The failure of the government to turn over the oldest overhead train system in the Philippines to the private sector—as originally intended in the concession agreement—will cost the state roughly P1.8 billion more to rehabilitate the existing, yet dilapidated, facility.
This was the assumption made by a ranking official of Ayala Corp., a partner-investor in Light Rail Manila Corp., who said his group has sought for the disbursement of the amount to help in the modernization of the Light Rail Transit (LRT) Line 1’s existing train stations; improvement of the rails; repair of an old signaling system; and overhaul of the already cannibalized trains of the railway facility.
“We have identified that we need to work on the rolling stock, the rail tracks, rehabilitate the stations; and upgrade the signaling system,” Ayala Corp. Managing Director John Eric T. Francia said in an interview. “We are talking about a major overhaul already, which is where we think the system needs today—not accounting for the growth in passenger traffic. Improving the system will be very tough.”
To put it in context, on a scale of 1 to 10, with 10 as the highest, the government should have delivered at least a 5—according to the concession agreement—but the train operator received a facility that was ranked close to 4.
In total, investments for these undertakings would likely reach P10 billion, with the fraction of the said capital, pegged at P1.8 billion, to be shouldered by the government—no thanks to its failure to deliver what was indicated in the P65-billion contract.
“Because we inherited a system that is below the baseline that was promised in the concession agreement, we need to be compensated for part of that,” he said. “We have determined that amount to be P1.8 billion. We need to make sure that we don’t lose our right. So to err on the side of prudence is to put a number.”
Francia noted that the best way to address this is to sit down with the government to thresh out the specifics of the project.
“The best thing is to sit down and look at what the agreement and the consultants say in terms of the status of the system. We will look at the costs, and, I think, it will take time,” he said.
The government officials were not available for comment. The entire rehabilitation of the existing train line will be finished in a matter of two years. Light Rail Manila holds the concession for the operations, maintenance and the extension of the train line. It signed the agreement with the government in October 2014.
Under the contract, the consortium will operate and maintain the existing line and construct an 11-kilometer extension from the present end-point at Baclaran to the Niog area in Bacoor, Cavite. The company will operate and maintain the oldest train system in the Philippines for 32 years.
A total of eight new stations will be built along this route, which traverses the cities of Parañaque and Las Piñas up to Bacoor, Cavite.
The extension is expected to enhance commercial development around the rail stations.
The government has invited Japanese firms to bid for the contract to supply 120 brand-new train cars for the railway line.
The capacity augmentation program will be funded through a loan extended by the Japan International Cooperation Agency, hence, the procurement will be exclusive to Japanese companies or consortia. These 120 light-rail vehicles will be configured in 30 four-car train sets, to allow the rail line to accommodate up to about 750,000 passengers daily.
“We are creating significant strides in the day-to-day operations. We have already increased capacity by almost 15 percent. We are expecting to increase it some more, to more than 30 percent within the next 12 months or so,” Francia said. He added that his group will have to be vigilant in the makeover of the whole train system before the new trains from Japan arrive. Otherwise, the new light-rail vehicles will likely be damaged by the old tracks and aging stations.