most,not all.

    “AS the bulls-eye target of the Metro Rail Transit (MRT) blame game, the object of public hatred through incessant pillorying/finger-pointing over the past few administrations, it was quite a surprise that Robert John Sobrepeña himself courageously gave testimony to the Senate. As the head of MRT Corp., the consortium that built the MRT, he, in a nutshell, had been the government’s scapegoat for the prolonged agony of MRT decline.
    And, just this once did we find something enlightening in a Senate hearing. Admittedly, we’ve come to associate Senate hearings, allegedly in aid of legislation, as pricey public theater of moral indignation where gladiators of the holier-than-thou settle scores without fear while currying favor. It is here that, through the ballot box, even the incompetent are elevated to wield enormous power as they strut their erudition, or the sheer lack of it. For those with a taste for it, the Senate, supposedly the temple of civility, sacrifices civility itself in pursuit of the truth, the truth convenient only to the one who wields the most power.

    First, a background: Back in the turbulent post People Power revolt, the Metro’s traffic was congealing over the lack of infrastructure investment since the IMF meeting fueled the building boom of the early ’70s.

    Mongrel buses, mostly colorum operating sans public-service franchise, were all over the city. The underfunded Metro Manila Transit state-owned bus company was collapsing. The only working mass transit railway was the LRT-1 from Monumento to Pasay-Taft. The critical EDSA ring road was close to a standstill.

    The first palliative was then DOTC Secretary Oscar Orbos’s yellow lane rule, an adaptation of exclusive bus priority lanes as per international practice. But our local wise guys thought they did one better by making not just one but two lanes exclusive to buses. Effectively, the yellow lanes crowded out the best means of surface transport — the private car. As for the bus riding public, the purchases of additional China-made buses just moved the commuting crowds from the sidewalk into the buses, which stayed immobile in traffic anyway.

    EDSA needed its own LRT. But because of the country’s poor credit rating, the government alone could not finance the whole LRT-3, as it was known then. Eli Levin, the man who structured the LRT-1 deal with the Belgians, came forward and found the Czechs eager to supply the trams and railways. Eli’s next problem was to find financing. In time he was able to cobble together a broad consortium composed of CAP, National Book Store, Ramcar and Ayala Corp. But instead of a Monumento-to-Baclaran LRT-1-style elevated tramway, LRT-3 (now renamed MRT-3) was force-fitted to a rollercoaster semi-elevated structure, truncated in TriNoma. The added sweetener to the deal was real-estate property development rights, similar to the profitable MTR of Hong Kong. All contracts, like the Sumitomo railway parts and labor maintenance, real-estate development and advertising rights, were long-term just like international practice.

    When the construction of the MRT finally got started, the Metro Manila Authority, in order to ease traffic, instituted the odd-even rush-hour ban on private cars with less than three passengers for alternating days of the week. The promise to the motorists then was that their impaired mobility sacrifice would in a few years yield a reliable mass-transit alternative to buses on EDSA, as buses were to be banished from EDSA as the urban railway didn’t need competition. MRT, which started as a BOT (build-operate-transfer), evolved into a BLT (build-lease-transfer), built by a private company and leased to be operated by the government. Elsewhere, the PHILTRAK system, which was even more financially viable than the MRT and which predated the Bus Rapid Transit in Curitiba by a decade, was supposed to complement the LRTs on other circumferential and radial routes.

    By 1999, the MRT was up and running, with fares set at P30, end to end.

    Initial ridership was approximately 30,000 commuters a day, far lower than the railway’s 200,000/day capacity and today’s 500,000/day crush.

    Then, in an act of populist appeasement, the government of the day, dropped the fare to P10. Ridership leaped.

    At around the same time, the LTFRB had its own answer to the commuter’s problem. Formerly called the Public Service Commission, the LTFRB’s function was to dole out public service (public utility buses, jeepneys) franchise by juridical process based on quota determined by forecasted mean passenger capacity of a route and vetting the competence and safety of the private sector franchise applicant to the said route. LTFRB decided to expand franchises in anticipation of an explosion of commuters and to legitimize as much of the many colorum operators as possible.

    Other government agencies required bus companies to build their own terminals if they were to be allowed to service the Metro routes; hence Cubao and Pasay-Taft became Meccas for scores of bus company-owned terminals. As the years went by, government would change policy and require the bus companies to vacate Metro CBDs, like Cubao, and deposit passengers from outlying provinces to intermodal terminals on the Metro’s outskirts. It doesn’t take rocket science to foresee that these foregoing flip-flopping and uncoordinated events were a recipe for a brewing perfect storm.

    During the term of GMA, the MRTC was already groaning under the inability of the low fares to meet its operations and debt amortization expenses. Advertising income was hampered by constant battles with MMDA, which was claiming that the trackside advertising violated their billboard ban. Local governments were bizarrely harassing the MRTC for payment of real estate taxes for the stations, which were built on EDSA — a national public property.

    To ensure the survival of railway operations, the MRTC had to monetize projected government lease payments to MRT. These were in the form of bonds with attractive yields that were gobbled up by DBP and LBP. At this point in the early 21st century, the MRT didn’t look like such a wise commercial venture anymore. Some of MRTC’s partners bailed out by selling their shares to Metro Pacific Investments. Then, a few years later, government stopped payment of this lease, which resulted in MRTC filing an arbitration case in a Singapore Court.

    TO SOLVE this impasse, there were plans during the final days of the GMA term to buy out the MRTC so as to end the multi-billion-peso lease due to it. The current administration is still mulling on proceeding with this plan.
    Bigger problems then ensued in the recent few years. There was this impression in the new DoTC leadership that the MRT deal was grossly unfavorable to the government because of the “high” lease payment.

    What they failed to see is that this “high” lease payment was because the low fares couldn’t even support operations. Politically, these low fares were a government subsidy of something like P50 per riding commuter. That’s P50 paid for by the rest of the country — Mindanaoans, Visayans and other Luzonians ­– who do not benefit from the MRT.

    With an anti-MRTC mind-set of a poorly executed deal, the DoTC decided to reinvent the wheel; the short-term maintenance contract, ignorant of technical details, was awarded to a new entity. Priced nearly like the Sumitomo contract but allegedly without the supply of imported spare parts for the trains, which was 60% of the cost of the Sumitomo contract. DoTC denies that the terms of reference of its new bid contract for the MRT O&M excludes parts. So why did the interim O&M contractor run low on parts? Ironically, it was the DoTC’s failure to permit Customs to release the spare parts for the MRT that became the cause of the “failure” of Sumitomo to fulfill their contract obligations. We won’t horrify you further by recapping the unprecedented accidents and breakdowns that has continued to bedevil the MRT ever since the DoTC has been reneging and endlessly tinkering with the operations contracts of the railway. Naturally, in the ensuing blame game, the government side demonizes the “greedy, selfish” motives of private sector businessmen. In the meantime, the latest DoTC bidding for the MRT-3’s P2.2-billion new three-year extended O&M contract attracted no bidders.

    As we find Robert John Sobrepeña’s explanations rational and revelatory, clearly the muddle that the government has made of the MRT doesn’t necessarily point to Secretary Abaya. He is only as good as the advice that he gets from those underlings tasked to unravel the MRT mess who, by lack of understanding and/or in pursuit of some agenda against any deal that was constructed under the Ramos or GMA administration, aggravated the situation. Meantime, the Palace is still stuck with the impression that the MRT was a poorly negotiated contract during the Ramos years, a lopsided deal that puts the government at a gross disadvantage. A deeper look into the events and changes in policies over the past years will show that the Palace’s pronouncements as to the causes and effects of the MRT mess are in grave error.

    In the end, the victims are us, the commuters, who will have to deal with congestion daily. We suffer the mistakes and erroneous perceptions of the government in the problems from the unnecessary conflicts it ignites. But the DoTC can take heart as it is not the only guilty agency.

    Look at the missteps of DoE in the power sector. Power output shortage? Propose emergency powers to legislate even the setting of thermostats in air-conditioners. Never mind how one is to police that. In all truth, the solution lies in implementing the EPIRA law in its entirety. Not having done this, the government effectively disincentivized the building of additional power plants. Bowing to popular pressure not to fulfill contracted power price increase further discourages private sector investment in power generation.

    Returning to the government agency that causes most of the problems we suffer, we can only mark this descent into administrative hell when DoTC Secretary Ping de Jesus resigned. We’ve mentioned LTFRB’s reckless franchising of buses during GMA’s tenure, aggravated recently by an opinion of an LTFRB officer that private cars should be banned from EDSA during the morning rush hour, apparently unaware that the original intent of the EDSA LRT or MRT was to ban the buses and not vice versa.

    In its desperate efforts to sidetrack Stradcom and other current LTO suppliers, LTO ended up with inferior registration sticker tags that fell off in weeks and drivers’ licenses that faded in three months’ time. LTO had an opportunity to improve our license plates with its new Dutch supplier.

    But now that the 7-alpha-digit plates are out — after a year’s delay — where is the improvement in the plate number size? Instead of elongating it, the new plates use nearly the same dimensions as the old plates, the only difference being the fonts, which are now condensed to fit tighter kerning. They are like the duplicate-replacement plates of the old system even as the new plates use a new color scheme with European zeroes and fours.

    This dumbing down in making regulations forces the public to bear the brunt and suffer more in the cause of expediency, supposedly for the greater good. This psyche is an unfortunate result of a worldwide backlash from the security lapses that didn’t anticipate the 9-11 tragedy.

    If you recall, the military-industrial complex and Cheney-Rumsfeld indoctrinated, knee-jerked by creating the TSA (Transport Safety Agency), which in turn spawned the mentality where everyone, even the law abiding, are suspects whose civil liberties can be disregarded for the sake of the greater public good. Let the public suffer for so long as government is seen to be doing something, anything.

    So now you have the police saying that mall robberies can be prevented by banning the wearing of baseball caps indoors. Local governments are requiring all business owners to have CCTV surveillance cameras. The spate of crimes committed by men tandem-riding motorcycles spawned oppressive regulations on motorcycle riders, like the “plaka” or license plate high-visibility vests, the ban on tandem pillion passengers and the ban on wearing of safety helmets. If only one can ban sloppy thinking.

