DOTC prepares for MRT contract bidding

The Department of Transportation and Communications has started preparations for the bidding of the operations and maintenance (O&M) contract for the Metro Rail Transit to improve services for the line’s 500,000 daily passengers.

This follows President Aquino’s recent signing of Executive Order No. 126, authorizing the Department of Finance to negotiate with the MRT’s private shareholders for a government buyout.

The buyout will give the government the freedom to develop the MRT line without having to secure the consent of private concessionaires.

Transportation Secretary Joseph Emilio Abaya Jr. said the government’s immediate concern was finding a short-term replacement for the MRT’s current maintenance provider, PH Trams-CB&R.

PH Trams was hired in October last year to provide maintenance services to the MRT on an interim basis. Its six-month contract is expiring next month.

Abaya said the company’s existing contract might no longer be extended. “Our inclination is to bid out the MRT maintenance (contract),” Abaya told reporters yesterday.

Abaya said the new maintenance contract would likely be a short-term arrangement that would eventually be replaced by another contract that would cover both operations and maintenance.

The MRT is currently controlled by MRT Corp., a consortium of private shareholders led by the group of Manuel V. Pangilinan. Under its original agreement with the government, MRTC is assured of a 15-percent return on investment, regardless of how the train line performs commercially.

Because of train fares that were kept artificially low by the previous administration due to social factors, MRT’s revenues have failed to meet targets under the original contract—forcing the government to cover the deficit in the form of subsidies.

Buying out MRTC will mean the end to these subsidies and will also give the government the freedom to expand the MRT line, which has a capacity of 350,000 passengers a day but carries more than 500,000 daily.