MRT3 loan delayed

INQUIRER FILE PHOTO

The signing of a multibillion-peso loan agreement with Japan to rehabilitate the busy Metro Rail Transit Line 3 has hit a snag in terms of its timing.

Transportation Secretary Arthur Tugade told reporters on Friday that the signing of the loan, initially expected in June and then eventually moved to September this year, would happen within the next two months.

While declining to elaborate, Tugade said a key reason was the fate of the 48 train coaches from China’s CRRC Dalian that were procured during the Aquino administration.

The Dalian trains, which would add to badly-needed capacity at the MRT3, remain unused years after their delivery.

Last July, the DOTr said an independent audit conducted by Germany’s TUV Rheinland showed certain defects, including weight measurements that did not conform to what was required under the contract. Dalian was later told to repair the trains and then last month, the DOTr said simulation runs to test the trains for reliability would be held in October.

It was not immediately clear whether the results of the test run were a prerequisite to the signing of the loan deal with Japan.

“It’s close, we’re just clarifying [the timing],” Tugade said.

Still, it was the first time the transportation secretary publicly linked the situation between the Dalian trains and the DOTr’s own initiative to bring back Japanese expertise in the MRT3. Japan and China are known rivals in the global railway space, with Southeast Asia being a key battleground.

The DOTr is seeking Japan’s assistance, in part, because Japanese firms Sumitomo Corp. and Mitsubishi Heavy Industries handled maintenance operations for the MRT3’s first 12 years of operations.

Japan is also offering generous loan terms, the department had said.

According to the website of the Ministry of Foreign Affairs of Japan, the loan provision would amount to a maximum of 38.1 billion yen or about P18 billion. The interest rate was set at 0.1 percent a year with repayment in 28 years after a grace period of 12 years.

The DOTr said last May that the rehabilitation and maintenance contract will run for 43 months. It said 31 months were allocated “for the simultaneous rehabilitation and maintenance works to restore MRT3 to its original design condition and capacity.”

The rehabilitation plan also requires the approval of the board of the National Economic and Development Authority chaired by President Duterte.

The deteriorated condition of the MRT3 has been a constant source of criticism for both the Aquino and Duterte administrations.

Some experts believed this deterioration accelerated when the Aquino administration, in 2012, did not renew the contract with Mitsubishi-Sumitomo, mainly citing the high cost. Other providers were tapped, including a Filipino-Korean venture known as Busan Universal Rail Inc. Its selection led to the filing of graft charges against former government officials, including then Transportation Secretary Joseph Abaya, in October last year.