Business & Economy

Rickety trains, aging airports spoil Aquino’s parade

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It’s been six years of hits and misses for infrastructure projects under the term of President Aquino. The outgoing administration made big promises to address the country’s infrastructure backlog - some of these fulfilled but a great deal more left for the incoming administration to implement.

It had moderate success as far as public private partnership projects (PPP) were concerned, considering its slow start.

The aviation sector was also relatively positive, with the country exiting global safety blacklists. However, air congestion in Manila still remained problematic - with no clear solution in sight.

In other high-profile situations - addressing Metro Manila’s traffic situation and improving urban mass transit options like the Metro Rail Transit Line 3 - the Aquino administration gets a failing grade.

Traffic issues, costing Metro Manila billions of pesos in lost productivity daily, were already building up before President Aquino assumed office in 2010. Six years later, it was apparent that too little was done in terms of investments to combat road congestion in aging Metro Manila, the country’s capital district.

The administration was already aware of the situation early on, especially with regard to the role elevated trains like the MRT-3 would play in helping untangle roads. After all, a safe and efficient mass transport system would lure people toward its use, lessening the need for private vehicles.

There was no shortage of blame laid on Aquino’s predecessor, President Arroyo, and what the transportation department earlier described as largely “barren improvements” in transport infrastructure over the last two decades.

But it was during Aquino’s term the already rickety MRT-3 truly deteriorated. Every day, over half a million people cram themselves into the Edsa-based elevated train, which was designed to handle only about 350,000 people daily.

It specifically made headlines in 2014 when a train unit derailed, injuring dozens of people in an incident later blamed on human error.

For sure, the administration of President-elect Rodrigo Duterte would inherit many of the train line’s problems.

MRT woes

Long-queues and operational glitches still plague the MRT-3. Questions also hang over the Aquino administration’s plan to buy out MRT-3’s private owners for over $1 billion, a move questioned even by lawmakers.

The scheme was aimed at resolving the MRT-3’s  thorny ownership issue that includes businessman Robert John Sobrepeña’s group. This would also end huge rental fees guaranteed to MRT-3’s private owner, Metro Rail Transit Corp., whose build-lease-transfer agreement expires in 2025.

Private sector players, including the group of businessman Manuel V. Pangilinan, separately planned to pursue proposals to assume the maintenance and operations of the MRT-3. Their proposals did not proposer under the Aquino government.

Currently, the transportation department operates the MRT-3 while a three-year maintenance deal starting 2016 was awarded to a Korean-Filipino group led by Busan Transportation Corp.

MRT-3’s improvements have been coming, albeit slowly, with facilities like broken escalators being refurbished and more coaches being fitted.

The PPP pain

The PPP Program had more measurable success. Following a painful startup process, a total of 11 PPP projects worth almost P200 billion were awarded and would be moving forward.

There were actually 12 projects awarded. The modernization of the Philippine Orthopedic Center, however, would no longer push through after the winning bidder terminated the deal supposedly after long delays on the government’s side.

The awarded PPP deals were the MCX or Muntinlupa Cavite Expressway (formerly DaangHari-Slex Link Road), PPP for school infrastructure project (Phase 1), Naia Expressway Project, PPP for school infrastructure project (Phase II), Automatic Fare Collection System, Mactan-Cebu International Airport, the Light Rail Transit  Line 1 Cavite Extension, the Integrated Transport System-Southwest project, the Cavite Laguna Expressway, the ITS-South project, and the Bulacan Bulk Water Supply Project.

Of the approved projects, only the MCX, the two school infrastructure projects and the AFCS, which paved the way for the use of the “Beep” card at MRT-3 and LRT-1 and LRT-2 stations, have been completed.

The Naia Expressway would be finished in the latter part of this year, the Mactan Cebu Airport expansion would be done by 2018 while the LRT-1 Cavite extension, which became privately operated starting 2015, would be done  by 2020.

The ITS projects, meanwhile, are integrated bus hubs aimed—again—at easing congestion in Metro Manila. The ITS-Southwest near Manila Cavite Expressway should be finished by 2018 while the ITS-South in Taguig should be done by 2018. The Cavite Laguna Expressway was also expected to be completed by 2020.

Still, the approved 11 projects paled in comparison to the number of projects in the PPP pipeline, which at one point swelled to over 40 projects valued at about P800 billion.

The entire program has since been rationalized. Some of the more ambitious items under study, like a Metro Manila subway system, disappeared from the pipeline altogether.

Meanwhile, 13 projects, including big-ticket railway and airport deals, already under procurement were left hanging by the Aquino administration, mainly because of their bidding proximity so close to the May 9, 2016 polls.

