Updates in the campaign against the MRT/LRT fare hike

Posted: February 6, 2011 in Economy, Socio-Political
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(Note:  A day after this article was written, the DOTC ‘clarified’ that it was not deferring the fare hike and would meet again on Feb.15 to decide what to do.)


We achieved a tactical victory yesterday after the LRTA announced that it would not be pushing through with the planned fare increases on March 1 after various groups opposed the fare hike. The LRTA said it would need at least a month to study the submissions of various groups.

Bayan attended the two-day public hearing and submitted its position paper to the LRTA, along with the signatures it gathered during the campaign.

Make no mistake, while this is a tactical victory, the fare hike has only been deferred. They can still implement it since there is still an existing LRTA board resolution. There is also Malacanang’s prior approval of the measure.

The best way to ensure that the fare hike will not push through is for President Aquino himself to order its withdrawal. The LRTA board is composed of cabinet secretaries and so if the president says he is withdrawing the measure, then the LRTA board will have to withdraw. The problem is, will Aquino do just that? Or will he uphold the line of the neo-liberals like DoF secretary Cesar Purisma who seems to have a huge problem with the idea of state subsidy for the poor commuters but has no qualms about paying onerous debt and partnering with big business no matter how disadvantageous to the public.

Thus, we need to remain vigilant and carry on with the mass actions and the mass education campaign. We need to focus on the issue of debt and why this should not be passed on to the commuters. We need to ask why other sources of revenues for the train system are not being maximized and why certain private interests are raking in profits while the government is shortchanged.

From the presentations we got from the MRT and LRT, current fares are already enough to meet the personnel expenditures and the maintenance and operations costs of the trains. The single biggest expense is debt servicing. This is where government subsidy is going.

The standard explanation of the MRT when its debts are questioned is that these were all part of the built-lease-transfer agreement entered into by previous governments. However, the terms were grossly disadvantageous to the public. Sovereign guarantees were given and the government assumed the commercial risks of the operations, even guaranteeing an annual Return on Investment of 15% for the private developers.

As for other sources of revenues, we found out that MRT only earns a measly P5 million from advertising and some P7 million from other operations. Its total non-rail revenue is only P12 million, not even 1% of its total revenues of P1.9 billion. All those malls and ad spaces and the government only earns P12 million? Clearly something is wrong with this arrangement.

We learned that a private entity is the one raking profits from the ads and development of commercial spaces around the MRT. This private entity was a spin-off of the private company that developed and built the MRT. The DOTC has yet to collect P1.1 billion from the MRTDevCo. Government should first go after these private profiteers before it can even think of collecting additional fares from poor commuters.

There were other interesting points raised during the consultation. Bayan and lawyer Jun Francisco raised the issue of the mandate of the LRTA to raise fares. There seems to be no clear procedures on how to go about fixing rates. The LRTA is the proponent of the increase as well as the approving body. This is certainly an anomalous situation that places consumers at a gross disadvantage. The LRTA is not a regulatory body hence it cannot approve the new fares.

The LRTA keeps calling the increase a “fare adjustment”. They refuse to call it a fare hike. Their explanation is that they are just bringing fares closer to the early rates in 1999 where the minimum fee was P17 and the maximum fare was P34. The reason for this however is that back then, the government needed to peg rates at a higher level because they were trying to meet the guaranteed profits of the private developers. They needed to meet the 15% ROI and pay for the debts. They lowered the fares eventually because they could not get the needed volume of passengers to make the rail “viable”. No one was riding the train back then.

One interesting point raised by the group National Council for Commuter Protection ( I hope I got that right) was the rationale of the mass transport system. Their leader pointed out that the mass transport system originated during the industrial revolution when there was a need to move workers en masses from one place to another so that they could work in the factories. There was no need for this during feudal times when peasants simply worked on the land where they lived and production was individualized not “socialized”. She said that the state should subsidize transportation for the workers and that transportation costs should not take up more than 10% of the workers’ wages.

Will the MRT/LRT trains be decongested with the fare hike? Nope. The expansion of capacity will not happen at least after 3 years. All other “improvements” are peripheral and could easily be done even without a fare hike. This includes increasing the number of security guards for bag inspection, repainting of the terminals and improvement of the rest rooms.

We have learned a lot from our initial engagement of this issue. There are many areas of research that we still need to work on, especially on the question of the onerous contracts entered into by government. We shall do this even as we prepare our mass actions and possible legal actions.

For now, thanks to all those who participated in the public consultations and mass actions. Our vigilance paid off but we have a lot of work ahead of us.

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