Higher budget sets back Cebu BRT project

SOCIOECONOMIC Planning Secretary Ernesto Pernia yesterday clarified that it would not be his unilateral decision to put the Cebu BRT project on hold in favor of the proposed LRT-Subway project.

With an increase of around P6 billion in project cost, Pernia said the BRT project would have to go back to the Investment Coordination Committee (ICC) Technical Board for evaluation before it is endorsed to the ICC Cabinet Committee and finally to the National Economic and Development Authority (Neda) Board for approval.

The ICC Cabinet Committee, chaired by the Finance Secretary and co-chaired by the Neda Director General, evaluates the fiscal, monetary and balance of payments implications of major national projects while the Neda Board, chaired by the country's President with the Neda Director General as vice-chair, is the highest social and economic development planning body in the country.

"It can't and will not be my unilateral decision..., given its huge increase in price," Pernia, who is also Neda director general, said in an email.

"As the country's highest planning and policy coordinating body, it (Neda Board) must ensure that what we're approving for implementation is optimal for the medium and long term," he said.

Pernia said the LRT-Subway project "seems a superior alternative but it would still go through a rigorous analytical process."

"Economic and social -- not political-- considerations are paramount," he added.

The BRT had a project cost of P10.6 billion when it was approved by the Neda Board in 2014, under the Benigno Aquino III administration. The cost has increased to P16.9 billion because of road right-of-way acquisition (RROW) cost.

Despite the increase in cost, Cebu City Administrator Nigel Paul Villarete said the project's economic internal rate of return (EIRR) is still 35 percent, only four percentage points lower than the 39-percent original EIRR.

"This is well above the 10-percent threshold of Neda. Anybody associated with Neda would know a project with an EIRR of 35 percent should not be questioned," Villarete, a former Neda division chief, said.

He said the issue is a procedural matter. All projects with increases in cost above 10 percent need Neda approval to ensure that the EIRR will still be above the 10-percent threshold.

Villarete traced the increase in cost to a new RROW law passed by Congress in 2016, requiring implementing agencies to make an offer of market values in all government projects.

"This is a national general law. All government projects are affected, especially DPWH (Department of Public Works and Highways) and DOTr (Department of Transportation). No project is spared," he said.

Despite this, he stressed that there is no doubt about the project's profitability, given an EIRR of 35 percent.

A Value-for-Money study, commissioned by Neda, has also been conducted by Systra, one of the biggest engineering consulting firms globally.

"When it (Systra) says the BRT can be implemented in Cebu, who's going to tell them they're wrong?" Villarete said.

DOTr, the implementing agency, has not stopped implementation of the BRT project, Villarete pointed out. Neither has Neda ordered it stopped, he added.

Implementation of the Cebu BRT project, a pet project of Cebu City Mayor Tomas Osmeña, risks getting shelved with Presidential Assistant for the Visayas Michael Dino pushing for an LRT project instead. (SunStar Philippines)