Posts Tagged ‘public private partnership’

With the recent announcement of the DOTC that the MRT/LRT fare hike on March 1 will still push through, we need to intensify our protest and prepare for a legal challenge to this anti-people measure.

We believe that the fare hike is illegal.

There are no published rules and guidelines for raising the fares of the MRT/LRT. There are no existing standards of what constitutes a reasonable fare. The LRTA is both the proponent and approving authority of the fare hike. The LRTA does not think that it is required to hold public hearing. It only holds public consultations. This is an anomalous situation. A public service, such as the train lines, should be the subject of regulation, as is the case with power, water, toll fees and jeepney fares.  Why should the train lines be any different, especially when this decision affects some 1.2 million daily passengers?

There is no need for a fare hike.

In the case of the LRT 1, the current fares are enough to cover the salaries and operations costs of the system. Even without a fare hike, the LRT 1 is still expected to have a surplus of P23 million for 2011. The same should be true for the LRT 2 whose current fare is enough to pay for the salaries and operations costs of the system. However, without a fare hike, the LRT 2 is expected to have a deficit of P250 million in 2011. This is because of the huge debts of the LRT 2 and the relatively smaller ridership.

The LRTA hopes to raise some P875 million from the LRT 1 fare hike. This huge amount will be used to pay for the debts of LRT 2. In effect, the passengers of LRT 1 will be paying for the debts of LRT 2. Government keeps saying that it is unfair for taxpayers in Mindanao to be subsidizing the fare of the LRT passengers. However, government sees nothing wrong with the fact that passengers of LRT 1 end up cross-subsidizing the debts of LRT 2.

Instead of a fare hike, government should find ways to lessen the debt burden, increase revenues from other non-fare sources and increase the ridership of LRT 2.

In the case of the MRT, the current fares are enough to pay for the operating costs and salaries of the train line. Its total revenues reached P1.9 billion last year while operating costs and salaries only amounted to P645 million. This should have resulted in a surplus of at least P1.2 billion. However, MRT has some P7.8 billion in debts due to the “built-lease-transfer” agreement entered into by government with private developers.

The disadvantageous provisions of this contract have resulted in a huge debt burden for the government and the taxpayers. What should be done is to renegotiate the terms of the disadvantageous contract, instead of conveniently passing the debt burden on the commuters.

The DOTC also admitted that it still has some P1.1 billion in collectibles from commercial space development of the MRT. Most of the ad revenues of the MRT go to the MRT DevCo, a spin-off corporation from the original private developer Fil-Estate. This explains why, despite so many mall and billboards, the advertising revenues of MRT only account for some P5.1 million while revenue from other operations account for only P6.8 million. All the main revenues from the commercial development go to the MRT DevCo. This private entity has yet to pay its obligations to government.

It would be better for government to go after these private entities before it even considers a fare hike.

On  February 15, we call on all oppositors to the fare hike to join the protest at the LRTA board meeting. We will await the decision of the board on the fare hike. We need to pressure the board to scrap this anti-commuter policy. ###


(The paper below was formally submitted to the LRTA public consultation on Feb. 4, 2011. We encourage groups to use it as a reference in raising awareness on the fare hike issue)


Position paper of BAYAN submitted to the public consultation on the LRT/MRT fare hike

February 4 and 5, 2011

The Bagong Alyansang Makabayan (Bayan) is participating in this consultation to state for public record its opposition to the fare hike approved by the LRTA for the light rail transit (LRT) and metro rail transit (MRT) systems. We participate to exhaust all available venues to stop the impending increases and help protect the interest of the commuters and Filipino people.

Our opposition rests on economic and legal grounds.

