House panel to DOTC: Submit projects to be funded by fare hike

MANILA, Philippines – On the first day of a House hearing on the Metro Rail Transit (MRT) and Light Rail Transit (LRT) fare hike, government officials struggled to justify the basis of the increase and failed to outline where additional revenues would go.

At the first House transportation committee hearing on the MRT-LRT fare hike Thursday, January 8, government representatives also admitted that the train system is making profit, if only operational expenses are considered. 

Bayan Muna Representative Neri Colmenares questioned the idea that the government is “subsidizing” the LRT and the MRT, saying the claim was nothing but a “spin” from Malacañang. 

Transportation Secretary Joseph Emilio Abaya was a no-show during the hearing, prompting Colmenares to criticize him for snubbing Congress despite being visible in the media. 

Transportation Undersecretary Jose Lotilla said that at the time, Abaya was in Malacañang for  a meeting between goverment officials and church leaders  on preparations for the visit of Pope Francis. Some committee members want Abaya to be summoned for the next hearing. 

Armed with figures on how much the train systems are earning and spending, Colmenares said that the income of the LRT and the MRT is, in fact, higher than its operating expenses, and there was no need to increase fares.

Lotilla did not deny that the MRT and the LRT were making profit.  

He said, however, that the profit is not enough to upgrade the system and build more lines, thus the need for subsidies from the government. 

“Para maibsan nang konti, para mabawasan. Hindi po lubos-lubos na kinukuha sa sumasakay yung pambayad ng gobyerno (So expenses will be alleviated a little. Not all the payments are sourced from passengers),” Lotilla said.

In defending the fare hike, Malacañang said the move allows the government to decrease the subsidy from P12 billion to P10 billion and reallocate the funds to areas outside Metro Manila. 

But since the MRT and the LRT are registering profits, Colmenares argued that the government is, in fact, not subsidizing passengers but rather private concessionaires, which DOTC partnered with for expansion and improvements. 

Colmenares said Malacañang should stop deceiving the public into thinking that the government is subsidizing the train system, when what is being spent for are just regular funding for public services. 

There is a distinction between subsidies for operating expenses and funding for capital outlay, Colmenares said.

“If there are loans for big highways in the provinces, we don’t call that a subsidy because the government will really construct those. When it comes to the LRT, it becomes a subsidy?” Colmenares said. 

Besides, the repair and rehabilitation of  train systems are already funded under the 2015 budget and the 2014 supplemental budget, Colmenares said. 

Under the 2015 national budget, a total of P977.69 million was allocated for the repair of LRT 1 and LRT 2 while P2.569 billion was set for the rehabilitation of the MRT3. 

Meanwhile, another P977.69 million was provided for LRT refurbishments under the 2014 supplemental budget while P957 million was given to the MRT.

Asked why there was need to increase fares despite this, LRT Administrator Honorito Chaneco said the budget was still not enough for repairs and the planned expansion. He did not provide a specific amount on how much was still needed.

The DOTC aims to build 11 more lines and line extensions to increase trips per day to 3.5 million or up to 24% of all commutes, from 1.2 million or 6% of all commutes per day. 

Earlier, Senator Grace Poe called DOTC threacherous for issuing the fare hike resolution after the 2015 General Appropriations Act was signed in December. 

Clarify terms of contract for LRT-1 expansion

DOTC signed in 2014 a concession agreement with the Metro Pacific Investments (MPIC) and Ayala Corporation to build the LRT-1 extension from Pasay City to Bacoor, Cavite. 

Lotilla admitted during the hearing that the contract allows the government to increase fares by 10% every two years. 

This means the December fare hike could only be the first in a series of increases that would be implemented every two years.

Lawmakers want the DOTC to clarify the terms of the contract. 

Fielding questions from Cavite Representative Elpidio Barzaga, Transportation Undersecretary Rene Limcaoco later clarified that the hike every two years would not be automatic. 

Barzaga: If it’s not automatic, when will the government increase fares?
Limcaoco: It’s a policy decision. 
Barzaga: Will it be mandatory?
Limcaoco: It is within the government’s power to increase. 

The December fare hikes expect to rake in additional revenues of P621 million for LRT-1 and P1.1 billion for MRT3. 

Barzaga asked the DOTC to submit a complete itemized  list of projects that will be funded by the fare increase. 

What formula did authorities use to compute the increase? Instead of the 11+1 formula, where a peso is added to the P11 base fare depending on the destination,  Chaneco said train fares are now distance-based, where passengers pay for the distance that they travel.  

Asked to expound on the formula further, Chaneco said it would be better for the LRT to just submit their study to the committee. 

Limcaoco gave assurances that train users will start to feel the impact of improvements by the 3rd quarter of 2015. 

New mindset needed?

Riles Network, one of the oppositors invited to the hearing, called on the government to change its mindset on funding the train system. 

“The subsidy for the LRT and the MRT is not a waste; it should be seen as a public investment to allow our workforce to be more efficent,” the group said.

It is high time for the government to create a body that would regulate fare hikes, just like other forms of transport such as buses, jeepneys and taxis.

“The regulation of what is considered just and reasonable fares should not be left to the discretion of DOTC, which also owns the trains,” said former Bayan Muna Representative Teddy Casiño, who was at the hearing as one of the oppositors.

At least 4 petitions have been filed before the Supreme Court calling for a temporary restraining order on the fare hike. – Rappler.com