Fare share
Only seven days after four groups filed separate cases against the fare increases in all three light rail line in the metropolis, the Supreme Court ordered the DOTC to explain what seemed to be its hurried move to increase the fare. Well and good. It is just that the fare increase now seems to be the wrong target of public dismay. It is now clear, at least based on talk in business circles, the real culprit is the “concession agreement” forged by the DOTC with a private group.
In September last year, the DOTC awarded the much-delayed P65-billion LRT-1 “extension project” to a consortium called Light Rail Manila Corp. or LRMC, which is owned by the group of Manuel V. Pangilinan with 55 percent, the Ayala group with 35 percent and the foreign group Macquarie with 10 percent.
Under the agreement, LRMC was supposed to use its own funding to construct the 11-kilometer “extension” of LRT-1 from Baclaran to Bacoor (Cavite), plus operate the existing line between Baclaran and Roosevelt on Edsa in Quezon—for all of 30 years. Originally, by the way, the government set the “extension project” to start by June last year, with the first phase (Baclaran to Sucat) already operating by June 2016, or toward to the end of the term of our dear leader Benigno Simeon, a.k.a. BS. For some unknown reasons, the project hit some snag and nobody in the Aquino (Part II) administration can even dare say when the trains on the additional LRT-1 line will actually start running. Moreover, the government set the original cost of the project at P56 billion but based on the DOTC agreement with LRMC, the price tag is now P65 billion.
The “concession agreement” thus might be raising some eyebrows in business because the original plan called for an almost even sharing of the cost by the government and the concessionaire. Also under the “original” plan for the “extension project,” the concessionaire (which eventually turned out to be LRMC) would take all fare collection, on condition that it would also assume the “risks.” Now, as you may have guessed, we are driving at all those salient points in the original plan because word goes around that they may or may no longer be contained in the final “concession agreement.”
And so back to the sharp and abrupt increase in the fare on LRT-1 and LRT-2, and the ever-problematic MRT on Edsa, the DOTC actually strategized somewhat by announcing the increase in the middle of December last year, giving the public all of two-weeks in advance as the department said the actual date for the start of the higher fares was last Jan. 4, a Sunday, a nonworking day, right before people would return to work after the long Christmas holidays. Naturally the sudden fare increase shocked the public, including lawmakers and radical groups, mainly because of the big jump, equivalent to between 50 and 87 percent increases for the three lines, raising the minimum fare to P11, plus P1 per kilometer thereafter.
Reports said that the DOTC issued a “resolution,” although it was doubtful that the DOTC by itself had the authority to impose the fare increases. From what I gathered, only the LRTA, or the Light Rail Transport Authority, has the explicit authority to adjust the fares on LRT-1 and LRT-2 under its original charter. Anyway, implied in the DOTC press statement was the issuance of a “resolution” to implement the fare increases. Word nevertheless goes around that the DOTC, now under Secretary Joseph Emilio Abaya, actually used a “resolution” that has been lying around somewhere in the department since the time of former secretary Jose de Jesus.
DOTC officials went to media with fantastic claims of their own, saying for instance that the fare increase would only be used for repairs and maintenance. Under the 2015 budget, however, which Congress passed last month or before the DOTC sprung its surprise attack on the train riders, the LRT 1 and 2 would have P980 million for the repair, while the MRT Edsa line would get a bigger P2.6 billion for rehabilitation. In addition, the “supplemental budget” for 2014 allotted P980 million for the LRT lines and P960 million for the MRT.
And so the transportation committee of the House of Representatives called for an investigation of the DOTC “resolution” to increase the fare. Now, in the House transportation committee hearing last week, the lawmakers extracted a vital information from the DOTC bright boys: The fare increase was actually contained in the “concession agreement” as condition to be fulfilled by the government. And could the congressmen please get a copy of the agreement? Well, the DOTC officials promised that they would furnish Congress with a copy after the visit of Pope Francis.
As I said, however, the target of public anger is the fare increase, although it is now a bit clearer that the increase is a direct offshoot of the “concession agreement” between the Aquino (Part II) administration and LRMC. In other words, the target of the cases before the Supreme Court was the DOTC, simply because it was the DOTC that imposed the fare increase. Yet the real beneficiary of the increase is none other than the private group, the concessionaire, which gets all the fare revenue, although the original plan called for a “50-50” sharing of the cost between the concessionaire and the government.
And how much cash did the LRMC, the winner the bidding in which it was the lone participant, put upfront for the amazing agreement—all of P935 million. Meaning, it will pay for the rest of its P9.35-billion winning bid to the government in installment over the next 30 years of the concession. You know—from out of the fare that it would collect from the public. Oh, and by the way, the concession was actually extended by an additional two years, from the original 30 years to 32 years. And this is supposed to be the “banner” project in the PPP program of our leader BS.