The debt burden of the MRT/LRT should not be passed on to the commuters

The LRTA and the Department of Transportation and Communications (DOTC) have so far failed to present valid and urgent reasons to implement the fare hike. We have carefully studied the Executive Report, dated 27 October 2010, conducted by the LRTA-DOTC Study Team. Without giving a detailed account, the LRTA/DOTC claimed that the full cost fare for LRT/MRT ranges from P 35.77 to P 60.75, which is way above the average actual fare of P 12.30 to P 14.20. Based on this unsubstantiated comparison, the LRTA/DOTC calculated that government “subsidies” for the LRT/MRT reached P 13.85 billion last year. Without adjusting the fares, it further estimated that subsidies could grow to P 17.06 billion in 2011. This, for the LRTA/DOTC, is the single biggest justification to increase the LRT/MRT fares.

The fare increase is arbitrary. The DOTC and LRTA study outlined threeproposals for a restructured MRT/LRT fare, and chose the proposal which would yield the biggest revenues, without stating any other basis why this, and not the two other proposals, was approved. Not only did the study fail to establish the basis of the P35.75 and P60.75 full cost fare, it also failed to establish why the P11.00-plus-P1.00-for-every-kilometer fare structure was the best option.

In the absence of a meticulous breakdown of the full cost fare, we assume that a huge portion of the P35.77 to P60.75 is actually made up of the debt service burden of the LRTA and DOTC for the light rail infrastructure. In one of our informal dialogues with DOTC officials, we learned that the rule of thumb for large infrastructure projects like the LRT and MRT is that 85 percent of the cost is made up of servicing principal and interest payments. By way of example, this means that debt servicing comprises almost P 51.64 of the alleged P 60.75 full cost fare of the MRT. This also means that the actual cost, or the amount needed to finance the operating and maintenance (O&M) expenses per MRT passenger, is only P9.11. In other words, each MRT commuter already pays between P 0.89 to P 5.89 more than the actual O&M costs.  A similar situation can be observed in the case of LRT 1 and LRT 2.

Such assumption is also supported by available data on the financial operation of LRT 1 and LRT 2 as posted on the website of the LRTA. Looking at the farebox ratios or the proportion of the fare revenues to the total O&M expenses of the LRT 1 and LRT 2, we confirmed our assumption that passengers already pay for the actual cost of a train ride and even contribute to debt servicing. A farebox ratio of 1.0 means that fare revenues cover 100 percent of O&M. From 2007 to 2010 (as of November), LRT 1 has averaged an annual farebox ratio of 1.39. LRT 2’s farebox ratio averaged 1.01 during the same period.

For Bayan, the issue of debt is important because of two things – (1) the debt burden has been made onerous because of questionable and disadvantageous BOT contracts such as in the MRT and (2) it is the obligation of government to service these debts through the people’s taxes and not through user fees. It is government’s duty to lessen, not increase, this burden of the people.

In the case of the MRT, the original proponents were private local and Japanese corporations which formed the consortium Metro Rail Transit Corp. (MRTC). These investors made a killing on the MRT because government guaranteed payments to the banks that financed the project including the Export-Import Bank of Japan, Sumitomo Bank, and other Japanese and Czech banks as well some local financial institutions like the Bank of the Philippine Islands (BPI).

Furthermore, the deal was made more financially onerous because the owners of these banks that provided a loan of $462.5 million in 1998 and the private firms that constructed the MRT have the same investors. MRTC included the Ayala Land Inc., owned by the Ayala family which also controls the BPI. MRTC also entered into an Engineering, Construction, and Procurement (EPC) Contract with the Sumitomo Corporation, owned by the same Japanese investors that control Sumitomo Bank. On top of the guaranteed debt payments, government also guaranteed that the MRTC will get 15 percent return on investment (ROI) per annum.

In fact, this deal was so burdensome that the previous administration in 2009 had to buyout 76 percent of MRTC for $800 million lump-sum payment in order to terminate the guaranteed ROI.

This is clearly a case of bad policy. Taxpayers should not be made to shoulder the burdened for this onerous transaction. Increasing user fees to pay for such debt is an additional injustice.

