DOTr wins some, loses some

Over the last two years, the Department of Transportation (DOTr) has embarked on a series of steps to improve the lives of the commuters, motorists and the public, in general—crack down on corruption, secure funding for legacy infrastructure projects and even move its headquarters to Clark, Pampanga.

Those moves came under the watch of Transportation Secretary Arthur Tugade, a successful businessman branded early on by his colleagues and friends as an “action man” who would get things done fast.

A third of the way into the Duterte administration, however, the action man image is coming under strain.

Critics have pointed to external politics and policy changes that have delayed certain crucial projects, some of which are part of the government’s P8-trillion “Build, Build, Build” infrastructure program.

Road congestion in Metro Manila and other major urban areas—a concern the DOTr has closely associated itself with—prevails to this day.

The Commission on Audit’s latest report cited the DOTr’s “slow” implementation of over 150 local and foreign-funded projects.

The DOTr, while acknowledging its shortcomings, sought to put a positive face on its daunting tasks.

In a promotional video showing its achievements over the last two years, it highlighted how it had been “changing the headlines,” a reference to its effort to solve transportation problems that plagued past administrations.

Past controversies

It is true that a number of high-profile issues have been resolved.

Gone are the “laglag bala” (bullet planting) scandal and the world’s “worst airport” tag on the Ninoy Aquino International Airport. The DOTr has also rolled out driver’s license cards with five-year validity.

The woes at the Metro Rail Transit Line 3 were another steady source of embarrassing news.

This has eased in recent months as the DOTr increased the number of operating trains to 15 sets today from seven as of February, cutting what used to be almost daily glitches that frequently led to unloading of passengers.

This happened as the DOTr terminated maintenance provider Busan Universal Rail Inc., which was tapped under the previous administration. To restore MRT 3 to its original condition, the DOTr is bringing back its original Japanese contractors under a three-and-a-half-year agreement valued at about P17 billion.

Yet to be settled is the fate of 48 MRT coaches manufactured by China’s CRRC Dalian, which were purchased during the Aquino administration and had remained unused to this day.

Tugade said in July that the delivered trains failed to comply with the DOTr’s terms of reference. He noted that any costs to meet the government’s standards would be shouldered by CRRC—a delicate issue given the current warm relations between Manila and Beijing.

Firm hand

Upon assuming his post, Tugade outlined a tough stance against corruption. Several DOTr employees and those of attached agencies have since been fired.

Tugade also convinced rival business groups to agree on a compromise for the Quezon City common station project, which will link the Light Rail Transit Line 1, MRT 3 and MRT 7. The common station project, according to the DOTr, will be completed by 2020.

In October 2017, Philippine Airlines settled long-running navigational fees and other charges amounting to P6 billion days after President Duterte demanded payment.

Tugade had also negotiated with the winners of a pair of Integrated Transport System Public Private Partnership projects (now called an Integrated Terminal Exchange) in the southern part of Metro Manila.

While these partly caused project delays, the DOTr claimed a victory as it noted that Ayala Land Inc. and Megawide Construction Corp. gave up a combined P13.2 billion in annual payments that the government would have paid over their 35-year concession periods.

Tugade also negotiated that government would receive a 2-percent share in commercial space revenues.

A more controversial case was the fate of Miascor Aviation Services, which was once the country’s biggest independent ground handling company with over 4,000 employees, in April this year.

Mr. Duterte ordered the
nonrenewal of Miascor’s airport contracts following a luggage pilferage incident in December 2017, ignoring the pleas of its workers.

COA report

The state auditor said procurement delays, policy changes and projects being “put on hold pending decision by top management” resulted in a low utilization rate of the DOTr’s 2017 budget.

Specifically, of the DOTr’s P71 billion allotment, the department had committed to spend almost 81 percent. This was much higher than in previous years. However, actual disbursements amounted to only a quarter of the budget.

The DOTr also identified “unobligated” allotments of P12.3 billion, the biggest portions from railway and road projects.

The DOTr has pushed back hard against the perception that his department was remiss in carrying out its functions.

It said the unobligated amounts, which were returned to the Bureau of Treasury, partly stemmed from projects of the previous administration, some of which the DOTr decided to scrap.

These included funds set aside for the regional airports project, which was once part of the PPP pipeline. Other large items were the bus rapid transit projects in Quezon City and Cebu, which Tugade did not support given his belief it would worsen congestion.

Proposed train lines such as the Light Rail Transit Line 1 to Dasmariñas, Cavite, and the LRT Ortigas-Taytay were also being reviewed further.

