Says DOTC made 3 fatal admissions vs MRT/LRT fare hike

At the first hearing of the Congress Transportation Committee on the Light Rail Transit 1 and 2 (LRT 1 and 2) as well as the Metro Rail Transit 3 (MRT3) fare hikes Bayan Muna Rep. Neri Colmenares said that Department of Transportation and Communications (DOTC) Undersecretary (Usec.) Jose Lotilla made at least three (3) fatal admissions against the MRT/LRT fare hikes.

“No.1 is that Usec. Lotilla admitted that the DOTC does not have the authority to increase fares, so the fare hike is illegal. No.2 he also admitted that the MRT/LRT makes profit and that the fare hike would go to the concessionaire. No.3 Usec. Lotilla also said that under the concession agreement for the LRT1 extension, this would just be the first fare increase and that there would be fares hikes every two years,” said Senior Deputy Minority Leader Colmenares.

“There is treachery and deception on Malacanang’s part because they have not been forthright about these issues and are still doing all they can to justify the fare increase. It is also deplorable that DOTC Sec. Joseph Abaya did not even show up at the hearing but is all over media defending the fare hike,” added the progressive solon.

“As it is I already moved for the Transportation committee to recommend the deferment of the fare hike pending the decision of the Supreme Court for the TRO. We will do all we can to stop these hikes because this is just the start of fare hikes especially LRT1,” said Rep. Colmenares.

Based on a study of IBON Foundation, the LRT 1 is the biggest project auctioned so far by the Aquino administration under its PPP program at P65 billion. It is also one of the most controversial because the Aquino government has given greater guarantees and perks than the ‘sweetheart deals’ done by previous administrations, the grave effects of which the public is still paying or to this day.

Quoting again from the IBON study Rep. Colmenares said that; “among the guarantees and perks that MPIC-Ayala group now enjoy are 1.)  the government will actually be paying some P34.9 billion or more than the half the of the total project cost of P64.9 billion for right of way acquisition, purchase of coaches, civil works, etc. This means that Light Rail Manila Consortiums rail business in effect benefits from the lower borrowing costs of government including from official development assistance (ODA). There is also an additional P5 billion subsidy of ‘viability gap funding’. Moreover, the concession agreement allows Light Rail Manila to pay the premium in tranches- 10% up front and the rest in a quarterly basis after five years,”

“2.) They are also assured of fare hikes, with their concept of notional fare composed of the boarding fare which is charged to commuters per trip and a distance fare which is charged according to distance travelled from the boarding station to the exiting station. The concession agreement (CA) states that by August 1, 2014 the private concessionaire is granted an initial notional fare that is actually a fare hike, which what they are demanding now. The initial notional fare is a boarding fee of P12.13 plus a distance fare of P1.10 per kilometre. This provision will result in an increase of fares up to 101.7% per trip depending on the route,” he added.

“3.) The CA also allows Light Rail Manila to have periodic adjustments in the notional fare starting August 1, 2016. The consortium is allowed to increase by 10.15% every adjustment period (every two years). Also upon completion of the extension line to Niyog station in Bacoor, which is estimated to take three years, the notional fare at that time can be hiked by five percent. On top of this, the CA also allows to adjust notional fares automatically according to inflation rates (inflation-rebasing) every four years starting from 2018 onwards.  Aside from these there are other additional increases: 1.) another 5% hike upon completion of construction of the extension; 2.) a programmed periodic adjustment of some 10% every two years; and 3.) pass-on of power cost fluctuations up to 5% of the notional fare,” said the progressive solon.

“4.) The CA also contains a mechanism assuring Light Rail Manila that it will be able to collect the notional fare if the approved fare is lower. Which means the government will pay a ‘deficit payment’ to cover the gap. This is a regulatory risk guarantee and the consortium never had it this good but at the expense of commuters. Seeing the extent of the perks the MPIC-Ayala group are enjoying it is incumbent upon us to exhaust all means so that commuters would not be at the losing end of this more than a sweetheart deal,” ended Rep. Colmenares.. ###