    It’s as if cops, with their nice new pistols and nice new private cars cannot commit crime. Whatever happened to their motto “to serve and protect”?

    The problems above, just like the MRT mess, are the result of decision makers making decisions and law makers making laws, without understanding what are the causes that deliver such dire effects that they want to correct. Quick to action without knowing the cause and effect does more harm than good. In the name of justice, do we deserve such degradation of our civil rights?

    tfhermoso@gmail.com

    http://bworldonline.com/content.php?section=Motoring&title=the-mrt-mess-and-the-mentality-behind-it&id=98931

    http://bworldonline.com/content.php?section=Motoring&title=the-mrt-mess-and-the-mentality-behind-it&id=99336

    • karl garcia says:

      the author said eli levin gathered the consortium,but what he wrote there was the consortium of Sobrepena.Was it Levin who gathered the herd and not Sobrepena?

    • josephivo says:

      There is a continuum from people with a primary concern for the public wellbeing up to people only concerned with their own wealth. Also in this story I think that in all the phases of the MRT saga some were thinking solutions for the common benefit and some were thinking of their own profit mainly by creating rent opportunities, but also by simply dipping their fingers in the honey pot. (2 variables are to be considered: effectiveness or “fitness for purpose” and efficiency or maximum value for minimum effort.)

      The ranking of the Philippines on the corruption scale gives an indication of the power distribution between both extremes from zero corruption and totally corrupt.

      Don’t there exist international data on average cost per kilometer for metro-type transport, and in construction and in operation, as we have for roads and buildings? How does MRT compares and what are the main reasons for the deviation, “world-class” and “Green”?

      • josephivo says:

        Once I heard a story that Imelda wanted our King to come and sign the LRT 1 deal, but she only got the Crown Prince and this was the start of all difficulties in the LRT 1 project.

        It is not only about money, sometimes it is also about big egos. Wonder how this affected the MRT saga.

        • karl garcia says:

          So Eli Levin was Imelda’s guy who brokered with the Belgian royalty? Then Levin continued with the MRT3 and then MRT7.
          Who is this guy,Joseph?

    • chempo says:

      Karl – interesting article.

      I’ll just highlight one part regarding the mrt which I think he got it wrong.
      The writer said fare reduction increased ridership but cause MRTC to operate with financial difficulties, forcing them to go issue bonds. That’s totally incorrect.

      It’s the govt that operates the mrt, not MRTC. Thus fare reduction hurt the govt tremendously and had nothing to do with MRTC. And who reduced the fare? Mr Estrada – the people’s president. (I think Mar should go reduce fare even further, reduce income tax, increase pension payout — and be as popular as Estrada, what say you?).

      The bond issue was MRTC shareholders’ way to monetise future lease payments from the govt because most of the shareholders’ businesses suffered financially from the financial meltdown of 1997.

      Remember what I said — every tidbit of media or internet report on the MRT always contain some mis-information, mostly from ignorance, but sometimes to serve some agenda. (That is not to say my article is 100% correct)

      • karl garcia says:

        Yeah make MRT 5 pesos.
        Subsidize the fare is still gets the blame.

        but question agsin BOT

        build operate transfer
        they build,they operate then eventually they transfer

        but it went BLT

        they bulid,they lease it the government,then they transfer
        so that implies government operates? or the concessionaire?

        on misinformation. no worries,my bs detector is always on alarm.

        roger that, if i believe everything I read,I would not be having any questions.

        • karl garcia says:

          sorry about my perennial syntax and grammar errors,too many to count.

          • karl garcia says:

            blt-operations are leased.you are correct.

            “Under BLT a private entity builds a complete project and leases it to the government. On this way the control over the project is transferred from the project owner to a lessee. In other words, the ownership remains by the shareholders but operation purposes are leased. After the expiry of the leasing the ownership of the asset and the operational responsibility are transferred to the government at a previously agreed price. For foreign investors taking into account the country risk BLT provides good conditions because the project company maintains the property rights while avoiding operational risk.”

            So many wrong analysis in the news papers,those tabloid media! I repeat, You are the Man!

            • chempo says:

              There is nothing wrong with the BLT model. It’s just that the FVR govt screwed it up. Tatad could have been a hero, but your SC was too smart for the country.

              • Tatad isn’t stupid. But now in helping Binay as his sidekick he is acting stupidly.

                Maybe not for himself, don’t know about that, but most certainly for the country.

              • karl garcia says:

                I was typing a comment trashing BLT further,good thing I erased it.
                Yeah,and that ex post facto retro active effect decision,really did it for us.

  35. Thanks for the article, chemp!

    p.s.— loving your new avatar, brought back some good memories…

  36. https://d0ctrine.com/2015/08/06/some-thoughts-on-the-edsa-mrt-3-problem/ – from August:

    That’s actually a very tricky question. We can’t really blame a specific person or persons but perhaps entire organizations that are supposed to be responsible for the mess that is MRT3. The main or root issue seems to be legal and not at all technical. The technical problems experienced are manifestations of a contract that is a textbook case for how NOT to do a PPP. I am not privy to the details of the discussions between the government and the people involved and behind MRTC so it is awkward to make comments specific to this matter of the contract and all its complexities. Perhaps the DOTC wants to follow “Daang Matuwid” by not budging to the terms laid out by MRTC? Perhaps MRTC is aware of the stakes (plight of the riding public) and is using this to force DOTC into a deal that is not favorable to government? We can only speculate on this without firsthand knowledge of their discussions.

    However, from the perspective of transport as a service and as a public good, I would say that MRTC indeed is aware of the public’s clamor for improvement. This is all over the news and social media in the form of commentaries, images and even videos of the undesirable experiences of those taking the MRT3. In the end, DOTC must decide whether it is all worth it to maintain the stalemate with MRTC considering that the public interest is at stake here and things will just become worse with inaction. Perhaps the government should move towards the best compromise they can live with considering the urgency of addressing the problem at hand.

    The traffic expert who does the excellent d0ctrine.com blog and has linked to this article also says:

    I would like to think that my reply was quite cautious. There have been many allegations and claims from both sides of the table regarding how to resolve the impasse and the conflicts that seem to be interwoven with the contract on the MRT3. Perhaps such cases test the limits of “Daang Matuwid”? Much was and is expected from DOTC considering its battery of lawyers including top officials of the department. – but from what I read in this article now, it is a top-level government team versus top level hustlers. Something like FBI versus the Mafia.

  37. Joselito Asi says:

    Chempo:

    I got confused by the way a name was presented here, e.g. par. 2, lines 2 and 3 “ex-MRTC GM Soriano Vitangco.” Who is Soriano Vitangco? Is he the same man as former Metro Rail Transit (MRT) general manager Al Vitangcol III? I just scanned this story and I found out that “Vitangco” was used 7 times.

  38. eag97a says:

    Many thanks to the author for a very informed and nuanced take on the matter. To be fair government projects like this are very complicated and sharp businessmen will always take advantage and you can’t fault them for profiting. At the end of the day businessmen, tax and litigation lawyers, investment bankers and the like are the ones winning and the ordinary tax-paying Filipinos who will end losing in this. Reminds me of the NAIA 3 mess and this type of clusterfuck is not unique to us even the US experiences this situation on a regular basis (e.g. F-35 project of the Air Force).

    • chempo says:

      Thanks eag97a, I agree with what your clusterfuck ref.

      Is there a lesson here?
      – Profit-motivated people are better than corruption-motivated people.
      – Salary disparity — smarter people get into better paid jobs in the private sector.

      • eag97a says:

        I think the more important lesson is our government needs a lot more competent/smart people in all of its agencies across the 3 branches of govt across all levels to minimize this events. Obviously compensation is a big issue and i remember there is recent legislation signed into law by PNoy regarding govt salary increases. Even though Singapore’s experience from a population size and geographical perspective is a bit different it is instructive to note that SG’s government employees are among the highest in compensation globally with a corresponding inverse relationship to corruption.

  39. edgar lores says:

    *******
    Here’s a news article on Poe’s subcommittee report on MRT.

    http://www.interaksyon.com/article/123636/dotc-officials-showed-gross-inexcusable-negligence-in-mrt3-graft-cases-eyed-in-new-lrv-deal

    I have skimmed through the report which seems to favor and adopt Sobrepena’s viewpoint.

    I note the following:

    “Mr. Sobrepena, as one of the original investors in the MRT, confirmed that as part of their obligation under the BT agreement, the private investors put in an equity of $190 Million. Out of which, Mr. Sobrepena invested 28.6% or $54.34 Million. He confirmed that he received a return on investment of $132.27 Million.”

    Not bad.
    *****

    • Joe America says:

      I wonder if he is on her donor list. Since looking at Peter Wallace’s rant, I’ve grown highly suspicious of those who find easy solutions in blaming others in a very general way. The Poe report seems very broadbrush to me, without the details as we found in the Blue Ribbon Subcommittee work on Makati or Chempo’s examination of MRT, and merely concludes “it’s not working, so Abaya must be a bad guy doing bad deeds”. I’m thinking Sen Poe is not a detail lady, and I wonder what she is going to do in the various “war rooms” she is proposing for the Palace.

  40. karl garcia says:

    Before senator Trillanes supported Poe,if he wants his message to reach Sec Abaya,he just asks my dad to send the message.

    Now my dad is in a bind, because Trillanes also asked for Abaya to voluntarily step down,on nationwide tv, a few weeks ago.

    My dad is a father figure to both,because of pma class 59 ties. All he can do now is be a messenger.

  41. butch silverio says:

    I seem to recall that it was not the original contract under FVR but the novations undertaken by Sobrepena during GMA’s term that screwed everything up. I also recall that there was subsequent litigation in the course of which Sobrepena obtained TRO’s that effectively prevented the govt from taking timely action to safeguard operation of the MRT. What do you have to say about these? Sorry, dont have specific details. Good article, by the way. Wish we had more of the same.

    • chempo says:

      Thank you for dropping by Butch. As far as I know, construction started during FVRs time and started operations during Estradas time. There was no novation during GMAs time. When Sobrepena took over from Eli Levin group, the former revised the contract into the BLT contract with FVR. U may be mistaken in this. The only TROs from Sobrepena are those regarding the purchase of the 48 trains. I am not aware of others.

