DERAILED | 5 things you should know about MRT3 and the mess it's in means BUSINESS

MANILA - In the aftermath of what is the worst accident involving the MRT3, questions likely will be raised as to how we've ended up in this mess. Below we've compiled five things you should know about MRT3, and which could help explain why yesterday’s derailment was an accident waiting to happen.



Long queues reaching all the way down to the street is a regular scene at the MRT3 especially during rush hour.

MRT3 has been operating beyond capacity since 2004. Running from North Avenue in Quezon City to Taft Avenue in Pasay City, MRT3 serves nearly 500,000 passengers per day, or way beyond its rated capacity of about 350,000. This is based on a fleet of 73 Czech-made rail cars, of which up to 60 three-car trains operate each day. The private contractor of the MRT3, Metro Rail Transit Corp (MRTC), had proposed to expand the service’s capacity as early as 2000, but the government turned it down in the absence of a triggering event, which is that actual ridership should hit the rated capacity. After ridership exceeded its rated capacity, a dispute over delayed rental payments had erupted between the government and MRTC, thus shelving the much needed capacity expansion (see item number 2 below). In 2011, Metro Pacific Investments Corp (MPIC), which wanted to acquire the MRT3, proposed to expand its capacity, but the government by then had made up its mind that it wanted to buy out MRTC (see item number 4 below).



The MRT3 project was drawn up during the term of President Fidel V. Ramos.

According to the Department of Transportation and Communications (DOTC), the government has made P35.2 billion in rental payments to MRTC since 2000, with the private contractor having nothing to show by way of expanding MRT3’s capacity. To understand why the government has to pay rent, we have to look into the legal structure of the MRT3 agreement. The MRT3 is one of the projects the administration of President Fidel V. Ramos pursued under the Build-Operate-Transfer (BOT) Law. The project was packaged as a build-lease-transfer (BLT) agreement signed on October 15, 1996 between his government and MRTC, which is a consortium of private firms led by the Sobrepenas of College Assurance Plan fame. Under this agreement, MRTC is tasked with building the MRT3 and expanding its capacity, while the government will lease the facility from the private contractor and operate it until its transfer to state hands in 2025. The agreement called for the government making P7 billion in annual equity rental payments (ERP) to MRTC. Between 2007 and 2008, however, the government fell behind payments, forcing MRTC in January 2009 to file an arbitration case in Singapore that has yet to be resolved to this day.


APT Global

APT Global holds the MRT3's one-year maintenance contract, which expires this month.

Under the BLT agreement, the government, through DOTC, leases the MRT3 from MRTC and operates the service. Up until 2010, maintenance of the MRT3 had been contracted out to Japan’s Sumitomo Corp. After the long-term deal with Sumitomo ended, DOTC has been bidding out the train system's upkeep on short-term contracts, and so the MRT3’s maintenance has passed from one company to another. Last year, Autre Porte Technique Global Inc bagged the maintenance contract, which expires this month. DOTC is already preparing the bidding terms, with plans of extending the contract period to three years.



Landbank, originally put up to provide farmers with credit, was one of two state-owned banks that the Arroyo administration used to take back the MRT3.

In a bid to end the rent it pays MRTC, the government as early as then President Gloria Macapagal-Arroyo's term moved to buy out the MRT3's private contractor, and used state-run Land Bank of the Philippines and Development Bank of the Philippines (DBP) to acquire a combined 70 percent economic interest. The Sobrepena-led group however still retained voting control over MRTC. In March last year, President Benigno Aquino III issued Executive Order No. 126, directing DOTC and the Department of Finance (DOF) to complete the buyout of MRT3, but the plan has yet to push through pending a legal opinion from the Office of the Solicitor General.


vitangcol vs czech amb

Efforts to improve MRT3's service had been hobbled by corruption allegations, in particular those hurled against its former general manager Al Vitangcol III (left) by Czech Ambassador Josef Rychtar (right).

Along with the planned buyout, the Aquino administration also bid out the procurement of additional light rail vehicles (LRVs) for the MRT3, with China's Dalian Locomotive winning the auction. MRTC contested the auction in court, which however decided in the government's favor. Add to that, a disqualified bidder, Czechoslovakian company Inekon, complained through Czech Ambassador Josef Rychtar that corruption marred the bidding and pinned the blame on government-appointed MRT3 general manager Al Vitangcol III. Vitangcol has since stepped down, and a new general manager appointed to oversee the MRT3. Dalian has two years to deliver the LRVs, but is mandated to test the units in the next one-and-a-half years to ensure they would meet the MRT3's requirements.

With reports from Darwin G. Amojelar