LRT, MRT privatization to benefit commuters, DoTC says

MANILA, Philippines—The Department of Transportation and Communications (DoTC) has assured the public that the private sector will do a better job in operating the Light Rail Transit (LRT) line 1 and Metro Rail Transit (MRT) systems—leading to better services for commuters.

Transportation Undersecretary Glicerio Sicat, head of the DoTC’s rail transport group, said the privatization of key government services had led to more efficient operations.

“The private sector normally can do a better job in operations and maintenance,” Sicat told the Inquirer. “Thus, the quality of service usually improves.”

Senator Ralph G. Recto, chairman of the Senate committee on government corporations and public enterprises, earlier expressed reservations over the DoTC’s plan to bid out the four-year contract for the operation and maintenance of the LRT and MRT.

He said the government might simply end up paying P15 billion—the price for the contract over five years—to the winning bidder, which will also be given tax holidays and cheap loans from state banks.

He said letting a private firm operate the LRT and MRT lines would give the winning company “an almost sure option to jack up fares.”

He also expressed fears that the private company, despite the P15 billion it stands to earn, might not be required to invest fresh funds into the LRT and MRT lines.

But Sicat said the privatization of public services such as water and electricity distribution had always led to better and more reliable services.

LRT Authority spokesman Hernando Cabrera said the power to set LRT and MRT rates would remain with the government. All revenues would also be remitted to the government, meaning the private firm would have nothing to gain from higher fares.

The government currently spends more than P7 billion in subsidies to the MRT-LRT to keep fares within reach of more riders. The government has announced plans to raise fares to relieve it of some of the financial strain, but the move has been postponed indefinitely.

The project is the first to be bid out under the government’s Public-Private Partnership Program, which hopes to attract billions of pesos in investments from the private sector.