Jeep modernization to cost P417 B — DOF

MANILA, Philippines - The government’s Public Utility Vehicle (PUV) Modernization Program is estimated to cost around P417.3 billion over the next five years, data from the Department of Finance (DOF) showed.

About P400 billion of this amount would come from government and private financial institutions for the lending program. The balance of P17.3 billion would be proposed under the General Appropriations Act and would be earmarked from the first package of the Comprehensive Tax Reform Program.

Included in this proposed budget is the P8 billion equity subsidy contribution of the Department of Transportation for the availment of the new jeepneys and P3.9 billion from the Office of Transport Cooperatives.

It also includes P4.5 billion for the training assistance of the Land Transportation and Franchising Regulatory Board and the Technical Education and Skills Development Authority, P494 million for route rationalization, and P332 million for project management.

Under the indicative lending program of the government, government financial institutions, namely, the Land Bank of the Philippines and the Development Bank of the Philippines (DBP) would provide credit of up to 95 percent for the cost of the jeepneys, while the government would shoulder up to 10 percent.

Landbank, for its part, would provide 95 percent of the cost of the jeepneys as loans, payable in seven years with an interest rate of six percent per annum while the government would shoulder the remaining five percent.

For the DBP, 90 percent of the cost could be borrowed, with a repayment period of seven years and a six to eight percent interest per annum while the remaining 10 percent would be subsidized by the government.

Landbank has already established a P1-billion credit facility to bankroll the project.

“We are helping them, we are subsidizing exactly what previous administrations couldn’t do, because we have a tax reform. So we will help the qualified jeepney drivers by subsidizing their equity, so that it’s easier for them to purchase their new jeeps,” Finance Undersecretary Karl Kendrick Chua said in an interview.

According to Chua, the PUV Modernization program seeks to modernize public utility vehicles across the country, thereby providing a safer transport systems for commuters while mitigating the effects of climate change.

“The PUV modernization is one of the tangible benefits of the tax reform. Seventy percent of commuters don’t take the train – they take the bus, the jeeps – and the train system, (while) important will take three to five years. In the immediate term, we need to improve the efficiency, safety and comfort of our bus, jeep, public transport system,” Chua said.

He added the program seeks to replace the Euro 2 engines with Euro 4, to increase the vehicle’s fuel efficiency by up to 100 percent and cut down fuel cost.

It is also seen to reduce particulate matters and CO2 emissions, he said.