  42. Madlanglupa says:

    Vitangcol accuses Roxas, Prez. No surprises, blame game. Expect others to come in and epal.

    http://newsinfo.inquirer.net/765937/neglect-of-roxas-abaya-led-to-mrt-woes-says-vitangcol

  43. kristineP says:

    thank you for this informative article. finally, I understand what the this MRT is all about.

  44. Mi amore says:

    Any common rail guy would see upgrading wrong. Even the sequence is wrong. Technically imposible. 4 car train without ancillary power first? , it should be corrected by including word systematically rehabilitate. A mere mechanical engr will oly be an ojt for another 2 years. Get a rail expert please.

    • Mi amore says:

      Ppp is just generic of the blt cloned from bot and oth three letter dumb profit based utility services. Most rail transport in the world except singapore are govt subsidized as an instrument to facilitate economic activities within the cities it inter connects. Similar to escalator and elevators in the malls. Imagine charging people for the ride. Most ppps like the the taiwan shinkansen had the exact problem as mrt3. With a few kilometer short to complete ridership quota. Most ppps in india did not lift off to become real. So ppp anybody?

      • Joe America says:

        I’m not sure I comprehend the objection to PPP based on one project that went bad because the initial contract drawn up under Ramos was flawed. PPP is a way to get a project done by combining the resources of private enterprise and government, with private enterprise in it for the profit and government distributing the financial burden to leverage up and do more projects. Loans from development banks is another way to leverage up to get the Philippines caught up. The execution of a project can be good or bad depending on the motives of the principals and how well oversight is expressed. Oversight under the Aquino Administration is a lot more rigorous than under prior administrations. The more work done, the better the PPP enterprise gets.

        What is your alternative method for rapid infrastructure development?

  45. Sup says:

    Somebody did blame Mar for the MRT so i told him/ her to read this piece by chempo…the responce was:

    MontyWest Lopez_Chaena 8 hours ago

    You want proof? Mar as DOTC Secretary made decisions such as replacing Sumitomo with Liberal Party affiliated APT Global, causing the MRTs decline. He also blocked the extension of the LRT 2 to Masinag, which is only being done now. Had it been started during his term, then it woulde be done by now, helping alleviate the traffic in that area. His endorsement of Abaya to the DOTC is probably the worst decision he could have made. That mooron clings to the position like a cockroach on a wall, infesting that department with his abject incompetence.

    If you want to look at Mar in the bigger picture, just look at how his family has progressed through the decades. One of the biggest landowners in the Metro, the wealth of the Araneta’s never progressed beyond Cubao, as compared with that of the Ayala’s, Henry Sy, Andrew Tan and Gokongwei who have projects mushrooming all over the country. Sad to say that this family has never been entrepreneurial enough to parlay their vast wealth into bigger endeavors that could create more jobs and enhance the economy. Mar has inherited his family’s teka teka approach to development, preferring to make decisions excruciatingly slowly to the detriment of growth and development. The stunted growth of the Araneta’s in Cubao is reflected in Mar’s management style. Sorry but we need leaders with more sense of urgency.

    As for Leni, I think she would make a great VP. GP-Leni for the win.

    sup 8 hours ago
    If you have nothing to do one day try to read this and educate yourself https://joeam(dot)com/2016/01/31/on-a-clear-day-you-can-see-the-mrt/
    MontyWest
    MontyWest 4 hours ago

    So what are you educating me about? History? If a leader can’t act to change what was historically wrong, then can you say he is a good leader? Argue in the here and now. If Sumitomo did SCREW UP, then the least Mar could have done was sue them for non-performance of maintenance obligations. There is a list of maintenance duties depending on use and time that needs to be performed, parts that need to be changed based on usage. This is not a replace when broken system. Think of it like maintaining an aircraft. Do you change a plane’s critical parts just as they go bad?

    Look at this dumb history lesson you gave. There was a mention of PH-Trams, but with the caveat that “this article does not go into the contentious issues regarding Vitangcol and PH Trams/APT Global. Those are a separate matter.” This statement just made this whole article as useless as toilet paper in trying to explain why the MRT’s maintenance is so screwed up.

    I was once a finance guy, and I do understand that the MRT’s history is filled with aholes trying to make a quick buck, from Levin to Sobrepeña to Ongpin. But then so what? Are we going to shoot ourselves in the foot and let such an important piece of our transportation infrastructure deteriorate just to prove a point? If Mar’s objective was to destroy the MRT to prove that Sobrepeña et al were asus, then job well done!
    Abaya has been bragging about buying trains from China. He conducted a bidding with only 2 participants, both Chinese. The LRT 2 trains were built in Korea and are supposedly very good (never used them yet). So why buy inferior Chinese trains when we could have refined the Terms of Reference to make sure that only reputable companies with long track records could bid? Are we so desperate and poor that we would take the cheapest, most unreliable suppliers and entrust them with the most vital piece of our transport system? From a country that we’re having an acrimonious territorial spat with? To that I say f-word you Abaya and the Roxas that spawned you.

    So what about my assessment of the Araneta clan and how they underperformed their other landed peers? Any argument you can present to dispute that? If Mar was such a financial genius, then maybe he could have grown his family company at least to the size of Manny Villar’s. Yet there they still sit, in the middle of Cubao. Sure with a few new structures, but nothing in comparison to MOA. Is Mar’s company already listed in the PSE? How the Araneta’s have underperformed is reflected in Mar’s term in government. Sure they have a good name, but others who have started with much less, have left them in the dust. Is this like the story of the Rabbit and the Tortoise where the slow but sure tortoise eventually wins? F-word no! Sloth is death in the internet age.

    By the way, cut and paste arguments are just lazy in my honest opinion. There educated enough for you?
    Reply
    View in discussion
    MontyWest replied to you on Roxas, Robredo also met with INC officials 5 hours ago
    sup 8 hours ago
    If you have nothing to do one day try to read this and educate yourself https://joeam(dot)com/2016/01/31/on-a-clear-day-you-can-see-the-mrt/
    MontyWest
    MontyWest 5 hours ago

    I replied to you but INQ is censoring the response. It’s not really filled with F words and certainly I didn’t curse you out. But ganyan talaga dito, ang higpit ng mga patakaran. We need more leeway to express our ideas.

    • Joe America says:

      Sounds like an angry person with his/her mind made up, and willing to adjust the argument or even offer up insults to hold course. Chempo’s article is “dumb” because it does not fit a preconceived idea, and you are “lazy” because you sent over a well-researched article that contradicted his/her view. Monty is that well known animal of 100 percenter, who will hold to a view no matter what. No matter if he/she must descend to the last resort of a losing debater, the insult.

      Thanks for the update. Too bad such an intelligent person is locked up in defense of self-esteem.

      • Sup says:

        I did reply that i did send his/her comment to this MRT page…maybe he/ she will read and will argue in the blog…For me it is just because i don’t like it if Mar is to blame for ”everything” wrong during his cabinet stint..
        Not fair at all….

        • Joe America says:

          Right. It has become so bad that we might think he has been president the past six years. The criticisms tend to lose credibility after a while, at least for me.

      • MontyWest says:

        Wrong on so many counts. I called out Chempo’s article since it claims that the financial structure of the MRT had a hand in its maintenance failures. Compartmentalize people. Does a financial disagreement between the parties in the MRT prevent the trains from being maintained? Why gloss over the role of APT/PH Trams? This maintenance contract was negotiated during Roxas term and consumated by Abaya, so why are these two claiming immunity from the screw-up that occurred?

        Why am I saying it was lazy to drag me into this Roxas lovefest? Well simply because that Chempo article is a data dump. You have a financial analyst trying to explain why the MRT isn’t working. Would you have a doctor explain to a pilot why his plane is crashing? Sure the MRT deal is complex, with layered structures that were meant to confuse. The bottomline though is that Sobrepeña laughed his way to the bank. He wanted to buy the additional equipment since that would extend his gravy train for several years with the same 15% sovereign guaranteed rate of return.

        Get a mechanical engineer to write about the maintenance history of the MRT. If it shows that Sumitomo did not follow the proper preventive maintenance schedules, then sue them. If it is shown however that APT was the culprit, then Roxas and Abaya will clearly have to answer for this. So far, both Abaya and Roxas have not answered in detail the question of why the maintenance contracts were so screwed, except of course for that standard line that Sobrepeña is to blame.

        Boo Chanco was prescient in writing that the choice of APT would blow up in Abaya’s face. Boo has been criticall of Roxas’s decisions during his DOTC stint, calling Mar out for his analysis paralysis style of governance.

        I make the call for Mar and Abaya to face their biggest media foes, namely Boo Chanco, Ted Faillon and Jarius Bondoc. If they can convince these three that they did a good job in the DOTC, I will vote for Mar again as I did in 2010. At this point with his ratings in the dumps, Mar has nothing to lose.

        • Can a financial analyst explain why the pilot fly a certain path, yes sometimes when the price of oil is too high it overrides safety such as what happened in the commercial plane gunned down in a war zone, the money dictated the path.

          In the case of MRT the money was a big part of the problem, badly structured deal. In the MRT case a lawyer , a financial analyst and a mechanical engineer would be required.

          A lawyer to understand the legal impediments and restriction,
          A financial analyst to explain the financial incentives or disincentives, and
          A mechanical engineer to understand the maintenance needs and deficiencies of sumitomo or and APT.

          • MontyWest says:

            Wrong analogy by the way. The shortest distance between 2 points is a straight line, so you don’t need a financial analyst to determine a plane’s route. Pilots are competent enough to know that this is the cheapest way.

            The MRT is subsidized, and thus should not be lacking in funds for its maintenance. Never heard Mar or Abaya complain that they did not have enough funds to do the proper maintenance.

            I’m only talking maintenance here as the cause of the MRT breakdown. Your solution looks like one of those how many ______ does it take to screw in a lightbulb jokes. The task was to make sure that the MRT was running well. If the DOTC leaders blame others for their failures, then they have to accept the blame as well. We don’t want excuses, we want results.