Subsidy reduction is patently anti-commuter

It is not unusual for state agencies managing public infrastructure like the LRTA to be in the red because their performance is measured not in narrow financial terms but through the net social and economic benefits they bring. The new capability that results from public infrastructure such as improved mobility of the economy’s workforce, for instance, far outweighs what government deems as its “losses”. These losses are actually not losses in the business sense but public investment that go into achieving economic efficiency and improving the overall living condition of the people.

Government should not consider as losses the subsidies it provides to LRT and MRT users. Instead, these must be deemed as public investment that will provide the economy and its human resources new or additional capacity. By drastically reducing state subsidy for commuters, it’s as if the government is saying that public funds are wasted on the students, workers and employees, many of whom are low-income earners, who are the recipients of such subsidy.

Fare hike proponents peddle the fallacy that it is unfair for Mindanao taxpayers to subsidize the LRT and MRT users in Metro Manila.  The entire Filipino people are already paying for the debts of the LRT and MRT in the same way that they are paying for the debts incurred to build infrastructure in Mindanao and elsewhere in the country.

The fare hike issue can be more appreciated if one will scrutinize the socioeconomic profile of regular LRT and MRT commuters. In the 2007 Mega Manila Public Transport Study conducted by the Japan Bank for International Cooperation (JBIC), it was disclosed that 68.1 percent of LRT/MRT users during weekdays earn below P 10,000 per month and a significant 15.3 percent earn nothing at all. The same study also said that 48.8 percent of LRT/MRT commuters (weekdays) are ordinary employees and workers while 31.5 percent are students.

We note that the LRTA-DOTC, in its study on the fare hike, recognized the social and economic role of the LRT and MRT although they are not profitable, to wit: “Most urban railway systems in the world are not financially viable, but are implemented for their socio-economic benefits. Our Manila Light Rail Transit (LRT) systems promote the use of high-occupancy vehicles, thereby reducing traffic congestion on the corridors served, local air pollution and greenhouse gases emissions. Besides the substantial savings in travel time cost of LRT riders, the LRT systems reduce infrastructure investment in Metro Manila road expansion”. (emphasis added)

We thus wonder why these socioeconomic benefits were not factored in by the DOTC study in determining the need for a fare hike. For instance, the savings of government from less air pollution and GHG emissions (i.e. public health budget) and less pressure for road expansion (i.e. public infrastructure budget) should have been computed to get the net losses or even gains from operating the LRT and MRT. The economic value accruing from reduced traffic congestion and considerable savings in travel time cost should have also been calculated to know additional potential benefits for government such as increased tax revenues.

The fare hike seeks to further marginalize low-income earners and student commuters

Aside from minimum wage earners, the study said that the fare hike will also heavily affect “students who are not granted fare discounts on LRT lines”. It claimed, however, that such impact “could be eased by the grant of 15-20% fare discounts”. As for MRT users, the LRTA-DOTC said that while they face the steepest fare hike, “they are expected to afford the increase in fare with their average personal monthly income of P 13,560 or 1.5 times the minimum wage in Metro Manila”. But still, fare discounts and the relative capacity of commuters to afford the higher fares do not legitimize the unwarranted fare increase.

It appears to us that the LRT and MRT fare hike has the intended result of marginalizing the minimum wage earners and students from maximizing the benefits of a relatively affordable and efficient mode of mass transportation. In its study, the LRTA-DOTC mentioned that one of the expected gains from the fare hike is “Optimized ridership and revenue leading to the reduction in wear-and-tear of LRT/MRT systems/facilities and postponing the required capacity expansion (additional trains)”. Optimized ridership, to our mind, is a euphemism for reducing the number of passengers from low-income workers and poor students who make up the bulk of LRT and MRT commuters.  The above portion of the report also belies the claims of government that services will be improved. Quite the opposite, government seeks to defer the expansion of capacity (additional trains) of the MRT/LRT.

