The Dilemma Caused by MRT-LRT Common Station

The current dilemma faces by the Department of Transportation and Communication (DOTC) regarding the location of the LRT-MRT common station should be a ‘no-brainer’. From its original site near SM North EDSA, DOTC Secretary Jun Abaya recently announced that the intended move to Trinoma.

There were three reasons were cited to back this decision:

1. savings of about a PhP 1 billion will be derived if the common station were to be built on the Ayala property;
2. it will be simpler, and therefore, faster to build; and
3. the Memorandum of Agreement (MOA) between SM and LRTA had lapsed in 2011 since NEDA, along with Malacañang and the LRTA Board, approved the construction of the common station at Trinoma.

However, it appears that it may cost the government more if they will not follow the MOA with SM. Why? Because not only does the contract explicitly identify SM as the site, it also uses it as the basis for projections on ridership volume, revenues and investment rates of return.

The calculation is worrisome because the contract further specifies that should ridership volume decrease by acts beyond the control of the concessionaire—in this case, Universal LRT Corp. (ULC) or in this case, government’s decision to move the station to Trinoma, ULC can claim damages amounting to at least PhP 2.5 billion for every one percent decline in ridership (versus the projections stipulated on the contract).

Should this happen, this staggering penalty will fall squarely on the shoulders of us, the taxpayers. In addition, moving the station to Trinoma can be considered a material breach of contract on government’s part. In which case, government is exposing itself to further claims.