            • chempo says:

              @Montywest

              “The shortest distance between 2 points is a straight line’….for airplanes, you said. If that were the case why did Malaysian Airlines MH17 flying from Amsterdam to Kuala Lumpur took that a path through Ukraine?

              We can all be excused for lack of sufficient knowledge now and then, that’s OK cos we are not a receptacle of all the stock knowledge of the human race.

              So just like you don’t understand the intracies of setting flight paths, it does’nt seem you understand, nor care to really understand, the intricacies of the legal mess of the MRT that is at the root of our problems.

              • MontyWest says:

                @chempo

                Had to look at a map but it seems the Ukraine is in a relatively straight path to KL, give and take a few degrees and some air current issues. Again something a pilot has the expertise to fully map out without need of a financial analyst.

                You’re trying to be the apologist to both Abaya and Roxas in the MRT issue, but your analysis has not explained why the maintenance of the MRT is in such a mess. Are you to tell us that both DOTC heads had their hands tied behind their back and were just mere witnesses to the maintenance disaster that occurred? Are you saying that the choice of APT Global had no bearing in that whole mess? Joe paints me as a biased GP supporter whose every word is based on the demolition of Mar. Can’t I be just an irate citizen who’s pissed that the MRT doesn’t work thus causing so much traffic and is blaming both Roxas and Abaya for this mess? Am I not allowed to have an independent opinion without having my motives be attributed to my support for GP? Joe sounds like Binay in his use of the word demolition.

              • Joe America says:

                You are allowed to have your say on MRT, but you arrived full of insult for Chempo, with a chip on your shoulder, and you seem unwilling to ask for or receive inputs yourself. Discussion of issues is important. Ranting to place blame is political. It is campaign season, and it is easy to see through the posturing, and the intent of the posturing. Your comments for sure do not seem to be to arrive at an understanding with Chempo on what went down on MRT.

            • Bill in Oz says:

              No wrong analogy :..This is not so.The earth is a sphere so the surface is curved.There are no ‘straight lines’ for planes to follow.
              AS for the MRT previous regimes left a nightmare mess ..Your thinking would perpetuate that night mare mess.

              • MontyWest says:

                Ok here then, the shortest distance between two points on a sphere is a relatively straight line. Happy now? You missed the point that a financial analyst is not needed to plot the cheapest route for a plane to take.

                On the MRT mess, I am just pissed that it’s not working and am looking at Abaya and Roxas to blame for choosing APT Global and the subsequent maintenance providers.

            • Well. The cheapest is only one of the factors. Now if the pilots knew they would be shot down and the litigation cost including brand value would they have still continued with their flight plan when they were being warned by air traffic controllers?

        • https://fightformar.wordpress.com/2016/03/23/corruption-in-mrt-sobrepenas/
          Mar called out the MRTC on poor maintenance. Pretty much like the Ayala bridge a full overhaul was necessary but not done, this is all documented even during GMAs time.

          Maintenance schedule vary but daily weekly monthly quarterly yearly are common.

        • Sup says:

          MontyWest thanks for dropping by…always good to see intelligent people in this blog…Agree or not agree…point are to be made and defended…..Salamat

        • karlgarcia says:

          I understand the importance of expert opinion,but in forums like these,it is about knowledge seeking and if hip shooting happens,that is the time the experts do their necessary corrections.
          To me rather than wait for an expert to discuss things,I rather have a layman initiate the discussion,and if an expert comes,very good.

          Rather than atack the author,do your thing,talk about the stuff you know,and do not look at the expertise and specialty,we all seek knowledge beyond our degrees.
          If you do know what the hell someoneis talking about,you can ask.If you beg to differ,then differ.

          • chempo says:

            I agree with you Karl, otherwise we will be reading nothing except hardcore expertise who will dump pages of their work here. Do you know how many pages of text is required to explain E=MC squared?

            I’ve had Caliphman correcting me on ocassions, that’s OK, nothing to be ashamed. Or RHiro coming on strong. This chap’s got lots to share, if only he will come on softer and share.

        • Joe America says:

          On one hand, I welcome your visit. On the other, I don’t like the failure to respect a generous and intelligent person who labored hard, without pay, to do what no journalist in town had done until he established the framework: dissect this incredibly complicated case. That you decide to cast aspersions suggests your argument to the issues is little more than smoke and mirrors. Citing three columnists who start with an agenda to discredit does nothing to support your case. Boo went off the chart at Mamasapano and now, toward the Aquino admin, is bitterly anti. He might as well write for Get Real Post along with Ilda throwing her acid. Ted Failon is a news reporter, and his criticisms reflect his lack of journalism ethics, so what’s to trust in his view. I don’t know Bondoc, but presume he is equally not an expert or objective.

          I laugh that you say you would vote for Mar. I hear that from so many people who don’t have the courage to be straight and say who they are really for. If they thought Mar Roxas was the best choice, they would not hang their vote on any act by him, but support him for the character and qualifications he brings to the job.

          • MontyWest says:

            Cast aspersions? You’re looking at it from the wrong perspective. The article above answers the question of why there is discord between the Sobrepeña group and the government. It’s very insightful and shows how greedy the cast of characters were, from Levin, Sobrepeña amd Ongpin.

            What it doesn’t answer is why the MRT is in such disrepair. This is where Mar and Abaya dropped the ball hard. Again as I said before we have to see the bigger picture of the actual maintenance work to see who truly screwed up. It seems from my perspective, the replacement of Sumitomo turned out to be a horrible mistake. All Mar and Abaya keep saying is that they replaced Sumitomo because they were overcharging us. Even Winnie Monsod was initially supportive of Vitangcol and his success in lowering the MRT maintenance cost. Then everything started to unravel and the shit hit the fan. Everyone washed my their hands clean of APT and Vitangcol was left holding the bag. Where is the account of that story? There was enough money to maintain the MRT since it was being subsidized anyway.

            With Mar’s bottom ranking and his dismal numbers in the NCR, and his being the least liked Presidential bet (a position I thought Binay would thoroughly dominate), he might as well to for broke and face his detractors head on. You’ve criticized Boo and Failon, but they do make very valid arguments. You’ve attacked these journalists’s ethics without contradicting their arguments. Poor form. Go back and read what Boo has written and make a point by point criticism of his opinion. This generalization of motives lacks intellectual integrity.

            You missed the point again when I said that I would vote for Mar, without mentioning the caveat I gave. I have never hidden the fact that I will vote GP-Robredo, and have consistently said so in disqus. Sup would know if he’s read my posts. I just see Mar in recent years as being incompetent, from the MRT fiasco, to not bringing Sat Phones during Yolanda, and then not taking a stronger stand for being bypassed during Mamasapano. His indecisiveness with the LRT 2 extension and the NAIA 1 rehabilitation are issues that I can’t accept from a leader. We here in the NCR have suffered from Mar’s decisions in the past 6 years. I don’t doubt his integrity, just his competency.

            • Joe America says:

              The issues you raise:

              1) Sumitomo should have not been terminated. Fair issue. I am unqualified to make the judgment, and leave you to yours.

              2) Vitangcol was left holding the bag. He is holding it because of the ombudsman filing against him for rigged bidding.

              3) Binay? I don’t understand the point to this comment.

              4) I lack intellectual integrity. That’s like the pot calling the kettle black. I have no interest in parsing Chanco and leave that to Chempo should he wish to take up the debate with you.

              5) If I missed the point, perhaps it is because you explained it poorly. A speaker must take accountability for misunderstandings, not the audience.

              6) Ah, okay, so you back Grace Poe. Click, click, click . . . the tumblers fall into place. I now understand the demolition on Roxas, Poe’s main threat because he has integrity. Now, how exactly is Poe going to fund her promises? Let’s get off the demolition and onto why Poe is right for the nation. If you have read my posts on her, you can see my migration from supporter to ardent critic of an unqualified trapo. But I grant you the platform to present her in a positive light. Your dissing of Roxas rings hollow until you do.

              • MontyWest says:

                1. Mar terminated Sumitomo which caused this whole fiasco. You’re saying he shouldn’t be held accountable for this as the Secretary of the DOTC at that time? Why? Does he wear a teflon suit to work?

                2. The APT-Global deal was negotiated during Mar’s time and signed by Abaya. If Mar and Abaya were unaware of the shenanigans in APT, and the fact that an LP member was involved in that corporation, then their ignorance is at the very least a sign of poor management skills.

                3. “Roxas, Binay ‘least liked’ to win by SWS mobile survey respondents” This survey came out fairly recently. I am surprised that you were unaware of this. Roxas topped this survey followed by Binay, which is surprising considering Jojo’s plunder issues.

                4. Again I repeat my request that you criticize the points Boo made, not his motives. The criticisms against Mar could have been written by anyone else, but the fact remains that they have remained unanswered, not even by this Chempo article.

                5. The caveat I made was pretty clear. I would vote for Mar if he and Abaya would go on an interview with Boo, Ted, and Jarius and convince these three that they did a good job in the DOTC. What’s not to understand there?

                6. What demolition are you talking about? I mentioned facts that needed answers and that’s demolition? That’s a low bar you set for the word my friend. What does “Poe’s main threat for his integrity” mean? You want an answer to mass transport funding? Raise the registration cost of vehicles in the Metro, and maybe impose a P1 per liter gasoline surcharge. Use the funds to build more MRT or even subway lines.

                By the way you cast aspersions on my motives for attacking Mar because of my support for Poe. Your linear thought process is suspect. I presented my reason for my displeasure with Mar, then your answer is that I did so because I’m voting for GP? I am not working for GP though I knew her eons ago. I haven’t seen her in 30 years. My thoughts on Mar are independent of any influence of who I’m voting for. I feel GP isn’t ready yet for the presidency, but given the cast of characters running, she the best of the lot.

                That’s it for now. Off to watch the fight!

              • Joe America says:

                1) Don’t put words in my mouth. I said you are entitled to your view. The matter is meaningless to me because I think your goal is not objective assessment, but demolition.

                2) Demolition work. Political jabber until you present Poe’s proposals.

                3) Okay. Thanks. Contrary to some, I do not claim to know everything and appreciate being enlightened.

                4) He, like you, has an agenda. I am interested in objective assessments.

