ADDED COST OF STALLED BRT PROJECT
The construction of the Cebu Bus Rapid Transit (BRT) system is yet to begin but the Philippine government was already charged P14 million for all the time that the project’s implementation has been delayed.
The multi-million-peso additional charges came in the form of “commitment fees” collected from the Philippine government over the last three years, or from 2015 to 2017, for not using the money it borrowed from foreign lending agencies for a project that was supposed to begin in 2014 yet.
This prompted the Commission on Audit (COA) to ask the Department of Transportation (DOTr) to explain what is delaying the BRT project.
Under the loan agreement for the BRT, the project that was supposed to be implemented in 2014 was to be completed by 2016. However, the project’s completion has now been pushed back to 2021 due to multiple factors, which included the change of design as well as the recent reorganization of its Project Implementation Unit (PIU) that included the firing of 13 of PIU’s 40 personnel last March.
The COA, in an Audit Observation Memorandum (AOM) dated March 12, 2018 and addressed to DOTr, noted that a total of P14.481 million has been paid as commitment fees to the World Bank (WB) and the Agence Française de Developpement (AFD), the international lending arm of the French government for development projects.
Commitment fee is the fee imposed on an undisbursed or unused portion of the loan. In this case, the fee was for the Philippine government’s failure to use the US$198 million loan it obtained from the WB, through the International Bank for Reconstruction and Development (IBRD), and the AFD for the implementation of the BRT.
A breakdown provided by the National Government Debt Accounting Division of the Bureau of Treasury (BTr) revealed that for 2017 alone, the national government paid P6.4 million as commitment fee; P6.1 million in 2016; and P1.9 million in 2015.
On top of it all, the project cost has also risen by P1 billion as a result of the delay, mainly due to the escalation of the costs of construction materials.
The 21-kilometer mass transport system, which covers from Barangay Bulacao in the south up to Barangay Talamban in the north of Cebu City, is now projected by COA to cost P17 billion from the previous amount of P16 billion.
COA’s 12-page observation paper was signed by its Audit Team Leader Ludivina Daulat, and Supervising Auditor Avenilda Torres.
It was addressed to Transportation Secretary Arthur Tugade and Undersecretary Thomas Orbos; and to lawyer Rafael Christopher Yap, the outgoing chief of BRT-PIU.
Who’s to blame?
When he learned about COA’s findings, Cebu City Mayor Tomas Osmeña renewed his threat to report to the WB and the AFD that the country has not been abiding with the bilateral agreement it has entered into with its creditors.
“I will make sumbong (a report) to the WB and the French government that there’s a move that the Philippines is not following the bilateral agreement. And I’m not lying. I will send one, a letter, to them,” said Osmeña, who had been lobbying for the implementation of the BRT since the 1990s.
The consequence, he added, is that the Philippine government may be blocked by the WB — the largest, international financial institution which grants loans to countries for large-scale projects — from entering into loan agreements in the future.
The mayor, as well as the BRT-PIU, blamed Presidential Assistant for the Visayas Michael Dino for coming up with “delaying tactics” as a means to block its implementation.
Dino, who has been opposing the BRT, yesterday reiterated anew that the project would just be a waste of money and that he would continue to object to its implementation.
In a statement sent to reporters yesterday, Dino also revealed that his office is now “closely working with the DOTr to come up with a more effective mass transportation system” that will cover not only Cebu City but also the entire province of Cebu.
“By stopping the BRT, the government will save billions of pesos — not just millions. A delay in the implementation is a bitter pill to swallow in order to save Cebu City from an impending traffic crisis,” he said.
“Let me put it this way: I’m going to be the one who will save Cebu billions of pesos and save it from a total disaster. I cannot allow him (Mayor Osmeña) to continue to destroy Cebu,” he added.
Dino, an arch critic of Osmeña, had been pushing for a Light Rail Transit (LRT) system instead of the BRT, insisting that the latter will no longer be effective in Cebu City due to its narrow roads.
But COA was instead batting for all stakeholders to cooperate in order to avoid further delays in the implementation of the BRT project. Otherwise, further delays will mean that the project’s objective to solve traffic congestion in Cebu City will no longer work, COA warned.
Cause of delay
For the state audit body, the delay in the BRT was mainly due to the absence of a Technical Support Consultant (TSC), which is one of the 12 components in the implementation of the project.
The COA said that the DOTr, instead of using a TSC, decided to tap the Procurement Service of the Department of Budget and Management (PS-DBM) in March 2017 for the project’s bidding process even though it has its own Bids and Awards Committee (BAC). As a result, an administrative fee of P2.952 million was added to the project’s cost, on the top of the resulting delays.
COA now required the DOTr to submit a justification why it did not use a TSC.
“The non-mobilization of TSC was considered as the major reason or the start of the chain reaction of delays in the completion of the BRT project. As of December 31, 2017, the TSC contract was not yet awarded and still under review by the DOTr-Legal Service,” COA said.
Without a functioning TSC, the other components of the BRT that are depending on its progress cannot proceed in doing their respective tasks. This included the conduct of the detailed engineering for the project, the civil works; and the tasks to be done by the procurement specialist, financial management specialist, and the transport policy and planning specialist.
This was also the observation noted by the BRT-PIU in its response sent to COA last March, as it affirmed that DOTr’s lack of expertise on the BRT contributed to the delay.
“The absence of TSC resulted not only to negative slippage but also additional cost to the DED (Design Engineering Detail). Since BRT is new to the country, the DOTr has no technical capacity to review the work of the DED consultant,” the PIU explained.
Solutions
On the other hand, the PIU was quick on coming up with solutions by providing COA a timeline detailing their plans and other measures to ensure that the BRT will be operational by 2021.
The PIU noted that even if the DOTr has reorganized the unit and reduced by 13 its 40-man staff, they could still meet the new completion deadline by finalizing the right-of-way (ROW) acquisition and also begin the construction within this year.
But a “strong political will” is needed to accomplish everything on time, the PIU stressed.