We object to the government’s seeming indifference to the plight of the commuters. For instance, the LRTA-DOTC study simply assumed that Minimum wage earners will likely shift to cheaper alternative modes such as jeepneys and regular buses”. Under the new fare structure, regular and aircon bus fares will be lower than LRT/MRT fares. This was actually used as one of the justifications for the fare hike. The LRTA-DOTC however failed to mention that the fare in road-based public transport modes have been increasing too due to unabated oil price hikes.

Furthermore, government seems to think that it is wrong for LRT/MRT, which is a more efficient mode of mass transportation, to have cheaper fares than public buses and jeepneys. Does this mean that every time private jeepney and bus operators increase their fares, the LRTA-DOTC will also have to automatically raise LRT and MRT fares?

The fare hike will be an unbearable burden. We have already pointed out that the ridership of the LRT and MRT is characterized by a high concentration of low-income, marginalized, and vulnerable social sectors. Worse, since late last year, the prices of basic consumer goods and services including rice, bread, sugar, petroleum products, electricity, water, and jeepney fares have all gone up. The current minimum wage in the National Capital Region (NCR) is not even half of the estimated daily cost of living of around P 1,000 per family. Unemployment in NCR is the highest among all regions at 12.6 percent as of October 2010 based on official data.

The fare hike will ultimately benefit big business and not the riding public

The fare hike in LRT and MRT is a policy decision that President Benigno Aquino III first articulated in his State of the Nation Address (SONA) last year. According to the LRTA-DOTC study, the objective of the fare hike is to “Send clear signal to private sector investors that regulatory risks will be minimized in future public-private partnership projects”, the apparent centerpiece economic program of the Aquino administration. The extension of LRT 1 (which will cost P 70 billion) and LRT 2 (P 11.3 billion) are also the two biggest projects identified by government in its priority list of PPP ventures. DOTC officials, meanwhile, have indicated that the whole light rail system will be eventually turned over to the private sector through the PPP.

The ultimate beneficiaries of this fare hike are the big business investors government is trying to attract for the country’s rail system. Even now, Metro Pacific Investments Corporation of Manny Pangilinan is seeking to buy the entire MRT line to a tune of $1.1 billion. Private control over the MRT will of course make it truly profit-oriented to allow the buyer a “reasonable” return on investment.

The LRTA is not a regulatory body and thus cannot approve the fare increase

LRTA’s power is limited to construction, operation, maintenance and leasing of light rail transit system. It has no regulatory powers. One of the powers of its Board of Directors is to fix the rate of fares, a power possessed by any board of directors of any private transport companies. The rate fixed by the Board of Directors, in the case of private entities, is subject to approval by the proper regulatory bodies. Since regulation is not one of the powers vested on LRTA, the rate fixed by its Board of Directors should be likewise subject to approval of proper regulatory bodies.

All other utilities and services such as toll fees, jeep and bus fares, power rates, water rates and the like, are subject to government regulation. In the case of the MRT/LRT fare hike, the proponent is also the approving authority. The commuters are at the onset placed at a gross disadvantage.

It cannot be denied that it is the DOTC which was granted the authority to regulate all kinds of “land transportation utilities”. Under the circumstances, it is only the DOTC which can determine and fix the fare rate to be imposed by the operators of land transportation utilities, including those operating light rail transports. The proposed fare adjustment should also go through the formal process of hearings, not just a mere public consultation aimed at informing the commuters.

Admittedly, the LRTA is an attached agency of the DOTC. However, it must be reiterated that the LRTA, being a government corporation, is not a line agency of the government, and is in fact governed by its Board of Directors. Under this peculiar situation, the act of the Board of Directors of the LRTA relative to the issue of determining and fixing fare rate is subject to the regulatory powers of the DOTC.

Our demands

We demand that the LRTA-DOTC not implement the so-called “provisional” increase in fares of LRT and MRT starting March 1.

The LRTA does not have the mandate to approve the fare hike. On the question of debt, government must negotiate with creditors to find ways on how to lessen the debt burden, instead of passing these on to commuters. Government must seriously look into the many projects funded by onerous debts and were bloated by corruption. It can start with the MRT loans that have been characterized by onerous terms.