                5) You are evaluating a man on a “set up”. I would not expect Roxas to run his campaign to suit you, and if you believe he must satisfy your personal whims to earn your vote, he won’t earn it.

                6) (a) This comment and all comments before do not present Poe’s platform or ideas. It is a demolition on Roxas. (b) Is the vehicle tax your idea or Poe’s proposal? (c) I am talking about her whole platform, of getting 30% of budget to Mindanao, cutting taxes, getting everyone a seat on public transportation, spending more on defense and social programs. Show me the overall plan for revenues and expenses.

                7) It is not an aspersion to recognize the politics behind your views. My thought process is what it is, and if it is not the same as yours, that is your problem. You are, from all I can tell, for Poe and on a demolition program against Roxas. But here is an idea, when the fight is done, how about giving me a Top 5 list of reasons to vote for Roxas – that is the ones you believe are most important – and a Top 5 list of reasons to vote for Poe. Then give me the Top 3 deficiencies of each. You can just bullet point them.

                There is no hurry. There is a month until the elections.

                Let’s get to analysis instead of political and personal grinding . . .

        • chempo says:

          @Montywest

          Thanks for dropping by. Your comments are appreciated. But let’s look at some of your points :

          “(The)…article … claims that the financial structure of the MRT had a hand in its maintenance failures”

          The article set out to explain the contractual structure (not just financial structure — world of difference)of the MRT3 basically check-mated 2 administrations from moving forward. The Arroyo admin bought back those bonds which gave the government a majority interest in the MRT, thus gained control over the ops. Her move was actually to prevent international investors from suing the Phils govt, that’s all. Pnony admin has now put in place steps that will allow the MRT to move forward, on the govt’s terms and in the interest of Philippines, not a group of fat cats.”

          Under the original BOT contract signed by FVR, the contractors build and operate the MRT, including maintenance sub-contracted to Sumitomo. The govt has no hand in that – the pricing, the terms, everything in the maintenance contract. Sumitomo was also involved in certain aspects of the construction part. You may ask FVR why there was no MRT Regulatory Body. So everything is in the hands of contractors. The govt simply pays up anything demanded. So I did not claim, but it is a clear cut case, the original maintenance arrangement is stacked against the interest of Filipinos.
          I wonder if you have read blogs of people who worked in the DOTC, the ordinary rank and filers, who wrote of the deficiencies during Sumitomo’s handling of the maintenance.
          ————————

          “If it shows that Sumitomo did not follow the proper preventive maintenance schedules, then sue them”

          Excuse me, I’m not a lawyer, but I think I understand the meaning of the privity of contract. The BOT contract made the govt a lame duck. Only Sobrepena can sue Sumitomo. Try doing that and spend the next 20 years in legal hell instead of working to get control of MRTC and move forward.

          —————————

          “You have a financial analyst trying to explain why the MRT isn’t working.”

          I’m sure many people experienced this — you got a doctor’s advice, or a lawyer’s advice, or an investment consultant’s advice — but you have a feeling that whilst you appreciate their expertise, somehow or other you felt you know certain aspects better. Sure we know nuts about how our ventricular is not co-ordinating their muscular contractions but we know that it’s temporary because we were looking at the sexy girl on the wall of the doc’s offic, or a lawyer asking you to go ahead and sue that damn character but we know we should’nt because we are having a hard-on for his sister, or the investment consultant say that’s a good buy, grab it, we know we can’t because well that may mean we have to sell the mistress’ condo unit that we gave her decades ago when she was a hot chick.

          By your same reasoning, you’re trying to tell us Boo Chanco, Ted Faillon and Jarius Bondoc are great railway system maintenance engineers. By the way, I have great respect for these 3 gentlemen but that does not mean I’m all for everything they say, including telling me how to vote.
          ———————–

          “The bottomline though is that Sobrepeña laughed his way to the bank. He wanted to buy the additional equipment since that would extend his gravy train for several years with the same 15% sovereign guaranteed rate of return.”

          Thank you for agreeing with what the article was basically saying.

          ———————-

          “There was a mention of PH-Trams, but with the caveat that “this article does not go into the contentious issues regarding Vitangcol and PH Trams/APT Global. Those are a separate matter.” This statement just made this whole article as useless as toilet paper in trying to explain why the MRT’s maintenance is so screwed up”

          This article stayed true to the subject matter on the legal mess arising from the BOT contract. It specifically avoided going into the contentious aspects relating to maintenance because that would be worthy of another blog. Perhaps you can write on that, it would make interesting reading. You seemed to have lots of expertise in that. Perhaps your article would help everyone concerned to clean up the toilet where the maintenance ended up.

          ——————————-

          • Wilfredo G. Villanueva says:

            Is it purely coincidence that two foreigners are defending Mar Roxas vis a vis MRT? While most of us are busy demolishing every gain of Daang Matuwid, Joe America and Chempo have taken it upon themselves to autopsy the project, to support Mar Roxas’s position that it will take legislative action to untangle the mess the Sumitomo connection has done to a centerpiece program dating back to earlier administration. Thank you, foreigners at issue, for doing what natives should have done a long time ago.

          • MontyWest says:

            @joeamerica I’m unfamiliar with how the reply procedures in this forum. I can’t reply directly to some of your posts. Have you blocked me or something? In any case you called me out for insulting @chempo. Please cite the instance because I did no such thing, except of course in my toilet paper remark. But that was in reference to its connection to the MRT maintenance, not to his description of the complexity of the corporate structure of the MRT. The work was well researched but it does not offer a credible explanation why the MRT maintenance failed.

            You’ve also found a favorite word in demolition. I criticize therefore I demolish. Sounds too much like Jojo Binay to me. By the way I am not connected at all with the campaign of GP. I know a lot of people in her circle, especially her Assumption friends, but I haven’t talked to any of them in several years. Stop insinuating that I have an active role in her campaign.

            @Chempo

            The FVR administration did a lot of awful deals, but worse than the MRT were the Power Purchase Agreements. That raised our power rates to one of the highest in Asia, effectively killing our manufacturing sector.

            There’s too much linear thought in some arguments you present. Suing Sumitomo and gaining control of the MRTC are 2 distinct events. Why do they have to be tied together? I don’t advocate suing Sumitomo of course, but Mar seems to have found fault in that contract. Maybe Mar can enlighten us on why APT was a better choice than Sumitomo.

            As for Boo et al, Joe says that these journalist and myself have an agenda. They have written countless times regarding the MRT fiasco. I’m just saying that Roxas should just man up and face his accusers and prove them wrong. If Roxas has said anything substantial in his defense that I’ve missed, then maybe it’s time to bring it out. Details please and no general denials a la Binay.

            Interesting to note that in the last debate, GP called out Mar for his role in the Zamboanga siege as well as the MRT mess. Mar immediately defended his role in Zamboanga, which I thought he handled quite capably. However he remained eerily silent on the MRT. Why is that always the case?

            Lastly, I want that Grand Central Station that Mar promised? What happened to that project? Isn’t it interesting that in the past six years, not a single kilometer of railway has been completed? Here we are suffering through traffic as our daily penitence with our only consolation are the words of our dear Jun Abaya – “Traffic is not fatal!”

            • Joe America says:

              Your intent appears to me to be, not to understand MRT, but to lay blame to Mar Roxas for it. I consider that a demolition effort. I could use other words, disingenuous being one. I don’t think you are being honest when you claim you are just a guy with a gripe about MRT. As for your attitude, go back and read again your own remarks and the reactions of readers to it. Condescending. “Data dump” is how you described Chempo’s piece. Others call it brilliant and comprehensive and very helpful. Frankly, I don’t have any interest in discussing anything with you. I want to converse with people who are respectful and straight with me.

              • MontyWest says:

                Oh you mean sycophants. Nope never been one and won’t start now. Yes @champos article is insightful and detailed, but it still doesn’t explain the problem of the MRT maintenance. I called it a data dump because it was long and detailed, but again did not delve into the maintenance issues. If you find that insulting, find out the meaning of the word first then grow a thicker skin. The article answers why the Republic got screwed in the MRT deal, and what government did to mitigate that problem. See how different that is from answering the question of why the MRT continuously stops in its tracks or why one of the trains wanted to go straight to MoA.

                Again I repeat that I have no association with any political party in any way, shape or form. If you can’t believe that, then so be it. As previously stated, I knew GP when she was in High School, but haven’t seen or talked to her in 30 odd years. I did not come to this forum on my accord, as you can see I was copy pasted. I also see that the tolerance level for non Mar supporters is very low. In a month’s time, everything will be decided. We will all have to accept the people’s will, except of course if Binay wins.

              • Joe America says:

                Haha. You tell me to grow a thicker skin as you complain of the way of this blog. The irony fairly explodes.

              • Joe America says:

                So he has two charges against him. Extortion and rigged bidding.

            • chempo says:

              Killing Mar is not the subject matter of my article, so I’ll pass unrelated issues if you don’t mind.

              • karlgarcia says:

                Killing Mar’s reputation,principles,conviction…..

              • Bill in Oz says:

                But who appointed Vitangcol ? I have a feeling it was Aquino’s mate Abaya..And I wonder re there links between Abaya, Vitangcol & Roxas ? But correct me if I am wrong….

              • it was during Mar’s stint at DOTC. the question more relevant is who recommended him. The heads seldom can vet everyone personally usually it is a quick browse of the CV, a little chat about principles and working styles and a long chat with someone who knows the recommended person well that also is known well by the dept head

                http://newsinfo.inquirer.net/122737/ppp-chief-tapped-to-head-mrt-corp

              • Joe America says:

                Objection. Speculative.

              • chempo says:

                I believe Vitangcol is insider. That does not mean he was put there to do shenanigans. How many of us have been played out by friends. But yest, it does put LP admin in bad light.

                Commenter MontyWest was insisting why does Mar not answer all those accusations. One thing I have noticed during my years here is that most politicians go for drama. But Mar never does that. I think he understands that whatever he says is’nt going to make any difference to people like MontyWest. He does not defend with public drama, but where appropriate in other circumstances, he puts forward a coherent explanation.

