THE INSIDE MAN

Raising toll fees, train fares and fuel taxes

Raising toll fees, train fares and fuel taxes image

Text: Tito F. Hermoso / Photos: MRT, Brent Co | posted January 26, 2015 12:08

Double standards?

Rare ally

It is indeed a rare occurrence that one will find this column to be on the same side as the perceived in-bred intransigence and petulance of this administration; in this case we find favor for the MRT-3 fare increase. Why, we even find it galling that some of the rather strident oppositors were the very people who were part of the consultation and negotiating process. Granted that the layers of relevant MRT contracts are as opaque as can be, when it comes to the MRT-3 fare increase, this post-Mar Roxas DOTC has been as transparent as they come, though not by some politicians' muddled criteria.

Good service vs. low train fares

It's another chicken or egg proposition. If the public wants safe and comfortable train service, they should welcome a fare hike. Leave it to grandstanding traditional politicos to demand the reciprocal; better train service first before authorizing the fare increase; essentially the proverbial cart before the horse. What is conveniently overlooked is proved by hindsight and history.

The 'right' fare?

There indeed was a time when the MRT 3 was fast, efficient, clean and comfortable. That was when it was new and the fares were "just right". Back in 1999, it was hardly ever crowded because fares were set above non-air-con bus fares. But then ridership was so low that the DOTC, the operator of the railway, welcomed the increase in patronage when the administration of the day dropped the train fares. And that is where its been stuck all these years, until the DOTC was put under the charge of Sec. Mar Roxas.

BOT with a twist

The MRT 3 is a unique public infrastructure animal. It is a BOT - build operate and transfer - project, with a twist. Instead of being built AND operated by the Private corp., the MRT was built by the private sector but is operated by the government. Hence the government pays the private corp.. in this case MRTC, a fee to allow MRTC to recover its investment. Now, since the MRT trains and tracks were built with private corp. money, MRTC required a high international standard of maintenance, just like the government owned and run LRT-1. Hence the long term maintenance contract with Sumitomo which kept the MRT 3 accident free until 2011, about the time when the DOTC decided to reinvent the wheel.

Reinventing the wheel messed it up

Consistent with this current administration's attitude that all government contracts after the Cory-era up to the GMA era are suspected as corrupt and disadvantageous to the public, the Sumitomo contract was abbreviated and bided out, and subsequently won by a company with no track record on rail nor train maintenance. And that is where the muddle of the MRT3 stands. To insist on a fare hike roll back is tantamount to pretending not to know once upon a time, the MRT3 ran as well as the older government owned LRT-1 and that during that time fares were a lot higher. In attempting to cure the ailment, the oppositors, feigning ignorance of the cause of the ailment, are demanding the wrong kind of medicine.

SLEX Nichols Toll Plaza

How about the tollway fees?

On the other hand, this administration's petulance and intransigence, is largely behind the refusal of the TRB to grant the contract obligated increase in tollway fees- four years and counting. These toll fee increases are necessary to fund the private concessionaire's enhancements and improvements.

Expansion for the South

For instance, the SLEx from Mamplasan to Calamba is due to be widened from 3x3 lanes to 4x4 lanes. Although San Miguel infra has already shelled out cash to widen the Lipa to Batangas section from single carriageway to 2x2 dual carriageway, it still needs additional funding to expand the Batangas toll barrier and widen the last few kilometers' approach to 2x2 carriageway. As of now, this approach to the toll barrier needs another river bridge while the installation of a concrete central barrier considerably narrows the width of the current carriageway and limits the flexibility of adjusting the access to lanes as toll paying exit queues build up. San Miguel recently withdrew the SLEx and STAR petitions for toll fee increases, ostensibly to resubmit readjusted figures due to 4 years of TRB inaction. Meantime, Skyway's petition also remains in TRB limbo.

Expansion needed for the North

Up North at the NLEx, the congestion experienced during holidays at the 2x2 segment from Sta. Rita, through the 20km long Candaba viaduct to San Fernando proves that widening to 3x3 lanes, is overdue. Upgrade to 2x2 carriageway is also needed for the Mabiga to Sta. Inez single carriageway segment. SCTEx will have to fund building a new toll plaza in La Paz in anticipation of the CLEx [Central Luzon Expressway] to Cabanatuan and expansion of the Tipo Subic toll barrier abutting the SFEx or Subic Freeport Expwy.

Tollways deteriorated further during Cory's term

So what gives? We all don't want a repeat of the bad old days when low toll fees and sometimes no toll fees, circa late Cory era, when the Supreme Court ruled to stop toll collections on the North and South Diversion roads. Then, enterprising private individuals opened up their own exits and entries on what should be a limited access expressway while law enforcement and maintenance virtually vanished leading to horrible accidents, disintegrating pavement, powerless street lamps and traffic jams.

Double standard?

All this leaves a bad impression of double standards; when it comes to increasing fares or fees to government run utilities like the MRT3, this administration can afford to be bold and stubborn but when it comes to utilities run by private corporations, utilities that the government could not have built but then asked the private sector to fund and operate for them instead, there is no compunction to adjust toll fees. Is it, cynically, all about what would be populist vote getters once the election cycle comes full circle? Unfair? Then it is no wonder that the PPP isn't getting much foreign investor interest, despite all those global roadshows.

Cheap fuel now so tax it again

While on the subject of increases, here is another area where the current administration can practice its stubbornness and intransigence. Though this will prove unpopular again, there is still a need to lighten the burden of the DoF. Hence, it is time to restore the taxes on fuels back to 2009 levels. If one recalls, the onset of the Global Financial Crisis of 2008 and the eruption of uprisings in the Arab world, spiked oil prices to beyond the USD 100.00 benchmark. Now that oil is back to its late 90's and early 21st century benchmarks, government should not waste this opportunity to raise fuel taxes again. Indonesia used this opportunity to abolish its costly fuel subsidy.

Inflation vs. deflation: economic good?

And as government raises fuel taxes, it should also raise tolls, public transport fares and utilities. Unpopular? But did it ever stop a determined Pnoy administration? Inflationary? It used to be that inflation was a bad word, but deflation is even worse, as what has been the case in the past decade. Sliding prices mean job losses, factory closures too. Then a disincentive to invest. Result? Economic stagnation leading to decline by diminished economic activity. Whether we like it or not, we can use a little inflation and an uptick in prices. And for once, we are in sync with this administration, whether we like it or not.