Fare increase in the Metro Rail Transit (MRT) and the Light Rail Transit (LRT 1 and LRT 2) can be aborted but the two offices each need to restructure its operations, Senator Chiz Escudero today said.
The impending fare hikes is endorsed by Malacaňang although new fares have not been disclosed yet.
Escudero said the MRT can pursue a stop-gap measure by way of revenue sharing from non-rail revenues realized from ads and lease operations of the MRT Development Corporation (MRTDevCo).
MRTDevCo has been collecting and receiving income from ads and lease operations but the Metro Rail Transit Corporation, which operates the MRT, failed to settle its billions of pesos in outstanding debt to the government. which already totaled to more than a billion pesos.
“If only the government gets its rightful share from the non-rail revenues it can be used to subsidized fares. The government should look into its collectibles”.
In other rails in the world, non-rail revenues are actually used to supplement the income of the railway system itself so that it can subsidize lower rates to commuters.
Escudero has been pushing for a congressional inquiry to determine ownership and full operational control of MRT 3 so that proper steps could be taken on how to deal with fare subsidies, among others.
An Asian Development Bank report in 2008 recommended that “MRT 3 operations should be handed over to the Light Rail Transit Authority to achieve sector rationalization”.
Escudero said the government is hampered from taking full steps in addressing and abating fare hikes because of the ownership and operational issues.
In the same ADB report, it added that “the buy-out of MRT3 needs to consider smooth turn-over of management to LRTA, but currently this aspect is not being addressed”.
The senator said that after the government has cleared the above-mentioned issues, as well as its long-overdue collectibles, improving non-rail revenues could follow.
A Japan Bank for International Cooperation (JBIC) study conducted in 2007 showed that in LRT and MRT, non-rail revenue can improve by increasing rates of ads and retail tenant leased areas so that fare will not sharply increase. LRT’s non-rail revenue share is only a measly 2.6% of the total earnings. Whereas in neighboring countries, the government gets a 20% share from its non-revenue collection.
“The real challenge now is to restructure the whole operations to create positive benefits for the riding public and society at large” Escudero said.