              • Joe America says:

                In that regard, he is a lot like President Aquino, who holds his own counsel rather than responding to tabloid drama. Sometimes it hurts him popularly . . . but I suspect one or two people appreciate it. I know I admire that kind of strength of character.

            • eag97a says:

              I just have to say that it’s all and good trying to apportion blame in this mess but I have to say that government contracts like this are very intricate and I like @chempo approach of laying out the financial, contractual/legal, some of the technical issues and history of the project. You have to note even US govt projects suffer a lot of the same symptoms of this particular project (e.g. Defense projects like the F-35 acquisition) and trying to blame all of it against one presidential candidate is very simplistic when we are discussing a project that has lasted across 5 administrations and the last 2 administrations working like crazy to take control and fix the mess. Finally I have to unequivocally support @chempo and the administration in buying out the bonds held by the “vulture” funds specially Elliot Capital, those guys are ruthless (Argentina issue) and even if its bitter and we paid thru the nose its better that they get out of the picture.

  46. Bill in Oz says:

    @Chempo & Joe and Giancarlo…
    Here is what the Enquirer published 4 years ago about Vitangcol :
    “The chief of the administration’s Public Private Partnership (PPP) Center has been appointed head of the Metro Rail Transit Corp. (MRTC), operator of the train line along Epifanio de los Santos Avenue (Edsa).

    PPP Center Director Al Vitangcol III was one of several new officials appointed to key posts at agencies attached to the Department of Transportation of Communications (DOTC).

    “These latest appointments are in line with the department’s goal of infusing new blood and recruiting highly qualified executives to resolve the myriad policy and operational issues in our transport systems,” Transport Secretary Manuel Roxas II said.
    ADVERTISEMENT

    “They will be part of the core team in our line agencies that will help provide the people a convenient, safe and reliable mode of transport,” he said.

    At the PPP center, Vitangcol used to review, initiate and recommend plans and policies related to privately-funded government projects, in consultation with relevant oversight and implementation agencies, and the private sector.

    With an in-depth knowledge of information systems and experience working with large international and local banks as an information technology (IT) specialist, Vitangcol led the PPP team that conceptualized, designed and implemented Land Transportation Office’s (LTO) information system.

    With Stradcom Corp.’s contract expiring, the government plans to bid out this year LTO’s contract to a new IT service provider.

    Roxas said Vitangcol’s experience as a lawyer and a civil engineer would help in resolving the legal and technical issues hounding the MRT line.

    “The MRT is one of the major and fastest transport means for people traveling daily from the south to the northern part of the metropolis,” Vitangcol said.

    “We intend to maintain a reliable system to prevent the trains from bogging down and disrupting operations, a mandate of the DOTC in serving the people with a convenient transport mode,” he said”

    So Roxas asked Aquino to make this appointment. It’s clear that he has been betrayed big time. Has Roxas made any comment yet ? Has Aquino ? But note this Vitangcol was in charge of the Public Private partnership Center. I wonder how long he was there? And what else that he did in his time in that capacity that needs to be investigated ?

    • chempo says:

      I don’t know about other stuff of Vitangcol but I know there was a big time screw up of LTO computerisation. Another big scandal there, but I’m not saying Vitangcol is involved — I just dont know.

      Goes something like this. Stratcom was provider of system services at LTO. Under Sec Torres (deceased recently) LTO never paid Stratcom for years. Tried to run out Stratcom by non payment, one group of directors together with Torres physically tried to take over Stratcom — there were armed guards charging into the ofc (never heard of this kind of corporate take over in the world, only in Phils) but they failed. Stratcom stayed on despite contract running out because LTO new service provider not ready.Don’t know the what’s the status, but Aquino never act against Torres. She got a suspension later for another misdemeanour — she was seen at a casino (govt officials not allowed to go casino). In Philippines, appearing in a casino is a more serious offence than barging into a company with armed guards !.

      • Bill in Oz says:

        Back in 2014 the Enquirer ran an article quoting Aquino on Vitangcol
        Reportedly he sad : ” “He looks vaguely familiar but I don’t really know him that well,” he added, saying Vitangcol was one of those who got appointed because he let his secretaries “decide as to whom they want to work with.”

        So we are back to Roxas & Abaya..The curious thing is that someone named De Vera acting for Vitangco; tried to get a Czech train company to pay $30 million in exchange for getting the contract..De Vera was a Liberal party member. And left with his family for the USA when news of this became public I wonder if there has been any attempt to extradite De Vera from the USA ?

        • chempo says:

          Has anybody here seen
          Wilson de Vera
          He tried to bribe Czech ambassador
          And now he is gone

          Has anybody here seen
          Gerry Limlingan
          He wheeled and dealed for Binay
          Everybody’s looking and he is gone.

          There is a travel agency dedicated to serving these crooks.

          • Are the travel agents UP-trained?

            Yesterday was a clear day over here in Munich.

            Today is not a clear day and I cannot see MRP even in my blog.

          • MontyWest says:

            I knew Gerry Limlingan’s kid. Maybe I can ask her where her dad’s been hiding. They really should offer a reward for his head.

            You’ve noticed through your years here that there’s too much drama in politics? Have you been watching the American Presidential debates? And that isn’t a circus? You have to understand that politics by nature is adversarial. That’s why the SOP line “politika lang yan” is used when candidates are faced with tough issues. If a candidate like Roxas can’t get his message across, what good would he be as a leader? In any case it looks like he won’t win. GP is closest in ideology to Mar, so I’m hoping that when certain loss sets in, Mar’s supporters would make the more prudent choice.

            Pnoy screwed up in Mamasapano and may yet be criminally liable for what happened there, yet Joe supports his stand of “keeping his own counsel” instead of engaging in tabloid drama. What Pnoy was hoping for is that the public would eventually forget the sins of the past, as we always have. I want immediate accountability. Swift justice should reign, whether it be for Aquino, Marcos or Binay. Unlike the other two though, I think Pnoy really meant well and had no malicious intent in the Mamasapano incident. He just screwed up and the Bart Simpson defense of ” I didn’t do it” just won’t fly. I have said this before, Congress should have censured Pnoy for his role in Mamasapano. That for me would have been enough.

            • chempo says:

              Gerry is in hiding for his own reasons. We are not here to persecute him. Just want the truth from him. Your contribution would be most enlightening.

              Monty, why is it that when we say something we can’t just stick to it for discussion but always the need to digress to something else. Is there any American circus? Americans have always been the most noisy, that’s their robust system. I’m not going to discuss that cos I don’t know them well. My comments on Phils is not political, but in general. The Economist or the Guardian put it down well when they say Phils is event rich.

              I understand your take on Pnoy re Mamasapano. I too think Pnoy screwed up in some ways, but for reasons different from yours. I think his PR after the even was crewed, and he was wrong to rely on a suspended Purisima. You and I can talk till the cow comes home, but if you were privy to the tracking of the terrorist and you understand full well Filipinos leak vital info once too very often, what would you do? See, talking is cheap, but making a decision is something else. Regarding the execution of the task, the ground commander has full responsibility, period. I was in military before, I understand this sort of concept. Do you think when Obama and Hillary Clinton and all those guys who huddled around a monitor screen watching the raid on Osama bin Laden’s hideout in Pakistan would have chipped in as the action unfolded before their eyes? Sure the action went OK, but had something gone wrong, do you think Obama would have picked up the phone to give instructions to his commanders? The rule is simply this : Just like a ship’s captain has full authority for lots of stuff once he is out in the seas, a task commander bears all responsibility for all tactical decisions he makes on the ground. Anything else is unrealistic. All those who pander to crucify Pnoy on tactical errors should have a chance to live one day in his shoes.

            • Joe America says:

              Congress was intelligent enough to know that a commander in chief without any authority, who will be second-guessed on any battlefield death, weakens the nation. Politics usually stops at two walls: defense and foreign affairs, both the purview of the President with authorities granted to run those two affairs of state without dragging them into the political debate that you recognize is a normal part of democracy everywhere.

              • Joe America says:

                I would add that Grace Poe proved too green to recognize either wall, or too opportunistic to abide by the well-known separation of legislative and executive affairs.

              • MontyWest says:

                Umm Iran-Contra Affair?

              • Joe America says:

                Hey, spies and skullduggery have been around since Pontius Pilate did his deeds. That is not the point. The point is that a President cannot act forthrightly to defend the nation or manage foreign affairs if his hands are tied or the process is bogged down by super-committee (the Senate) butting in. There will always be arguments and infringements. They are a part of checks and balances. But the protocols exist for a reason . . . as the SC recognized in the EDCA decision. Senator Poe . . . to me . . . displays a kind of righteous indignation even when she is wrong. The exercise to try to crucify the President for a battlefield loss weakened the nation’s defense. China is still laughing about it.

              • MontyWest says:

                Clarication, did you mean the US Congress? Your being American confuses me on your references. I understood it as the US Congress recognizes two walls. I countered with the Iran-Contra and how the US Congress tackled that affair, which is similar to the Mamasapano investigation. Then you rambled on. Walls of infallibility seems to be what you’re alluding to, but acts of stupidity, like not including the AFP and PNP Chiefs in the meeting to plan Mamasapano breaks my these walls. That is why the BOI called out PNOY for breaking the Chain of Command.

                GP handled the investigation of Mamasapano well and her Senate report is proof that she won’t bow down to pressure. True she is green in foreign policy, especially how we’ll handle China, but Pnoy was much more clueless than GP when he won the Presidency.

              • Joe America says:

                “Chain of command” is a military concept. As then DOJ Secretary De Lima explained at the committee meeting, PNP is a civil organization, and the President has executive rights. You can cut the words any way you wish for political gain, but it means nothing under today’s laws. The rights and prerogatives of Executive are stated in both the US and Philippine Constitutions. Again, you can pose the political arguments to suit your whim, but yours is an opinion, whereas the SC’s is a ruling.

                When you slide into derogative expressions (my “rambling”), I know you know that you are at the end of your rational arguments.

                The “Poe Report” was never presented to plenary and remains a rough draft. Mainly because it is flawed and incomplete. That Poe allowed Enrile to take the Senate floor in a wasted attempt to extract vengeance on President Aquino is another example of her daft executive skill. She should have vetted Enrile’s “evidence”, but did not have the power or courage or intelligence to do that. It was a giant egg-on-the face moment she quickly put behind her.