Among the deals under procurement were the operations, maintenance and development contracts for the Bacolod-Silay, Iloilo, Davao, Laguindingan and New Bohol air gateways. The clamor by investors for these to be bid out in the last months of Aquino’s term fell on deaf ears.

The LRT-2 was another PPP project that private bidders were very interested in. Outside the PPP process was the construction of a 4-km extension of LRT-2 to Masinag, Antipolo. That railway extension would be finished by 2017, the transportation department said.

Another PPP deal that got stalled recently was the construction and maintenance of a new prison facility, located north of Metro Manila in Fort Magsaysay, Nueva Ecija. This aimed to address worsening congestion at the New Bilibid Prison in Muntinlupa and the Correctional Institution for Women in Mandaluyong.

Another project that ran out of time was the Laguna Lakeshore Expressway Dike, which also included a Taguig to Laguna tollroad, a massive flood control dike and land reclamation project on Laguna Lake. The project failed as bidders shied away from its complexity and unaddressed risks.

Unsolicited proposals

Nevertheless, the PPP program proved private sector players, including local conglomerates and foreign groups, were ready to invest in big-ticket infrastructure deals being offered by the government.

President Aquino also had a well-known bias against unsolicited projects, making PPPs among the best avenues to bid for major infrastructure opportunities.

Still, many of these same players faced challenges over the last six years in terms of the regulatory environment they had to navigate.

For example, Pangilinan-led Metro Pacific Investments Corp., which has active cases against the government over water and tollroad tariff increases, was only allowed to take over the operations of the Subic Clark Tarlac Expressway in 2015.

Moreover, its 8-kilometer Metro Manila elevated connector road project was only given the green light to proceed with a Swiss challenge this year, again a delay that spanned a whole administration.

The connector road was delayed because of disagreements within the government over how it should be implemented. That meant the connector road aimed at linking the North Luzon Expressway and South Luzon Expressway - easing traffic within Metro Manila - would be finished by 2020 instead of 2016, as originally planned.

To be completed earlier is San Miguel Corp.’s own Metro Manila connector road, the Skyway Stage 3, between 2017 and 2018.

But San Miguel also faced delays with its massive MRT-7 project, a P71-billion elevated train that would connect Quezon City in Metro Manila to  San Jose Del Monte, Bulacan by 2020. The project that was envisioned even before the Aquino administration came in finally broke ground last April, after a long review over the terms of its financial guarantee.

PH carriers fly high

Among President Aquino’s more lasting legacies - assuming reforms started under the Civil Aviation Authority of the Philippines continue - was the removal of the Philippines from aviation safety blacklists in Europe and the United States. The country earned the negative marks under the Arroyo administration.

CAAP was able to address safety worries and in 2013, the European Union started to lift its ban on Philippine carriers. The EU ban has been in place since 2010, a year after the  International Civil Aviation Organization found “significant safety concerns” in the country’s aviation standards.

Soon after the EU ban was lifted, flag carrier Philippine Airlines revived flights from Manila to London.

Following a downgrade in 2008, the United States’ Federal Aviation Administration (FAA) also restored the Philippines’ category 1 safety rating. This paved the way for increased connectivity between the Philippines, the US and other jurisdictions that rely on FAA standards. PAL revived its Manila to New York flights, while Cebu Pacific said it may launch direct flights to Hawaii in the latter part of 2016.

While aviation initiatives overseas have yielded good results, the infrastructure picture was murkier back home.

Manila’s Ninoy Aquino International Airport (Naia), the country’s main air gateway, had limited expansion options, proving a growth constraint for airlines.

Alternative

Despite statements of support, the administration also showed a lack of commitment to an existing alternative, the Clark International Airport in Pampanga, which observers said needed mass transit access, like a railway line, to Metro Manila. So far, no concrete plan has been presented.

Another option was to privatize the operations of Naia, which handles close to 37 million passengers per year, well above its intended capacity. This was outlined under a P75-billion Naia Development Project PPP. However, it failed to get the approval of the board of the National Economic and Development Authority, led by President Aquino himself.

The administration also searched for a suitable location for a new airport. It finally settled on Sangley Point, Cavite province, but a feasibility study for this location could not be finished before President Aquino steps down.

Separately, San Miguel pursued an alternative location involving reclaimed land in Manila Bay, company president Ramon Ang said. San Miguel had proposed this to the outgoing administration, but the process failed to move beyond that.

Despite lapses in execution, efforts made by the Aquino and previous administrations meant there were plenty of good plans for the new government to consider.

As incoming Public Works and Highways Secretary Mark Villar had said, the next six years would be about implementing projects already studied in the past. The hope of many is that President-elect Rodrigo Duterte follows through on that goal. Inquirer.net

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Cynthia V. Reyes DMD