The government may soon start subsidizing the operations of privately run toll roads—a move that could potentially cost taxpayers billions of pesos annually—in line with efforts to boost investor confidence in the administration’s infrastructure program.
Transportation and Communications Secretary Jose Emilio “Jun” Abaya on Thursday said this form of government guarantee would ensure that private entities investing in key projects are able to get their money back.
“To have a more predictable business environment, the government can decide that whatever portion of scheduled fare increases is not implemented shall be covered in the form of state subsidies,” he told reporters.
Five toll road operators, handling North Luzon Expressway, Subic Clark Tarlac Expressway, Metro Manila Skyway, Southern Tagalog Arterial Road, and Manila-Cavite Expressway are entitled to increase their toll by the start of 2013.
Abaya said the hike in toll would still have to be subjected to public hearings and publication requirements three weeks before implementation.
Like privately run toll roads, Abaya said all projects to be bid out under the administration’s public-private partnership (PPP) framework would have to rely on fees from the public for investors to make a profit.
“All PPPs have scheduled fare increases. This is the assurance that once invested, companies are paid. This is part of the incentives that we want to attract companies to participate in projects,” Abaya said.
However, Abaya said the government would still assess on a case-to-case basis whether toll or fare increases are fair and not overly burdensome on consumers.
“If we see that toll hikes might be too high, especially if, for instance, fuel prices also start climbing, we might not approve the full increase,” Abaya said, noting that prices of other commodities would also be considered in the government’s decision.