                “Pnoy was much more clueless than GP when he won the Presidency.” Hahahaha. President Aquino lived under his mother’s term, still carries bullets from a coup attempt, knew all the main players at the time and the way government works. He spent 9 years in the House of Representatives (a portion as Deputy Speaker), and three years in the Senate where he gained passage of several bills. Meanwhile, Grace Poe was in the US teaching school and living a soft life. President Aquino appointed her to run a movie ratings board. Then she won election to the Senate during which term she has done nothing notable other than strike popular positions.

              • MontyWest says:

                Guingona already refuted de Lima with reference to Ramos EO 226. Even the author himself has said that his EO institutionalizes the Chain of Command in the PNP. What SC ruling are you talking about? You cite no reference as is your style.

                Why did I say you rambled, simply because you stated that there are 2 walls the US? Congress will never second guess the President on, that is defense and foreign policy. I mentioned the Iran-Contra investigations which investigated Reagan’s involvement, similar to how our Senate investigated Aquino’s involvement in Mamasapano. You never reacted to the similarities in these 2 cases because you were already tied to your 2 walls theory. And so you rambled and now I am spoon feeding.

              • Wouldn’t a standing president have more authority than an executive order of the previous president?

                I am a non lawyer so the logic is iffy to me.

              • Joe America says:

                Two walls is not a theory, but a practice that has importance that you and Senator Poe either don’t comprehend or don’t want to. When (if) she is actually leading Executive, it will hit her like a hammer upside the head when some upstart in Congress inserts himself into her purview of authority. I’m not inspired to search for the reference sources you seek as I recognize when I am dealing with a peddler busy selling pigs ears whilst calling them purses. Peddlers are inclined to weasel out of arguments with nonsense, obfuscation and name-calling, so the idea that a sincere discussion can be held is itself a part of the nonsense.

              • Joe America says:

                Hahahaha, and I have a suggestion about what you can do with your spoon.

              • Joe America says:

                I suppose this is the operative section of the Ramos EO:

                SECTION 1. Neglect of Duty Under the Doctrine of “Command Responsibility”. Any government official or supervisor, or officer of the Philippine National Police or that of any other law enforcement agency shall be held accountable for “Neglect of Duty” under the doctrine of “command responsibility” if he has knowledge that a crime or offense shall be committed, is being committed, or has been committed by his subordinates, or by others within his area of responsibility and, despite such knowledge, he did not take preventive or corrective action either before, during, or immediately after its commission.

                What was the crime of Mamasapano, and what was the knowledge that President Aquino had of the crime, and what preventative or corrective action do you believe should have been taken by the President that was not taken?

              • “When (if) she is actually leading Executive, it will hit her like a hammer upside the head when some upstart in Congress inserts himself into her purview of authority.”

                I wonder how that hammer will hit Duterte, who wants to use police and military to “legally kill”.

              • Joe America says:

                A superb question.

              • MontyWest says:

                Well if you choose to wallow in your ignorance of the Iran-Contra, that is your prerogative. Your “wall theory” has been refuted.

                Yes we can use a teaspoon to pierce your onion skin, no need for knives there I guess.

                Crime you ask. You so funny Joe, you need to be shown good time. The Ombudsman has filed a case against Purisima and Napeñas. A crime has been committed. Whilst the President enjoys immunity now, the VACC has already promised to file a case. Morales is Pnoy’s rear guard to protect his ass as he steps down, similar to what Corona was supposed to be for Arroyo.

              • MontyWest says:

                Mmmm sisig.

            • chempo says:

              “GP is closest in ideology to Mar…”

              You made me laugh, Monty. No I’m not laughing at you, but by that statement.
              Philippines political parties, and all politicians, HAVE NO IDEALOGIES. The only ideology they have is ….let’s scram over to the party of the candidate more likely to win.

              • MontyWest says:

                Gerry Limlingan should be crucified along with his benefactor. I remembered a Jesuit theology teacher of mine who said plunderers were worst than murderers because social sins have a much bigger impact on society than heinous crimes. He actually advocated the death penalty for plunderers which was quite odd given the position of the Church on those matters. I support that view. We have been to lenient on those who have abused us. Enough of this.

                If Daang Matuwid is an ideology, then that is what Mar and GP are supposed to share. As broad as that is, good governance is considered ideology here since a plunderer and an executioner are running, so that’s what sets them a bit apart.

                As for Mamasapano, I will take the word of the PNP Board of Inquiry report that said that Pnoy broke the Chain of Command. The defense that the PNP has no Chain of Command or that the President being at the helm of government doesn’t need to follow such is a weak and self-serving argument. Pnoy was definitely apprehensive of the conclusion of the BOI report, as it could be used as evidence for his post-Malacañang case, and there will definitely be one since several groups have vowed to run after him. For me, an honest apology is enough. Admitting he made a mistake trusting Purisima and not bringing in the PNP and AFP Chiefs was a serious error in judgment.

                By the way, the reference to the US debates is on topic, considering your reference to political drama. I just wanted to emphasize that we are not unique in this respect. Every vibrant democracy that has such polarizing personalities involved will always have drama. It is not bad as it tends to highlight what is wrong here. Without the Senate BRSC, would we have seen the scale of Binay’s rapacity? Drama pulls people to action and makes them more involved in the issues that confront them. We need this passion.

              • chempo says:

                Para 1 – agreed
                Para 2 – agreed
                Para 3 – I disagree. Difference of opinion.Any future case against him re Mamasapano will never prosper.
                Para 4 – Disagree. We don’t need drama. We need cool heads and thinking calm minds.

              • eag97a says:

                In some ways your observation is spot on, I’m reminded of the way Roman senators before used to be since they too have no political parties (boni and popularis notwithstanding). It will take a better person than me though to argue that strong political party systems are better than weak party systems.

              • karlgarcia says:

                Not certfying a bill as urgent is not tantamount to a threat to veto.I often wonder,if a bill only reaches the secnd or third reading or if majority went AWOL during the plenary votes,it becomes the presdent’s fault.Call me naiive,or anything,but it is not always the president’s fault.

            • eag97a says:

              I would say that politics is the art of compromise and negotiation, a bit similar to business dealings and market transactions but statesmanship and patriotism are at a higher level and must impose its necessary values over the grime of petty politics and the greed of business. Naive? Perhaps but worth thinking about.

              • MontyWest says:

                That is the ideal, but when you’re in the Philippine setting where maybe 90% of politicians are corrupt and a lot being part of entrenched dynasties, the art is trying to get the job done with the least possible grease. Pnoy allowed DAP to happen, knowing full well that Congress would abuse these funds for their personal gain, but he needed Corona out.

                I’ve heard stories that when he was a legislator, Pnoy never took kickbacks from contractors even when offered. Good for him, but this made him well aware of how his colleagues operated. Pnoy’s DAP turned a blind eye to the obvious corruption in the system just to get the job done.

                With Pnoy’s high popularity ratings, he should have spent all his political capital pushing both FOI and the Anti-Dynasty bills. Tuwid na Daan isn’t enough because it will have no legs in succeeding administrations without these 2 laws supporting it. It was a wasted opportunity.

              • Joe America says:

                Let me set the scene for you, Monty. You are the president coming into office in 2010. You have your staff go through the list of projects on the drawing board that will cost P100 million or more. They report that a good number are tainted with corruption and favor and some are not the highest and best use (like moving silt from one part of the lake and dumping it on the other). You are faced with the following choices: (1) cancel the dubious projects and watch the economy sag, (2) continue with corrupt and wasteful spending, (3) re-allocate the money to highest and best use, as expediently as possible.

                Which do you choose, and why? Whenever I’ve asked the question, I either receive no answer or the same answer, every time.

              • Joe America says:

                You have a tendency to dismiss information that shows you are wrong, dissing the rating agencies that prove the point that the Aquino Administration, that you persist in criticizing, has done valuable work in stabilizing and growing the economy. Why is it so impossible to state that, yes, the Aquino Administration has been good for the Philippines in that regard, and “this is how my candidate will build on the successes and shore up the weaknesses?” Why the failure to recognize and tarnish people who have done good work for your nation? I simply don’t get it. Why throw mud on the successes of a nation that has lived so long in the mud. It’s like people don’t want it any other way. The orphan nation, always working to prove that it is worthless. We outsiders fairly scream in Filipino faces, you are doing great! And you turn away, find sores to pick, wallow in the mire. Why don’t you help pick the nation up, and lift people up?

              • chempo says:

                Wikipedia: “….a political ideology is a certain ethical set of ideals, principles, doctrines, myths or symbols of a social movement, institution, class, and/or large group that explains how society should work, and offers some political and cultural blueprint for a certain social order.”

                Yes the art of politics is compromise and negotiation most times. But the parties need to be identified by it’s set of beliefs on the political spectrum and politicians belonging to that party stand for those beliefs. The Liberal Party has nothing to do with the political meaning of liberal as in the US or UK. It’s just a name. And what the heck does UNA stand for? Political parties in Philippines are just franchises. Actually the only one who has an ideology is the NPA.

                @ Monty — can you please highlight which DAP disbursement was abused?

                FOI and Anti-Dynasy bills — I agree anti-dynasty needs priority, FOI not so much. However it is naive to hold the view that a President has persuasive power over Philippines legislature. Hands up anyone who thinks the anti-dynasty bill can ever be passed in your lifetime.

              • chempo says:

                And might I add the party list system in Philippines is a joke.

              • MontyWest says:

                Joe I just don’t like licking anybody’s ass. If GP were to make serious mistakes, I will be the first in line to criticize her. You have my word on that. What you don’t seem to understand is that my loyalty is to the good of the Republic, not to any person or party. You seriously can’t seem to get that.

                As to the DAP, obviously the reallocation of funds to better projects was a good thing. That is just common sense. But why use DAP to augment the Pork Barrel (PB)? Pnoy and Abad came from Congress and knew how these PB funds were being abused. Simple answer is they needed the PB DAP for the impeachment of both Merceditas and Corona. Both were great initiatives, but the method is obviously suspect. Remember that the 3 stooges were charged based on COA’s pre-PNoy report. If the 2010-2013 PB reports were used, then many more legislators would be in jail, BBM among them. Why so slow on the Aquino term PB cases?