Following the COA report, the DOTr announced a series of reforms, including merging parts of the typical project process flow and starting the time-consuming detailed engineering design earlier.

Move to Clark

The 2017 transfer of the DOTr’s headquarters from Mandaluyong City to the Clark Freeport Zone was meant to signal its willingness to embrace life away from Metro Manila given its congestion woes.

The move involved some 700 employees, not all of whom were happy with the plan. Tugade, the former CEO of state-run Clark Development Corp., was scored for his lack of concern for workers who had to commute long hours to reach their new office.

A group of employees filed a complaint in the Mandaluyong City Regional Trial Court, alleging abuse of discretion. The COA also noted that the transfer lacked a “structured transfer plan.”

The DOTr insisted the transfer was beneficial and rent payments came at “zero cost” to the government since it would be paid to CDC. It also defended the costlier rent payments in Clark, saying it was occupying a much larger area.

Rental income from the office tower it vacated in Metro Manila would cover over 90 percent of its lease payments to CDC, the DOTr added.

Vague airport policies

Two years into the administration, a definitive airport strategy for Metro Manila and nearby areas has yet to emerge.

The DOTr and Bases Conversion and Development Authority are currently expanding Clark International Airport in Pampanga. However, worsening congestion in Naia remains an issue.

In February 2018, a group of seven conglomerates offered to upgrade and operate Naia at no cost to the government.

The DOTr signaled in July that it was inclined to adopt the proposal of the consortium, after major tweaks were made including the reduction of the concession period from 35 years to 15 years.

Conglomerate San Miguel Corp.’s proposal for a new international airport in Bulacan province—a project that also comes at no cost to taxpayers—had been given conditional approval to proceed with a Swiss Challenge. Its timing depends on the government’s review of the final concession agreement.

The Cavite province separately submitted a proposal to transform the former US naval base in Sangley Point into a new international air hub.

The DOTr said all offers would be reviewed under a so-called multiairport approach.

The same uncertainty has spread to other airports, notably, the air gateways in Bacolod, Iloilo, Laguindingan and Davao, which require expansion and upgrades.

The projects were among the early casualties in the administration’s shift to hybrid PPP projects. The DOTr also dealt the PPP an early blow after it decided to unbundle the projects.

The DOTr said the projects would be bid out, however, specifics had yet to be announced. There are also pending private sector offers for some of these gateways.

Positive developments

In March, Naia was named the world’s “most improved” airport in 2018, according to an online survey by Skytrax.

The DOTr has also opened or rehabilitated other provincial airports, including those in Puerto Princesa, Virac, Maasin, and Tuguegarao.

June 2018 saw the opening of a new passenger terminal in Mactan Cebu International Airport—one of the PPP projects awarded during the Aquino administration. The private concessionaire is Megawide and India’s GMR Infrastructure.

The DOTr has also increased the number of airports that could handle evening flights, improve on-time performance in Naia and increase flights in the underutilized Clark Airport. From seven flights per week in Clark Airport, the figure has ballooned to over 200 weekly flights today.

In January 2018, the DOTr inaugurated the new communications, navigation, surveillance/air traffic management (CNS/ATM)—bolstering safety and air traffic efficiency.

Railways revived

The DOTr has set a clearer direction for the railway sector. It is moving to implement a pipeline of projects that would expand the country’s railway footprint to almost 2,000 kilometers from the current 77 km. The total cost will be about P1 trillion, most of it from ODA loans.

One of the administration’s legacy projects include the P350-billion Metro Manila subway, which will run from Quezon City to Taguig, with further connection to Naia. In March, the first loan tranche from Japan was signed.

The subway is expected to start construction toward the end of the year, with partial completion by 2022 and full completion by 2025.

Partial Japanese funding has also been secured for the 107-km Tutuban-Clark railway, which the DOTr promised will be finished by 2022.

Moreover, Chinese funding is being sought for the 653-km railway line that will run from Manila, Batangas, Laguna and Matnog, Sorsogon, as well as the Mindanao railway project, whose first phase is a 102-km line linking Tagum, Davao and Digos.

Seaports

The DOTr likewise continued to build, rehabilitate and modernize commercial port projects. From 2016 through May this year, some 129 projects were completed. The figure included 18 roll-on/roll-off ramps.

In 2017, it noted that four social tourism ports were finished. These are Badoc, Talisay, Mongpong and San Jose Port. Another 24 are undergoing construction.

A $30-million roll-on roll-off barge terminal in Tanza, Cavite, built and operated by International Container Terminal Services Inc., has started operations.