Further, creative ways to improve the non-rail revenues of the LRT and MRT should be pursued and maximized.  The LRTA-DOTC admitted that “Compared with urban railway lines in neighboring countries, our LRT lines are not generating substantial revenues from commercial development and advertisement”. But the LRTA-DOTC did not further explore the option of raising collections from tenants and commercial establishments and advertisers that use the railway infrastructure.

For example, the DOTC has yet to collect from the MRT DevCo an outstanding debt of P1 billion in unsettled Development Rights Payments. The questionable operation of  the MRT DevCo, which holds the concession to develop open spaces in the MRT, has apparently placed the government at a disadvantageous position since MRT Dev Co has not paid up.

A study by the Japan Bank for International Cooperation (JBIC) disclosed that LRT’s non-rail revenues comprise a paltry 2.6 percent of total revenues. In neighboring countries, non-rail revenues account for 20 percent. Non-rail revenues must be raised to at least approximate this regional benchmark instead of placing additional burden on commuters through a fare hike.

Finally and most importantly, we demand the LRTA-DOTC and the Aquino administration to junk the PPP/privatization scheme to develop the country’s infrastructure. The MRT case should have taught government of the pitfalls of PPP. The experience of power and water privatization, in the Philippines and elsewhere, clearly show that privatization does not alleviate government’s fiscal woes and create unnecessary burden for consumers due to skyrocketing and increasingly prohibitive user fees. (end)


Bayan opposes the provisionally approved fare hike for the LRT and MRT because of the following reasons:

  1. There is no need for a fare hike. The present fares can already cover the cost of operation and maintenance of the LRT and MRT. The additional fares government wants to implement are only meant to increase the direct burden of commuters in paying the creditors. The DOTC said that the rule of thumb for big infrastructure projects like the LRT/MRT is that debt accounts for 85 percent of the cost. This is the obligation of the National Government and not the commuters, who as taxpayers are already servicing such debts. The MRT debts, in particular, have been also proven to be onerous. It is thus a double injustice for the commuters to pay more to service these debts when the just thing to do for government is to seek remedies including the possible renegotiation of the terms with creditors.
  2. The fare hike is anti-poor. According to the Mega Manila Public Transport Study of 2007, almost 68 percent of regular LRT/MRT commuters earn just less than P 10,000 a month. Such income is just within the range of the minimum wage rates in Metro Manila. Forty-five percent of the commuters earn below the minimum wage. The new fares will cost a minimum wage earner who is a regular LRT/MRT user as much as 16 percent of his income. Put in the context of increasing fares in alternative modes of transportation, prices of food and other basic goods, etc. – not to mention the chronic job scarcity – the LRT/MRT fare hike is unconscionable.
  3. Public infrastructure is not business. Government should not consider as losses the subsidies it provides to LRT/MRT users. Instead, these must be deemed as public investment that will provide the economy and its human resources new or additional capacity. The viability of public infrastructures is measured not in narrow financial terms but in terms of net social and economic gains. Besides, the losses stem not from commuters paying less than the operation and maintenance costs of the LRT/MRT. The losses are the results of burdensome contractual and loan obligations that previous governments inked with the private sector.
  4. There are other ways to ease fiscal pressure. We recognize that there is an urgent need to address the fiscal woes of government. But this should not be at the expense of the already hard-pressed masses. Instead, government must negotiate with creditors to find ways on how to lessen the debt burden. Government must seriously look into the many projects funded by onerous debts and were bloated by corruption. Further, creative ways to improve the non-rail revenues of the LRT/MRT, which at present is only less than 3 percent of the total, should be pursued and maximized.
  5. Fare hike is first step to privatization. Government admits that the long-term plan for LRT/MRT is privatization. Thus, the fare hike can also be seen as a scheme to entice potential investors and showcase the profitability of the rail system. But we already have around three decades of experience under privatization that includes water and power utilities. Since last year, we have seen how insecure we remain in our energy and water needs despite the manifold increases in user fees under privatization. The fiscal crisis, which privatization was supposed to help address, has not only lingered but even worsened. The same predicament is true in many countries around the world where corporations have taken over public utilities and infrastructures. #


Today the Aquino government will be hosting the Infrastructure Philippines conference which aims to jumpstart the Public-Private Partnership (PPP) program of the government. The conference will be held at the Marriot Hotel in Pasay. The PPP is just a repackaging of the discredit “privatization” policies of previous regimes.

