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Analysis

DOTC rams through MRT takeover

/ 02:47 AM January 12, 2015

The Aquino administration faces heightened public protest against increased fares in the Metro Manila elevated railway system, as it stonewalls on the decision raising the fares starting Jan. 4.

President Aquino stoked public indignation when he poured scorn on demands to scrap the increases or delay their implementation, insisting that the new fares were “still the right thing to do.”

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At the inauguration of government projects over the weekend in Romblon province, the President said those opposing the fare spike just wanted to look “cute” to the public. He maintained that the new fares were “reasonable and just,” especially since the Metro Manila train system—Light Rail Transit (LRT) Lines 1 and 2, and Metro Rail Transit (MRT) Line 3—was being subsidized by the entire nation.

Assuming that all residents of Metro Manila are using the MRT and LRT, “14 million people [are] being benefited and 86 million (the population of the rest of the country) [are] paying the bill,” he said.

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Because train users were paying P15 before the increases but the government was spending P60 for each passenger on the MRT, 86 million Filipinos outside the metropolis were thus shouldering the P45 difference, according to the President.

He claimed that the P12-billion annual subsidy being paid by the government was only for the operation of the MRT and LRT, and “does not include improvement and upgrade of the train systems.”

Deceptive

This is a deceptive presentation. Why are the improvement and upgrade of the service to make trains safe for commuters excluded?

With the fare increases, the government could save P2 billion in subsidy yearly, which can be used for the improvement of facilities, such as escalators, elevators and toilets, the President said.

He suggested that critics of the fare increases and of the deal made by the administration with the private consortium consisting of Ayala Corp. and Metro Pacific Investments Corp., were “only out to promote themselves.”

This statement reeks of self-righteousness and does not address the basic issue—the safety of train users commuting between their homes and places of work. It sweeps the issue of safety under the rug.

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‘Fatal admissions’

Mr. Aquino sought to give the impression that the train system was losing. The Department of Transportation and Communications (DOTC), according to an Inquirer report, made “three fatal admissions” at a congressional hearing on Thursday, giving grounds for the deferment of the new fares.

The first was the admission by Transportation Undersecretary Jose Lotilla that the DOTC did not have express authority to enforce the fare increases, making them “illegal.”

The second was Lotilla’s admission that LRT-1, LRT-2 and MRT-3 “were actually making profit, with ticket sales more than enough to cover operations and maintenance cost every year.”

The Inquirer report said Lotilla had told the House transportation committee, chaired by Catanduanes Rep. Cesar Sarmiento, hearing the fare that proceeds from the fare increase, would thus go to private concessionaires operating the trains under the terms of their contract with the government.

Bayan Muna Rep. Neri Colmenares said these admissions were enough grounds for the transportation committee to issue a congressional resolution asking for a deferment of the increases, pending the Supreme Court’s resolution of the petitions to stop them.

On the government’s move to buy out private owners of MRT, a closer examination of the plan showed that a government takeover of MRT would not solve the many problems of the Metro train system.

According to a study made by groups opposing a buyout, the solution to fix the MRT as early as possible was to “spend the money instead on rehabilitation and get a qualified maintenance provider who will accept a single point of responsibility.”

Buyout

On Dec. 28 last year, Transportation Secretary Joseph Abaya said that even without an allocation for Evbo (equity value buyout) in the 2015 budget, the DOTC was still giving priority to the buyout of the private owners of MRT. The 16.9-kilometer MRT-3 runs through 13 stations from the North Triangle in Quezon City to Edsa-Taft in Pasay City.

Abaya was quoted as saying that “there are other options to push through the Evbo to allow the government to take over the mass transit system along Edsa, as directed by Mr. Aquino even if it was not included in the 2015 General Appropriations Act.

“We’re not left with just one option. There are other options. There’s an executive order, which is basically a directive from the President to execute this,” Abaya said.

In plain language, this means the administration is pushing for the buyout regardless of its consequences to passenger safety. This strong-arm tactic is possible only in a dictatorship.

In case of default

The paper of those against the fare increases argues that the DOTC cannot do this. It points out that Evbo “is a right only of MRTC (MRT Corp.) in case there is an event default by DOTC which will trigger default of the obligation of the country.”

What Mr. Aquino probably doesn’t know or wasn’t advised is that by doing an Evbo, government will have to be declared in default. An Evbo, as per the BLT (build, lease and transfer) agreement, is an option of MRTC in case of default or failure of the government to pay rentals. It is not an option of the government as per the BLT agreement.

The paper raised the question: “Will the buyout solve the problem of safety?”

“No,” it declared emphatically. “Buying out the MRT is not the solution to the safety issue. Buying out is no guarantee that the safety issue will be addressed. With the performance of the DOTC in 2014, giving the government full control in fact seems to be the worst thing that could happen to the MRT.”

The position paper said it was wrong for the DOTC to believe that an Evbo would solve the problems of the MRT. It pointed out that an Evbo would not solve the safety issue because this was a maintenance problem.

It also said that an Evbo was not even necessary as the government already controlled the MRTC board. Nine out of 14 board seats are held by the government through state-owned Development Bank of the Philippines and Land Bank of the Philippines.

The paper denounced Abaya for “trying to slant the story that the private owners are ripping the people of their money.” But the government is not taking responsibility for the mechanical mishaps in the trains that have caused injuries to a number of passengers over the past few months.

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TAGS: buyout, DOTC, equity value buyout, evbo, fare hike, Government, Joseph Abaya, LRT 1, LRT 2, Metro Manila, MRT takeover, MRT-3, rail transport
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