It looks like someone pulled a fast one on the incoming Duterte administration once again. Unless the plan is that the coming change will be in the form of conglomerates favored by the past administration actually regulating the sector of government that they merely secured sweetheart deals from in the past.
Sammy Malunes, of the left-leaning rail advocacy group Riles Network, has sounded the alarm about the appointment of Noel Kintanar, a longtime Ayala Group executive, as undersecretary for transportation. “We’re still trying to confirm if Kintanar was truly designated undersecretary for railways, because then we’d really be in trouble,” Malunes told me.
Malunes said Kintanar, as part of the Ayala-Pangilinan consortium that took over the Light Rail Transit Line 1, helped draft that “onerous and one-sided” contract signed last year with the Department of Transportation and Communications. In particular, Malunes said it was Kintanar who came up with the concept that the government would have to put up money for the private Light Rail Manila Corp. to take LRT-1 out of its hands.
Kintanar’s brainchild, Malunes said, was to consider all of the assets of the government in LRT 1 as “sunk costs” and no longer of any value. This allowed LRMC’s partner, the government, to actually give money to the firm for the privilege of letting the private firm take over all of the line—including the extension of LRT-1 from Baclaran to Bacoor, Cavite.
Readers will remember that this extension project became famous after President Noynoy Aquino declared while campaigning for the 2013 elections that he would have himself and Transportation Secretary Joseph Emilio Abaya run over by a train if the LRT-1 did not reach Bacoor in two years, or by 2015. As of now, not one single concrete pylon has been put up to extend the railway line built by Imelda Marcos 35 years ago—and Aquino’s spokesmen have since explained that Aquino’s vow was just an elaborate joke that no one really understood.
The joke in the LRMC-DOTC deal is apparently on all of us. And only Abaya and his private-sector partners are laughing.
* * *
Malunes asked why the DOTC allowed LRMC to declare all the assets of LRT-1 of no value “when immediately after the private company took over, it has been collecting the P9 million in cash daily that the line produced in fares?” Then he explains why.
Malunes said that the DOTC allowed LRMC to declare LRT-1, with its entire fleet of coaches, railway, stations and fares of no value to get around the law which states that both the government and the private entities that enter into Public-Private Partnership deals would equally share the cost of the contracts they enter into. Accordingly, LRMC plunked down P800 million in cash to secure LRT-1, money that was put in an escrow account, as the law dictates.
But because LRT-1 was declared in the contract to have no value, the government had to front up money to LRMC, as well, as part of the PPP deal. And for this, DOTC’s Abaya secured a budget from Congress to pay its partner.
Now, part of the deal also imposes a five percent fare increase every year, on the anniversary of the signing of the contract. This means that LRMC is going to recoup its investment in a very short time, even if it still cannot put up the contracted Baclaran-Bacoor extension.
“The LRT-1 operates the entire year, except for four days during Holy week,” Malunes said. “At the rate they are collecting fares and increasing them, all their original investment will be returned to them in a little over two years.”
It’s one of the sweetest of the sweetheart deals consummated during the conglomerate-friendly Aquino administration. And now, it appears that the business wizard of the Ayalas will get to secure it under a government that promised a level playing field for all and absolutely no corruption.
Nobody asked me, but I believe that instead of being rewarded as the protector of this truly onerous arrangement, Kintanar should be thrown in jail instead of getting a high government post. And if what Malunes and Riles Network are saying is true, Kintanar should share the same jail cell with Abaya —who must surely be locked up, and justly so, for everything he did during the Aquino administration.
I don’t know if Duterte understood just how badly Kintanar’s appointment would reflect on his new government. Or if his friend Arturo Tugade, the incoming transportation secretary, knew about his undersecretary’s actions in the not-so-distant past.
All I know is, the people of Metro Manila punished Aquino, Abaya and Mar Roxas last May 9 for all the suffering they received because their train systems were systematically looted and destroyed. This is one clear conflict of interest case that must not be allowed, if Duterte really has the people’s interest at heart.