Based on the website, the conference aims to boost the PPP program of the Aquino administration by giving incentives to potential foreign investors. Many of the conference speakers are representatives of foreign banks and multilateral lending institutions like the Asian Development Bank, World Bank, Japan Bank for International Cooperation, HSBC, Standard Chartered Bank among others.

During his State of the Nation Address, Mr. Aquino hailed the PPP as a creative or innovative way of getting projects done even if government is facing a gargantuan budget deficit (which may reach P325 billion by yearend). He even cited leasing the facilities of the Philippine Navy Headquarters in Roxas Boulevard so that government can get P100 billion for the modernization of the Navy. The headquarters meanwhile will be relocated to Camp Aguinaldo in Edsa, quite far away from any body of water.

During his trip to the US and Japan, Mr. Aquino also sought foreign investors for his PPP projects. In his speech at the Council on Foreign Relations in the US, Aquino said that the Philippine was “wide open” for investments “particularly in tourism, business process outsourcing, mining, electronics, housing and agricultural sectors”.  In the same speech, he announced that there are 10 initial PPP projects amounting to some $4.5 billion (Aquino speech on CFR, US). Recently, the government unveiled its list of 10 PPP projects as:

Tourism Projects                                                                                              Cost

-MRT-LRT expansion                                                                                      US$1.56 billion

-LRT Line 2 East extension                                                                            US$251.10 million

-Puerto Prinsesa (Palawan) airport                                                          US$96.93 million

-new Bohol Airport                                                                                         US$167.62 million


Kabulnan-2 Multipurpose Irrigation and Power Project                 US$319.40 million

-Logistics Support on Agri-Fishery Products Supply Chain                               US$33.33 million

Renewable Energy

-Wind Farm Power Project                                                                          US$125 million

-Northwind Pamplona Project                                                                   US$75 million

-Northwind Appari Project                                                                          US$100 million

The 10 projects are part of the 83 infrastructure projects lined up until 2015. These projects are reportedly worth P740 billion. Of the 83, 43 projects worth P348.5 billion are in the power sector. (Bayan discussion guide).

Government guarantees

To attract investors, the Philippine government has prepared incentives and other conditions that would guarantee foreign firms their profits.

Under the new PPP program, the Aquino government is willing, “on a case-to-case basis, to protect investors from certain regulatory risk events such as court orders or decisions by regulatory agencies which prevent investors from adjusting tariffs to contractually agreed levels. Such regulatory risk insurance could take the form of make-up payments from the government to PPP investors, other guaranteed payments, and adjustments to contract terms.”

So if the Supreme Court issues a TRO on a toll fee hike of a private toll operator, the government will end up paying the toll way operator for its “losses”.

The “insurance” from the government covers court orders or decisions, issuances of regulatory bodies (ERC, TRB, MWSS etc), and even legislation. In one fell swoop, the executive renders all these institutions and agencies useless. Consumers, who are also taxpayers, will still end up paying the private operators. Such an arrangement is a surefire way to pile up public debt.

Not long ago, the Philippine guaranteed the profits of Independent Power Producers during the Ramos administration. The onerous “take-or-pay” provisions, where IPPs are assured of payment whether or not their plants go on-line, resulted in skyrocketing power rates and saddled the state-run Napocor with billions of debt. This became the infamous Purchased Power Adjustment or PPA. Meanwhile, the private investors of the MRT were also given sovereign guarantees on their loans as well as a guaranteed return on investment of up to 15%. The government ended up in debt as it tried to pay its obligations to the private operator.

