A lawmaker has sought for a congressional investigation on the ongoing controversy over the issuance of a notice of award to AF Consortium, a business entity led by Ayala Corporation and Metro Pacific Investments Corporation headed by Manuel Pangilinan, for the Department of Transportation and Communications’ (DOTC) P1.72-billion Automatic Fare Collection System (AFCS) project.
Kabataan Partylist Rep. Terry Ridon filed today House Resolution No. 781, which calls on the House Committee on Transportation to inquire on the status of DOTC’s bidding and award of the said project to AF Consortium.
The AFCS is a public-private partnership (PPP) project that seeks to unify the ticketing system in LRT1, LRT2, and MRT3 lines. According to the DOTC, the project involves the decommissioning of the present magnetic-based ticketing system and replace the same with a “contactless-based smart card technology.”
On January 30, the PPP Center – the agency overseeing the country’s PPP projects – announced that a notice of award for the AFCS project has been issued to AF Consortium, which offered a P1.088-billion premium on top of the AFCS project cost, besting second-placer SM Consortium which offered a premium that was only P103,900 lower.
However, the SM group protested the result of the bidding, saying that AF Consortium’s terms for the AFCS project was actually unfavorable as the Ayala-Panganiban group offered to pay an initial P279 million for the premium, with the remaining P800 million to be paid only when ridership volume reaches 750 million per quarter.
Based on DOTC’s estimates, the ridership volume mentioned by AF Consortium may only be reached by the ninth or tenth year of the contract, which means that the full premium amount will only be paid by 2024 or 2025.
“A careful study of the AF Consortium bid shows that it is not favorable to government and the people,” said Ridon, who is a member of the House Committee on Transportation.
The lawmaker argued in HR 781 that the terms offered by AF Consortium is in fact illegal for not complying with the requirement of the law on public biddings.
For entities to win in public biddings for build-operate-transfer projects, the BOT Law requires not only the submission of the highest bid but also the most favorable terms for the project.
“In offering to pay on a staggered basis, the AF Consortium bid might prove to be unfavorable for the government and the people as it contains clear conditionalities on the terms of payment that is contingent on an event that may not transpire,” Ridon explained.
The youth solon added that by awarding AF Consortium the P1.72 billion contract, the DOTC’s Bids and Awards Committee might have given the said business entity “unwarranted benefits, advantage or preference.”
“The conditional terms offered by AF Consortium for the AFCS may constitute an undue burden to the public in the form of higher fares across all train lines,” Ridon added.
“The controversy at hand also shows the folly of PPP as it subjects to wily private interest public goods like mass transit,” Ridon stressed.
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