Press Release
May 15, 2011

Let incoming GOCC Commission review MRT-LRT privatization plan

Wait for the GOCC Commission's go signal.

Sen. Ralph G. Recto yesterday appealed to the government to defer the bidding for the P15-billion management contract of the bundled Metro Rail Transit -Light Rail Transit (MRT-LRT) systems until Congress enacts the law setting up the Governance Commission for GOCCs (GCG).

Recto said among the powers of the GCG is to review the operations of government-owned and controlled corporations (GOCCs) to determine if they should be abolished or privatized subject to the approval of the President.

The GCG will also have the power to review the performance of the GOCCs and professionalize the membership of the GOCC boards.

Recto said the government should allow the GCG a first crack at the MRT-LRT privatization plan under its private-public partnership (PPP) program via a thorough scrutiny.

"This PPP project should not go to market while the GOCC probers are setting up camp," Recto stressed.

The GCG bill has already passed the bicameral conference committee and would soon be enacted into law by mid-June as what the main author, Sen. Franklin Drilon, has expected. The MRT-LRT contract is slated for bidding on July 11.

The bicameral committee report will be submitted to both houses of Congress--the Senate and the House of Representatives--for ratification before it is submitted to the President for signature. Under the proposed legislation, the GCG will be created to supervise the 157 existing government corporations.

The GCG would be be composed of five members�chairman with the rank of Cabinet secretary and two members with the rank of undersecretary to be appointed by the President�and the Budget and Finance secretaries as ex-officio members. The commission shall develop a new position and classification system that will apply to all officers and employees of GOCCs, whether covered by the Salary Standardization Law or exempt from it.

Recto said the two railway systems fall under the GOCC basket as to the Light Rail Transit Authority (LRTA) over LRT-1 and after state banks Land Bank of the Philippines (LandBank) and Development Bank of the Philippines (DBP) took a majority stake in the MRT-3 rail system.

"As the enactment of the GOCC law appears very imminent, it would be prudent for the DOTC to defer the bidding of the MRT-LRT and wait until the GOCC Commission goes to work and gives their thumbs up," Recto, chair of the Senate committee on corporations and public enterprises and bill co-author, said.

"The privatization of the MRT-LRT would be the maiden 'CSI' case of the GOCC probers and a litmus test to the "Daang Matuwid" program of the Aquino administration," he added. Recto said "it will leave a bad taste in the mouth" if MRT-LRT bidding pushes through like a midnight deal when the DOTC is fully aware of the new mandate of the incoming GOCC Commission."

The senator also said a deferment of the bidding would save government from a potential embarrassment should the GCG body find some loopholes in the bidding blue print of the bundled MRT-LRT Operations and Maintenance (O&M) contract.

Recto earlier questioned the O&M contract for the MRT-LRT stressing that aside from forking out P15 billion to the winning bidder, the government could not expect new money being poured into the two railway systems like additional rolling stocks or coaches and improved facilities. He also said it was unclear if the P15 billion "pay out" to the winning bidder would translate to new jobs being created.

"If such is the case, this will give the PPP project a bad name. Later on, pag ganyan ng ganyan, aayaw ang tao dyan at magagalit sila," he previously pointed out.

The winning bidder will get to operate and manage the two rail lines that would be integrated eventually for four years, with an option to extend by another year. LRT-1 runs along Taft Avenue from Baclaran in Paranaque City to Roosevelt-Munoz, Quezon City.

The MRT, meanwhile, runs from Taft Avenue in Pasay City to North Avenue in Quezon City.

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