The Commission on Audit has failed to review the concession agreement of the P65-billion extension the Light Rail Transit Line 1 (LRT1) due to absence of supporting documents.
The Light Right Transit Authority (LRTA) is pointing a finger at the Department of Transportation (DOTr) failing to to heed their requests for copies of the documents.
In its 2017 audit report on LRTA, COA said its audit, legal and technical review of the 2014 agreement for the Cavite extension and operations and maintenance project of the LRT1 was incomplete as of December 31, 2017.
“LRTA, the grantor/implementing agency of PPP (Public-Private Partnership) Project, has no documentation of the project and all the related documents that will ensure project history and better retention of information over the life of the concession agreement of 32 years,” the commission said.
The then-Department of Transportation and Communications signed the agreement with concessionaire Light Rail Manila Corporation (LRMC) on Oct. 2, 2014.
LRMC then took over the operations and maintenance of LRT1 on Sept. 12, 2015, leaving only the LRT Line 2 under LRTA supervision.
COA requested for such documents as the invitation to bid, instruction to bidders, Bids and Awards Committee Resolution recommending approval of the winning bidder, breakdown of the project cost, and National Economic and Development Authority Board approval of project cost.
The documents would have helped its review, but the commission did not receive a reply to its queries.
COA also sought clarifications from LRTA on several sections of the concession agreement, including the obligation of parties and the obligations of LRMC.
The commission said these documents would have helped scrutinize the PPP project and provide an insight into the construction, operation and maintenance, and commercial aspects of the LRT1 extension.
“Management should have in their possession the complete documentation of the project to ensure retention of information over the life cycle of the PPP project and preserve the project history,” COA said.
LRTA informed the state auditors that the documents were with the DOTr.
“Management informed us that the documents pertaining to the concession agreement are with the DOTr and they do not have the documents we have requested. While they informed us that they have requested the DOTr to submit the documents, there was no submission as of to date,” the audit report read.
Rental space
COA also found deficiencies in the lease of contracts entered by LRTA and the various lessees of spaces at the LRT2 premises.
COA said the LRTA did not submit supporting documents for the lease contracts and allowed those with expired contracts to occupy their leased spaces.
The LRTA was also plagued by deficient security deposits and rental payments and questionable lease rates, according to COA.
The documents that LRTA failed to submit include mayor’s permits, income tax returns, registration certificates, and third party liability insurance.
Despite their expired contracts, six lessees were allowed by LRTA to occupy leased spaces at LRT2 stations while one lessee was unable to submit a contract agreement. The largest occupant of premises is Joymart/Isetann which paid LRTA P14.9 million in rental fees last year.
COA said it observed that 15 lessees did not pay security deposits, three did not pay the required amount, while one paid but auditors were unsure if the amount was correct as the LRTA did not submit the lease contract.
Among the lessees Ad Finity Media Marketing Corporation was required the highest security deposit of P2.85 million, but COA claimed the company did not actually pay the amount.
Five lessees are deficient by up to P6.7 million in rental payments, but the commission said it could not verify how the LRTA determines the rental rates.
In response to concerns raised by COA, the LRTA said it has directed the Business Development Division (BDD) to submit the lease contracts to the commission.
The BDD has also been tapped to research prevailing lease rates and remind lessees of their deficient security deposits.
The LRTA noted the expired contracts of the seven lessees had either been renewed or were in the process of being renewed. —VDS, GMA News
The Light Right Transit Authority (LRTA) is pointing a finger at the Department of Transportation (DOTr) failing to to heed their requests for copies of the documents.
In its 2017 audit report on LRTA, COA said its audit, legal and technical review of the 2014 agreement for the Cavite extension and operations and maintenance project of the LRT1 was incomplete as of December 31, 2017.
“LRTA, the grantor/implementing agency of PPP (Public-Private Partnership) Project, has no documentation of the project and all the related documents that will ensure project history and better retention of information over the life of the concession agreement of 32 years,” the commission said.
The then-Department of Transportation and Communications signed the agreement with concessionaire Light Rail Manila Corporation (LRMC) on Oct. 2, 2014.
LRMC then took over the operations and maintenance of LRT1 on Sept. 12, 2015, leaving only the LRT Line 2 under LRTA supervision.
COA requested for such documents as the invitation to bid, instruction to bidders, Bids and Awards Committee Resolution recommending approval of the winning bidder, breakdown of the project cost, and National Economic and Development Authority Board approval of project cost.
The documents would have helped its review, but the commission did not receive a reply to its queries.
COA also sought clarifications from LRTA on several sections of the concession agreement, including the obligation of parties and the obligations of LRMC.
The commission said these documents would have helped scrutinize the PPP project and provide an insight into the construction, operation and maintenance, and commercial aspects of the LRT1 extension.
“Management should have in their possession the complete documentation of the project to ensure retention of information over the life cycle of the PPP project and preserve the project history,” COA said.
LRTA informed the state auditors that the documents were with the DOTr.
“Management informed us that the documents pertaining to the concession agreement are with the DOTr and they do not have the documents we have requested. While they informed us that they have requested the DOTr to submit the documents, there was no submission as of to date,” the audit report read.
Rental space
COA also found deficiencies in the lease of contracts entered by LRTA and the various lessees of spaces at the LRT2 premises.
COA said the LRTA did not submit supporting documents for the lease contracts and allowed those with expired contracts to occupy their leased spaces.
The LRTA was also plagued by deficient security deposits and rental payments and questionable lease rates, according to COA.
The documents that LRTA failed to submit include mayor’s permits, income tax returns, registration certificates, and third party liability insurance.
Despite their expired contracts, six lessees were allowed by LRTA to occupy leased spaces at LRT2 stations while one lessee was unable to submit a contract agreement. The largest occupant of premises is Joymart/Isetann which paid LRTA P14.9 million in rental fees last year.
COA said it observed that 15 lessees did not pay security deposits, three did not pay the required amount, while one paid but auditors were unsure if the amount was correct as the LRTA did not submit the lease contract.
Among the lessees Ad Finity Media Marketing Corporation was required the highest security deposit of P2.85 million, but COA claimed the company did not actually pay the amount.
Five lessees are deficient by up to P6.7 million in rental payments, but the commission said it could not verify how the LRTA determines the rental rates.
In response to concerns raised by COA, the LRTA said it has directed the Business Development Division (BDD) to submit the lease contracts to the commission.
The BDD has also been tapped to research prevailing lease rates and remind lessees of their deficient security deposits.
The LRTA noted the expired contracts of the seven lessees had either been renewed or were in the process of being renewed. —VDS, GMA News
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