The Aquino government clarified that such a guarantee will only be made available on a “case to case basis” and that there will be no guarantees for commercial risks, no take-or-pay provisions in the new PPP. Finance Secretary Cesar Purisima was saying they want to break with the past practices.

Secretary Rick Carandang meanwhile was quoted as saying that Leftist critics of the PPP have done nothing but “oppose and oppose”. He said:

“They (critics) are concerned that it will lead to more debt but let’s take a look at what the debt to GDP ratio is going to be at the end of all of this. Let’s take a look at what the debt servicing ratio is gonna be at the end of all this. Let’s take a look at what kind of projects, what kind of infrastructure we’re going to be able to build at the end of all this and then we’ll know if it was worth it,”

Well, we shall take up Sec. Carandang on his challenge. We doubt it if Sec. Carandang can guarantee that debt spending will not go up after this PPP spree. Yes we will have tangible projects, as we did have the IPP’s and the MRT during the Ramos administration. In some cases, it will probably be some time before the negative effects will be felt. The IPP contracts were entered into in 1990’s but the outrage over the PPA erupted only during the following decade. Almost a decade passed before the government decided to drastically increase the MRT fares (which are set to take effect next month).

The Aquino government has said that guarantees or incentives are necessary to attract investors. Private investors need protection from certain risks, says the government. But who will protect consumers from the risk of high prices and mounting debt if the authority of regulatory bodies, the courts and congress can be circumvented by private firms armed with government guarantees?

Can we build infrastructure without the aid of foreign investments? Yes we can, but it would take a restructuring of the economy in favor of addressing people’s needs rather than global market demands. It would require government investing in basic and heavy industries and encouraging national industrialization to address basic needs and promote stable employment. It would require land reform which will increase purchasing power in the countryside and stimulate domestic consumption. It will involve an economic outlook that fosters self-reliance and sovereignty and allows the domestic accumulation of wealth, rather than the repatriation of profits. It cannot be achieved overnight but when it happens, there will be balanced growth and the people will not be left behind in “progress”.

No, we don’t just “oppose and oppose”. Ours is an economic alternative to privatization, liberalization, deregulation and unbridled profiteering. ###

P.S. – The PPP Cabinet:  A review of the cabinet appointments of Pres. Aquino will show us several representatives of big business strategically positioned in departments that would take on PPP projects. Many of the PPP projects are in tourism, transportation, public works and energy. Could it be mere coincidence that the secretaries of these departments all come from big business? Could there be potential conflicts of interest?

Tourism Secretary Alberto Lim was the Executive Director the Makati Business Club. Energy Secretary Jose Rene Almendras was the former president of the Ayala-owned Manila Water. DPWH Secretary  Rogeliio Singson was former president of Maynilad, a company conncected with DM Consunji. Transportation and Communications secretary Jose “Ping” de Jesus was the former president and chief operating officer of electricity distributor Meralco and also former PLDT executive vice president.

Appointees like Singson and De Jesus may have conflict of interest issues. Singson was connected with DM Consunji Inc., one of the biggest construction firms in the country and which has lucrative infrastructure contracts with government. DOTC’s De Jesus on the other hand, being a former executive vice president of PLDT, may find himself in a similar conflict of interest situation when dealing with his former employer.

Similarly, DOE’s Almendras will have to deal with his former employers in the Ayala Corporation since the company is also interested investing in the energy sector. News reports say that Ayala is keen in investing in renewable energy and had also partnered with Metro Pacific in a previous attempt to acquire the Angat power plant. Almendras will also have to deal with his former employers in Aboitiz and Co. which is considered one of the biggest firms investing in power generation and distribution in the Visayas and Mindanao.

Business with government is made so much easier when representatives of big business are running the government, as if it were a business. In the 70’s, they called it “bureaucrat captalism”. ###