The MRT mess and the mentality behind it


Posted on December 03, 2014

Part 1

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.