Gov’t seeks arbitration with Chinese train supplier

Arbitration may be the solution to the seven-year-old case of unsuitable trains from China left idle at the Metro Rail Transit Line 3 (MRT 3) depot, the Department of Transportation (DOTr) said.

Transportation Secretary Jaime Bautista told reporters on Friday that while the government had yet to solve the issue of the incompatible trains delivered by Dalian Co. Ltd. in 2017, intervention may be needed.

“It’s possible for the case to undergo arbitration. In fact, it seems that that’s where the problem with Dalian is headed,” Bautista said during a press conference.

The issue involves 48 sets of trains that the Philippine government purchased from China-based Dalian in 2014 to expand the major railway system.

When the P3.75-billion trains were delivered in 2017, however, the government found that these were too heavy to use in the existing MRT 3 system.

The trains remain unused to this day, as the government has yet to figure out how these could be utilized without incurring higher maintenance costs and damaging the rail line.

“We will have to liquidate the damages because they were not able to meet our requirements,” the secretary said. “But, of course, that’s subject to an agreement. We need to talk to them (Dalian) also,” Bautista said.

Asked whether the government would include in its computation of damages forgone revenues from the unused trains, Bautista said this was a “contentious issue.”

“We can always include it. But we should also be fair and reasonable in terms of what should be collected from Dalian,” he explained, adding that the MRT 3’s train requirements were “enough” for now.

Privatization an option

Among the possible solutions, according to Bautista, was the privatization of the railway.

In July last year, the DOTr announced that it was considering privatizing MRT 3 by 2025, and possibly package it with the Light Rail Transit Line 2.

The agency had received unsolicited proposals from Manuel V. Pangilinan-led Metro Pacific Investments Corp. and Ramon S. Ang-led San Miguel Corp. earlier this year, but these were both declined, as the DOTr wanted more options through solicited bidding.

Bautista noted that the proposals, although rejected, included provisions on how to operate the Dalian trains despite the unsuitable weight.

“Once MRT 3 is privatized, which we plan to do by the second or third quarter of 2025, it’s possible that the operator can look at the Dalian train,” the official said.

As of now, the DOTr is still working with the Asian Development Bank to finalize the terms of reference for the bidding, Bautista clarified. INQ