MRT, LRT fare project hit by S. Korea-backed firm

A South Korean-backed firm is crying foul over the government’s alleged refusal to recognize the company’s unsolicited proposal for an automated fare system for Metro Manila’s train lines, submitted months before plans for any such project.

The contract for a P1.72-billion automated fare collection system (AFCS) is currently being bid out by the Department of Transportation and Communications (DOTC), with completion expected by January 2015.

However, Kystek Corp., a locally registered company backed by South Korean money, said it originally proposed an AFCS project to the DOTC in 2011.

This offer was accepted and the firm was named its “original proponent” by the DOTC, then under Secretary Mar Roxas.

Under local procurement laws, a company that is declared an “original proponent” for a major project is entitled to a “Swiss challenge.” This means that to win the project, the original proponent need only match any offer by other companies that is deemed better than the one Kystek submitted.

“We were already declared the original proponent, but we were surprised when the government suddenly announced that they would bid out the project through an open bidding,” Kystek president Kim Young-sung said in an interview.

Kystek, which is backed by South Korea’s leading financial services group Mirae Asset, first expressed its intention to take on the project in a letter to Roxas in September 2011.

In a letter on Oct. 3, 2011, DOTC’s director of procurement, supply and property management Venancio Santidad said Kystek was the “first proponent” to have expressed interest in the said project.

If the firm submits an unsolicited offer on Oct. 23 of that year—exactly one month after the company’s original letter to Roxas—Kystek would be “considered as the preferred bidder of the said project by unsolicited proposal scheme of the BOT (build-operate-transfer) law of the Philippines,” the DOTC’s letter read.

Under its offer, the company said it would spend $20 million to install an automated fare system at the Light Rail Transit and Metro Rail Transit lines. The technology to be employed would allow passengers to have a single ticket that would work on all three lines.

In a letter on Nov. 21, 2011, DOTC’s Santidad confirmed that Kystek was declared the preferred bidder for the project.

According to Kim, the company never received any further letters from the DOTC. The company sent three follow-up letters in April, July, and August of 2012, but never received any reply.

Companies that have expressed interest in the AFCS project include Metro Pacific Investment Corp., SM Prime Holdings Inc., Ayala Corp., DM Consunji, First Metro Investments Corp. and NNT Communications Philippines.