The public can be at the losing end when public services such as the train system is thrust into the hands of the private sector and run on their profit-seeking terms

IBON Features–In anticipation of President Aquino’s last State of the Nation Address, some people’s groups compared the country’s situation to the Metro Rail Transit (MRT), which has been breaking down more often this year compared to five years ago. According to them, the MRT is symbolic of the Filipino people’s sorry plight under the administration of a pro-business government.

It has been months since the light rail transit fares in Metro Manila increased, without any consultation from the riding public. Yet despite the promised better MRT experience to justify the fare hike, there has been no stark improvement in the train service. The public is living with sloppy train services yet are forced to pay more than what is necessary.

Recently, a south-bound Metro Rail Transit (MRT) train overstayed twice at the Shaw and Boni Avenue stations. As the air-conditioning and some lights went out on passengers who were squeezed like canned sardines in several coaches, the driver apologized: “May inaayos lang po (just fixing something).”

Malacanang has consistently dismissed opposition to the MRT fare hike. On several petitions to the Supreme Court asking for the restoration of fares to pre-hike levels, Presidential Communications Operations Secretary Herminio Coloma said that prior to the hike, train fares could barely cover the cost of train maintenance. No less than President Aquino meanwhile said that critics are ‘only after self-promotion’ and that the reasonable rise in fares is expected to translate into improvements in the train service.

The Philippine Development Plan also invokes the ‘user pays’ principle. According to government, it is only fair for each rider to pay an amount closer to the actual cost of their trip.

No improvement yet

But couple Jose and Monica, Makati residents and minimum-wage earners in a Quezon City office, lament the fare hike implemented in January this year. It pushed their daily Php48 combined MRT fares to Php80. It has added over Php4,000 to their transportation expenses from January to June this year, which they said has ruined any steep chance for savings.

Amid the rising cost of living and insufficient wages, the couple counts among millions of students and employed and unemployed workers who had to choose the MRT as their daily ride because of its relative speed compared to the bus which gets caught in traffic.

“But the glitches have been occurring more frequently compared to the previous years,” they said. ‘There are also more discomforting experiences aside from the MRT mishaps that get media attention, ‘ Monica shared. ‘For example, I cannot recall how many times I have ridden on a train whose entrance light and signal panel has fallen and is only being held up by passengers to keep it from hitting their heads.”

“Sometimes the windows would be wide open when the air-con was not working, or the train would simply be too jam-packed that the air-con could no longer be felt,” Jose added. Defunct escalators, elevators and ticket gates that are occasionally out of order, and long queues caused by lack of train cars, have become some of the perennial problems of the MRT.

Onerous beginnings

The unaddressed mishaps and increasing glitches are characteristic of a privatized MRT system. To begin with, the MRT was constructed based on a lopsided business deal and not on a plan that intends to provide an efficient and economical service to the public.

To recall, the Ramos administration signed a build-lease-transfer (BLT) agreement with the Ayala-Sobrepena-led consortium MRT Corp., Ltd (Metro Rail) in 1997. Under the 25-year agreement which begins in the year 2000, Metro Rail would construct the train system and then lease it to the Department of Transportation and Communications (DOTC). For the construction part, Metro Rail contracted Japanese firm Sumitomo, which subcontracted fellow Japanese firm Mitsubishi Heavy Industries and Czech CKD Dopravani Systemy. While the DOTC operates the system, Metro Rail is in charge of maintenance. The DOTC’s rental fees include (1) equity rental payment to Metro Rail guaranteeing an annual 15% return for the investors (who put in US$190 million in the project), (2) reimbursement of Metro Rail’s maintenance expenses and (3) payment of Metro Rail’s debts to the project’s financiers (US$485.5 million). In effect, aside from guaranteeing investors annual profits, government has also guaranteed debt payments to the banks that provided loans for the project. Some of these banks, namely the Sumitomo Bank and Bank of the Philippine Islands, are owned by the very same investors mentioned above.

Consumer advocates have noted that pre-hike MRT fares would have been enough to cover operation and maintenance expenses if not for the above obligations of the DOTC to Metro Rail. The DOTC itself cites a rule of thumb for large infrastructure projects like the MRT wherein 85% of the supposed Php35.77-60.75 full cost fare is actually made up of servicing principal and interest payments. This means that the pre-hike fare has already been Php 0.89-5.89 more than the actual cost per passenger.

Abaya had earlier on affirmed that the fare increase would be used in paying government’s obligations to Metro Rail, as the former ended up incapable of meeting these burdensome fees on time. Beneath the hype about improved train services, the current administration has passed on to consumers, through user fees, the burden of paying its debts – which are onerous in the first place.

Malacanang had also declared that the fare hike is necessary to entice investors to do business in the country, and in particular to invest in the MRT.

Further privatization through PPPs

Seemingly oblivious to the public’s plea for reasonable fares and improved services, the Aquino administration carried on plans for various integration and expansion projects involving the existing LRT and MRT lines through its public-private partnership program. These will be undertaken with the country’s wealthiest including Araneta, Roxas, Cojuangco, Consunji, Lopez, Zamora and Sy business groups as well as their American or Japanese partners – and in fact, at the expense of some agricultural or indigenous communities.

As for the MRT, the Aquino administration, for one, is considering a deal with Pangilinan group Metro Pacific Investment Corp. (MPIC) which has proposed to add new equipment to the system, buy out government’s stake in the project and even accept a lower rate of return on investment (ROI) on the condition that the contract be extended for 15 more years beyond 2025.

To date, track and station repairs have reportedly been made during the holidays, and new ticket gates for the single-ticketing system under the Ayala-Pangilinan group consortium are ready to replace the old ones. The DOTC also announced that procurement of new railways, coaches and other equipment has begun.

“With big businesses all over the train projects and services, we dread the possibility of additional passenger fees in the future, or maybe really intolerable glitches,” said Jose and Monica.

After having to put up with the train system’s inefficiencies for some time, the promised MRT developments mean nothing yet for the train’s commuters. What is evident is that their MRT experience is another proof to how the public can be at the losing end when public services such as the train system is thrust into the hands of local and foreign businesses and run on their profit-seeking terms. IBON Features