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Tuesday, July 16, 2024

Closing the loop

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“What closing the loop will do is to open up a window of opportunity for the public to enjoy convenient travel via the light rail network in Metro Manila”

IMAGINE this: Traffic congestion along EDSA particularly during the rush hours reduced by one-fourth, allowing motorists and commuters to go to work or return home at a faster pace than before.

That’s the goal of the integrated operations of the MRT-3 and LRT-1, which we wrote about earlier.

We’re referring to the unsolicited proposal (USP) by the joint venture of Metro Pacific Investment Corporation and the Japanese conglomerate Sumitomo for the rehabilitation, operation and maintenance of MRT-3 and its integration with the LRT-1.

In effect, this will ‘close the loop’ between the two light rail systems.

The USP has already been approved by the Public-Private Partnership (PPP) Program and is now awaiting the green light from the Department of Transportation.

The joint venture seeks to solve the problems that plagued MRT-3 in the past and greatly inconvenienced the riding public.

The aging system is approaching the end of its design life and, although the recent general overhaul/ rehabilitation may have given a life extension of five years, maintenance will become the primary concern in the years ahead.

The joint venture thus wants to implement a comprehensive capital expenditure and a systems plan to address immediate, medium and long-term needs and service objectives of the aging infrastructure.

This will be complemented by the efficient execution of the appropriate maintenance regimen.

The plan is to implement what they call Through Train Operations, which will result in passenger convenience, decrease travel time and travel expense of passengers, and, more importantly, mitigate the traffic congestion along the combined alignment and especially along EDSA.

The MPIC-Sumitomo joint venture will rely on its unequalled technical and institutional knowledge of the MRT 3 system.

Sumitomo had been MRT 3’s contractor and maintenance provider from 2000 to 2012 and current rehabilitation and maintenance provider from 2019 to 2025.

The joint venture’s unsolicited proposal will also bank on Sumitomo’s proven high quality of maintenance as evidenced by superior transport services and continuous passenger growth up to 2012.

It was re-engaged in December 2018 to solve system degradation due to poor maintenance from 2012 to 2017. Its rehabilitation work for MRT 3 proceeded without delay even during the COVID period.

What happened was that MRT 3’s operations had declined from its reliance on 20 trains during its peak in early 2012 to an average of 11.6 trains in Jan. 2018, and in the length of time from a trip time of around 30 minutes to 75 minutes.

According to JICA, the precipitous decline in MRT-3 operations after 2014 was primarily caused by the 45 percent reduction in train availability and disruptions in MRT-3 trains alone occurred more than 10 times a week in 2017.

Upon successful rehabilitation, major service interruptions decreased by 94 percent from a high of 81 in 2017 to only 5 incidents in 2021.

Sumitomo is confident of its ability to source spare parts since it was able to secure critical spare parts for the entire MRT-3 system especially for completely knocked down trains, including those from Dalian, China.

The joint venture guarantees its capability to integrate MRT-3 with LRT-1.

As the project proponent, it will assume the full operation and management risks.

It is also uniquely positioned to implement different levels of integration, being majority shareholders of Light Rail Manila Corporation, thus avoiding any commercial and contractual conflicts.

The unsolicited proposal also has shorter lead time to award, in contrast to a solicited tender process that will take a longer to award because DOTr and consultants will need time to conceptualize, conduct a technical due diligence, and accurately define and cost the scope of works.

The USP, on the other hand, will ensure smooth and timely transition by end of the Build-Lease-Transfer in July 2024.

The unsolicited proposal, if accepted, has commercial advantages.

One, it will avoid further extension of the current contract wherein the maintenance fee is pegged at P166 million per month.

Two, it will eliminate the P1.3 billion annual subsidy to MRT-3 at the earliest possible time.

Three, the Philippine government will immediately receive concession payments.

Four, funding for comprehensive system upgrades and/or replacements throughout the concession period will be avoided.

Finally, there will be public competition among qualified proponents.

Competition and best value for the Philippine government in an unsolicited bid process will be assured by the “Swiss challenge” because of the defined qualification criteria.

A solicited tender, on the other hand, may not be able to eliminate bidders without the proper technical and financial competency.

In the end, what closing the loop will do is to open up a window of opportunity for the public to enjoy convenient travel via the light rail network in Metro Manila. (Email: ernhil@yahoo.com)

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