                Joe put this through your thick skull, it is not the DAP that was the problem, it was the Pork Barrel allocation. I remember when the Napoles scandal broke out, Pnoy came out to defend the PB system. Why did he do that? He just had too many allies in Congress he had to please, even if he knew full well that those PB funds were being thrown into a bottomless pit of corruption. Abad and Pnoy are obviously not legally responsible for what happened with the PB funds, but they should have stopped the PB system immediately upon taking office. Everyone knew that the GMA administration used it for its survival.

                Chempo, Pnoy never actively fought for either anti-dynasty or FOI bills. Tuwid na Daan will not be institutionalized without these 2 bills, regardless of who’s elected. Pnoy should have come out on TV and said that he would actively persuade Congress to pass both bills. Spend his political capital based on his high ratings. What’s the point of those ratings if he can’t use it for the greater good? Doesn’t matter if he failed, just as long as he showed that he was fighting on the side of the just.

              • Joe America says:

                @MontyWest,

                I find your method of discussion rude and crude, and a step below the respectful discourse typically found at this blog. Try to elevate it, eh. It is taxing not to respond in kind.

                Kindly provide the source of your statement that DAP was used to augment the Pork Barrel, and that DAP was used for impeachment cases. Those are very serious charges.

                So you believe that the Philippines would be better off under Ombudsman Gutierrez and Chief Justice Corona? In your role as hypothetical president you would have left them in office?

                You say that you are loyal to the Republic. May be, but you come off as an obnoxious twerp with the listening skills of a brick, busy selling pig’s ears. As I said, you might want to reconsider your style.

              • MontyWest says:

                What’s to elevate if you called me a twerp? Am fine with that cuz my skin ain’t made of paper. Yeah don’t you get tired of lecturing me on manners? Every. Single. Time. Thanks grandma.

                Yes I am not your usual visitor in this blog since as I said ealier, I don’t like licking ass and vice versa. You must have blown a wad when Pnoy mentioned you in his SONA. There porn reference if you must. Nobody’s been reading our repartee anyway since this post began last January and many other topics have superceded it.

                Now to the details. As I already wrote earlier, Corona and Merceditas needed to go as the last vestiges of Arroyo’s rear guard. I have friends who have been affected by Corona’s reign as CJ, so no love lost there. My previous statement was clear on that. I said it was a great initiative. Clear now?

                As to the DAP PB, you really should read up on current events. The Inquirer, Rappler and Karen Davila are good sources to start with. Abad already confirmed that DAP funds went into augmenting the PB, as was exposed by Jinggoy in his speech before he went to jail. This was headline news, so why are you so unaware of this? Hmmm maybe time to go to a neuro to get a check-up heh? As to its purpose, that much is obvious given what happened during GMA’s time. Congress has always been for sale, as was the case during the impeachment of GMA, Mercy and Corona. That is JDV’s legacy. That is Philippine reality.

                What are you saying about being just critical without offering solutions? Haven’t I advocated raising car registration fees and/or Metro Manila gas prices to subsidize more mass transit systems.I just said that Pnoy should fight for the FOI and anti-dynasty bills. If you think that’s a lost cause, it really doesn’t matter. Raise the issue, get the populace involved and shame the legislators to pass the law. We have a distorted democracy in the PH, and this is what we need to do to get it on the right track. Speaking softly with gentility won’t get the job done.

              • Joe America says:

                Monty, I really don’t care for snide people who at their core are just not very nice. Kindly take your commentary elsewhere.

              • chempo says:

                SONA 2015: President Aquino calls for passage of anti-dynasty law.
                You want the President to be seen doing his part, I guess SONA is big enough an ocassion.
                http://cnnphilippines.com/news/2015/07/27/aquino-anti-dynasty-law-2015.html

                Rappler : Aquino on FOI bill passage: Look at Congress not me
                There were issues that need to be addressed. The Admin felt some things were missing and passed the buck back to Congress to address. Guess where the buck stopped.
                Remember the AMLA — things were left out when you are haphazard in legislation.
                Remember your constitution — things were haphazard regarding the issue of natural born citizens, shit follows.
                http://www.rappler.com/nation/67494-aquino-foi-bill

                Let’s put a stop to this line of argument which has nothing to do with the MRT problems.
                Peace man.

  47. Bill in Oz says:

    @Chempo..I read the Rappler report on FOI.etc. .I am perplexed at what appears to be Aquinos naivity. Why not certify it as urgent ? If a criminal gets elected it will definitely be urgent. I am similarly perplexed at him not certifying the anti-dynasty bill as urgent..
    Political change in most countries usually happens gradually with consensus..But in these instances he seems to be doing a ” My way or the Highway ” strategy…

    • The only true consensus-builder I see at the moment is Leni Robredo. Over here it is “Angie” – which is what people used to call her when she was still underestimated and not yet Chancellor.

    • Joe America says:

      My view on President Aquino is that he is far from naive, but is (as Raissa Robles wrote) a skilled pool player. Calculating, stubborn or determined, depending on one’s view of an issue, and not inclined to bend to the whims of the populist press. My guess is he does not declare FOI a matter of urgency because he does not think it is urgent. He has put in place a transparency program that makes financial information readily available (visit the DBM web site, or BSP sometime). No one is clamoring for information about anything (the press is not journalistic or investigative). He believes Executive should have the right to conduct meetings (brainstorming ideas) and make decisions that are in the interest of National Security that ought to remain out of the public’s eye. Anti-dynasty is a non-starter for a lot of legislators, governors and mayors and I suspect he chooses not to use what political capital he has for that program.

      • Bill in Oz says:

        Well Joe..I think I disagree here..The anti-dynasty issue is important enough to be in the constitution of 1987.. It’s now 2016…The delay is telling me that it is urgent…
        On FOI I agree with your comments about the current transparency.. But it is not legislated. I also agree on the need for what we Aussies call ‘cabinet confidentiality’ being exempt from FOI. That’s normal. But FOI is still needed to ensure future regime transparency

    • chempo says:

      The status of ‘urgency’ for a bill is not dictated by the president, it’s Congrss’ prerogative. A president can shout lound and clear, it’s still the Lower House’s decision to make, and they do so based on their own criteria, possibly means, own interests.

      House of Reps – House Rules:
      Section 52. Urgent Bills and Resolutions. The Committee on Rules, through the Majority Leader, may, at any time declare a bill or resolution urgent. It shall prepare a timetable which shall fix the date when the bill or resolution must be reported by the committee concerned, the number of days or hours to be allotted for the consideration of the bill or resolution in plenary session, and the date and hour debate must be concluded and final vote taken.

      • Joe America says:

        But, in practice, the President does communicate to the Legislature the bills he considers urgent. When the legislators are mostly from his party (as now), then that list becomes almost a marching order. Now, under the Constitution, you are correct. But in practice, the two branches of government coordinate. It is done transparently (at least under President Aquino) and the President’s list is widely reported. To me, it is a very constructive process.

        • chempo says:

          Yes of course, party control of Congress is important for a President and most members will tow the party line come voting time. Pnoy is in a good position as LP and allies form the majority in Congress. However the call for urgency is made by the Committee on Rules which is made up of 30 members, we don’t know who these are and their affiliations. In any case, they have certain criteria to check off a pending bill as urgent. Certainly, anti-dynasty bill will never be one of them.

  48. chempo says:

    Lance’s blog now showing —“Going gentle into the goodnight” — is Dylan Thomas’ poem on raging against Death. Still on the subject of death, this is an out of topic in Lance’s blog so I’m posting here.

    New admin is boasting of getting increased trains within 100 days, but no one is giving credit to the previous admin for the work done so far.

    But before giving credit, I have very important caveat to the public.

    Concern was raised by interested parties that the DOTC was getting the coaches from a company with no prior experience. The company was indicated as Dalian Locomotive & Rolling Stock Co Ltd. Is the full name of this company CNR Dalian Locomotive & Rolling Stock Co Ltd? I think so, but I’m not 100% sure.

    The CNR group has much experience in China. However, here’s a scary story that you guys need to know of.

    Singapore MRT purchased some 36 coashes from a Japan-China consortium (Kawasaki-Sifang). 26 out of the 36 trains had problems (cracks on some body parts). Spore sent 26 trains back to China for repairs. They did it quietly. But the story broke in HK media and Spore MRT is getting hell from the public. The Spore MRT, China and Japan parties down-played it, that it’s not life threatening, and that repairs will be using Japanese parts.

    Now it seems the cracks were due to the alluminium alloy mix. It’s not simple some parts giving problem. It’s the damn materials itself. Material weakness problem often will surface years later. In Spore we have LRT trains (LRT is lighter system than our MRT) and these LRT trains are now showing problems in the undercarriage metals. The metal weaknesses are now showing up after 16 years. The new 36 MRT trains, and existing LRT trains, came from Sifang.

    In 2014 CSR Sifang made a bid for a subway train contract for Boston. The lost when Massachusetts transport officials ruled that the technical, manufacturing and quality assurance components of its bid were “unacceptable”. That contract was won by a Chinese firm CNR (I think stands for China National Railway)

    Here’s the rub. Last year CNR and CSR merged to form CRRC, (China Railway Rolling Stock Corp). CNR Dalian Locomotive & Rolling Stock Co Ltd is a subsidiary of CRRC.

    So guys, better get the metals analysed and tested..

  49. a distant observer says:

    I just stumbled upon this post, and I am impressed by the amount of information it contains. Very well done!

Trackbacks
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  1. […] On a clear day you can see the MRT […]

  2. […] It is not true that “MRT ‘mistakes’ started in Roxas’ DOTC stint”. This started long before the Aquino administration. Kat Usita, a former staff member of DOTC, has written an extensive piece detailing the source of the “MRT mistakes”. A more comprehensive study, with data admittedly taken on “a best efforts basis”, has been published in the SONA-cited “Society of Honor” blog. […]

  3. […] They aren’t interested in the facts, so well laid out by author chempo in his article “On a clear day, you can see the MRT“.  They only see the lines they are standing in. Because they can’t have Abaya’s […]



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