Postpone fare hike

A fare increase in Metro Manila’s railway system is inevitable. No less than President Aquino had long been pitching for higher fares at the Light Rail Transit and Metro Rail Transit systems, arguing that the government wanted to reduce its subsidy for the trains’ operations so that the money could be used for other social services. The President claimed it was unfair for the entire country to help finance the operating cost of the railway system that benefits only residents of Metro Manila.

The government plans to bring the train fares closer to those of air-conditioned buses. The Department of Transportation and Communications is considering an “11+1” formula, which means passengers will be charged P11 to board the trains plus P1 for every kilometer traveled. With the proposed rate, MRT and LRT fares will reach nearly P30 from the first station to the last, or almost double the present level. The government is expected to save about P2 billion in subsidies from the planned fare adjustment.

The fare increase was supposed to be implemented back in 2011. It became imminent in 2013 when the President mentioned in his State of the Nation Address that the government was to raise train fares to cut government subsidies, with early 2014 as the target date. But last January, the government said there was no urgent need to raise fares and deferred the plan to do so to August; the DOTC cited the then impending power rate increase early this year.

August went by and nothing happened. Last week, the government indicated that the fare increase would likely be implemented before Christmas. The spokesperson of the DOTC was quoted as saying that the directive was only waiting to be signed by Transportation Secretary Joseph Emilio Abaya, after which a notice would be published. So far, however, even Abaya is noncommittal. In an interview with Radyo Inquirer 990AM last week, Abaya said there would probably be no increase in October and that there was no indicator it would proceed. But he could not categorically say if there would be no fare increase until the end of the year, except to point out that the DOTC had complied with all the requirements for the fare adjustment.

Opposition to the fare increase is expected. Imagine the howl it would raise given the sorry service being endured by MRT3 commuters. Critics assail the argument that the government should not subsidize projects like the MRT and LRT that only benefit Metro Manila residents. Following this logic, critics counter, the government should stop subsidizing the building of public schools and hospitals in far-flung areas because Metro Manila taxpayers would not benefit from those either.

One solution being put forward by groups opposing a fare increase is a renegotiation of the contracts with the private consortium holding the concessions for the mass transport system. The subsidies shouldered by the government result from the guaranteed rates of return that the private firms running the train system will get whether or not people will use the MRT and LRT. Renegotiation is indeed one plausible way to avert a fare adjustment.

Instead of renegotiation, however, what the government has in mind is a reverse privatization of the MRT3: It will take over the operation of the train system plying the length of Edsa. Recent announcements from the administration indicate that it is close to clinching a deal to buy out the MRT’s private shareholders.

But this so-called reverse privatization does not guarantee that a fare increase will not happen. At most, it can help cut the huge subsidies that end up as profit of the private concessionaire. The government can also earn from the commercial advertising space along the length of the MRT tracks. This will nonetheless be better than the current situation.

Still, this brings us back to the issue of fare increases for the MRT and LRT. Whatever explanation we get from the government, any fare adjustment should be timed properly. With the rising cost of living, any additional financial burden on the working middle class—the main market of the mass transport system—is not welcome at this time. Any additional financial burden on the ordinary taxpayer is ill-timed given the approach of the Christmas season. As Abaya himself said last January, when the government postponed the fare adjustment due to the power rate increase by Manila Electric Co., “you have to be sensitive to people’s lives, too.”