Gov’t eyes new benchmark for setting PUV rates

Officials want fares to better reflect oil price movements

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The government is reviewing a potential new benchmark for setting rates for public transportation—one that will better reflect any fare hike or rollback on the price of oil, Transportation Secretary Joseph Abaya said.

The plan, which Abaya said was proposed by Energy Secretary Carlos Petilla, is still in the early stages of study.

But the objective, Abaya said, is to come up with an acceptable middle-ground between operators of public utility vehicles (PUVs) like buses and jeepneys, and their customers.

“Why don’t we just have fuel prices directly linked to fares,” Abaya quoted Petilla as saying.

“We will have to study if that will indeed be a fair measure,” Abaya told reporters following the oath-taking of lawyer Winston Ginez as chair of the Land Transportation Franchising Regulatory Board (LTFRB) Thursday.

Abaya clarified that the plan may not result in any actual change in policy, citing for instance the challenges in factoring in the volatile movements of the price of oil.

“That’s the effect of a deregulated oil industry while fares are regulated. Volatility will be considered, but whether we can come up with a good mathematical model to simulate that would be interesting,” he said.

The price of gasoline is already a factor being used to determine fare adjustments, but it is not the only consideration, LTFRB board member Rolando Corpuz told reporters in a separate interview.

Factors include vehicle depreciation and other operating costs, he added.

Corpuz also pointed to another layer of complexity—when rates have to be adjusted based on a proposed formula given the mandate for a public hearing for each fare hike or rollback.

There has to be a public hearing, Corpuz said. “It is required by law.”

Nonetheless, he noted that the current measures used by the LTFRB in computing rate adjustments would also have to be modified.

“We need to look at [the measures] again. They are outdated,” Corpuz said, adding that the process could take at least three months.

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