In the experience of the Philippines, the light rail systems were built through lopsided loan and contractual agreements. In the case of LRT 1 and 2 which were financed by official development assistance (ODA), 63 percent of the Php8.373 billion expenses in 2012 went to loan payments, interest expenses and depreciation. Fares of commuters were actually enough to cover direct operating expenses. Rail revenue was at Php3.44 billion while direct operating expenses was at Php3 billion.
On the other hand, MRT 3 was built using a PPP mode of build-lease transfer agreement between the government and Metro Rail Transit Corp., a consortium led by Ayala Land and Fil-Estate Management Inc. The government pays amortization for leasing the facility from the consortium, for operation and maintenance and for loan amortization. The government guaranteed the loans made by the consortium from banks that were also related to corporations involved in the project. Like in the case of LRT 1 and 2, fares of MRT 3 commuters have been covering for direct operating cost. In 2012, rail revenue was Php2.14 billion while direct operating expenses was only Php1.82 billion. In 2012, 58.5 percent of expenses of the MRT3 was for the equity rental payments which cover the cost of guaranteed loans and 15 percent return on investment that the government assured the consortium.
The impact of these lopsided deals is being felt by commuters up to this day. In April, MRT and LRT commuters had to endure very long queues so that they could get to their destinations. The MRTC claimed that this was because of the lack of revenues to operate the MRT due to technical malfunction. This was on top of perennial crammed trains during rush hours, non-functioning airconditioning units and increasing frequency of technical “glitches”. Accidents have also been recorded. When Malacanang was asked to react on commuter woes, Secretary Coloma told commuters to take other means of transportation instead.
The government has long been batting for fare hikes for all three rail lines supposedly to improve services. Behind this, the push for fare increases is a way to gain investor confidence for the bidding of its mass transport PPPs.
Commuters are being forced to swallow an entire package of fare hikes for all light rail lines. Commuters of LRT 1 and 2 would be shouldering a maximum of 50 percent and 66 percent increase respectively if the latest proposed fare hike will be implemented. For example, fare from Roosevelt to Baclaran would increase from Php20.00 to Php30.00 MRT 3 commuters would be absorbing a maximum of 87 percent fare hike or an average increase of Php15.84 per round trip.
The proposed fare hike has no basis because additional revenue will only be used to pay for the loans and unfair contract terms that the government entered into. The Aquino government has been serving big-ticket PPP contracts to big business with a host of incentives and guarantees. With the sweet concessions that the Aquino government has been giving to the prospective winning bidder of the LRT 1 Cavite Extension, commuters foresee a mass transit system that will be used for more profiteering instead of service.
Like what the recently concluded World Economic Forum for East Asia has shown, the Aquino government has the interest of big business in mind when it comes to its flagship development strategy. The way infrastructure projects have been tailored to fit the demands of big foreign and local corporations reveals the government’s bias towards business interests over ensuring people’s welfare.