Fare hike before rehab?

I would normally support raising the MRT fare up to the level of EDSA bus fares. Reducing the subsidy for MRT riders would be fair for taxpayers in other parts of the country who get no benefit but share the cost of running the commuter line.

But given the inability of DOTC to provide adequate service or even guarantee passenger safety, raising the fare now is like showing a dirty finger to the riders. As someone in one of my e-groups puts it, it is like increasing the price of an old piece of moldy bread because you know the consumer has little choice.

Transport expert Rene Santiago captures the situation well: “Train supply has dwindled. On MRT-3, from 22 trains to 16. On LRT-1, from 104 to 95. On LRT-2, from 16 to 12. Nearly all ticket vending machines at stations are broken down.

“Visible results: overcrowded trains and long queues at stations. Hongkong MTR audit report on MRT-3 are alarming – especially about track conditions. Track replacements on Line 1 also delayed. How can we justify a fare increase against this backdrop?”

If I were confident that raising the fares now would guarantee better service, I would probably overlook the decrepit situation of the MRT system and focus on the prospect of a much improved one within a reasonable time. But DOTC cannot even guarantee that improvement would happen within the foreseeable future.

Indeed, I do not have confidence DOTC knows what it is doing. Sec. Jun Abaya keeps on talking about buying control of MRT 3 from the private owners but his explanation reveals he would only effectively buy the MRT bonds already owned by government banks and give the banks a hefty profit as well.

That’s a simple transfer of money from one government pocket to another. It won’t begin to rehabilitate an inch of rotten rail or fix any of the overworked rail cars now in use or have been sidelined and are being cannibalized for spare parts.

Raising the rates should come after it is obvious that improvements are happening. But as I have explained in this column, nothing is likely to happen unless Sec. Abaya sits down with the private owners. Otherwise, more court cases would only delay any rehabilitation of the system. I do not understand why Sec. Abaya has refused to sit down and talk.

The private owners have offered to undertake the rehab of the system at no cost to the taxpayers in exchange for a fare that is equivalent to the fare charged by buses on EDSA. That sounds like a very good deal. DOTC’s Sec Abaya has totally ignored that offer and is insisting government would undertake the rehab.

This leads many to suspect that the bureaucrats want to handle the rehab because it would entail a lot of money and we all know what happens next. How they manipulated the awarding of the maintenance contract to a favored relative of the then MRT manager does not give confidence they respect Daang Matuwid. We are also approaching an election year and the Liberal Party, of which Sec. Abaya is secretary general, needs funds.

I don’t think this fare hike DOTC is insisting on would fly unless they get honest with the numbers and the plans for MRT 3. The way they are doing it, without public hearing, delivers the message that they don’t really care what the public thinks. That’s how the DOTC has operated during P-Noy’s watch, unfortunately.

There are many ways of looking at government subsidies for public transport. It is accepted in many countries that government is obligated to provide affordable and reliable mass transport, a necessity in our urban setting. A good mass transit system is expensive and I think it is only the Hongkong MRT that makes a profit, mostly through astute management of valuable property along the route.

The condo unit of my son in San Francisco is located a little further south from the main Market Street downtown area. I had to take the LRT known as the Muni to cover less than 10 kilometers for a minimum one way fare of $1.25. That’s the equivalent of P56.25 at the exchange rate of P45 to $1.

I realize we can’t compare apples and oranges, but then again the cost of rolling stock, spare parts and even trained personnel should be just about the same whether here or there. Admittedly labor costs in the US are high due to union rules and their standard of living. Still, mass transit fare in San Francisco is nowhere in the neighborhood of the current P10-P15 fare of MRT 3. That should make it easy to justify this fare rate increase if only...

The thing is, DOTC cannot justify even a minimal increase because they have not managed the system well. It had also been shown that DOTC officials have connived to profit from sub standard contracts to maintain the system. Why should the public pay more to line the pockets of officials or their friends?

P-Noy must not believe the bullshit that they are making a difficult but necessary decision in raising the fares. Closer to the truth, they are not making the more important difficult decisions on how to undertake the rehabilitation of the system, something that must come ahead of any fare hike.

This administration has no political brownie points to use in this politically costly decision to raise MRT 3 fares. They have totally bungled the management of the system and until the public is assured that conditions are set for a radical improvement in the system, even P-Noy has no credibility to sell this move.

I have experience in this delicate act of introducing rate increases in a public utility and I can say that credibility is a must. When I helped Ping de Jesus sell the dramatic increase in toll rates for NLEX, we did not begin to talk about it until we were almost done with the rehabilitation of the expressway.

Only after the public could clearly see the benefits of a much improved expressway were we able to mitigate the expected opposition to the increased toll rates. Even with that, it was still not an easy sell. A lot of work had to be done, essentially conducting dialogues with those affected and I credit Sec Ping for carrying out the job well. Marlene Ochoa, a sister of Executive Sec Ochoa was a key player in accomplishing the job.   

There is a right way and a wrong way to handle delicate problems like rate increases. Unfortunately, the clueless bureaucrats at DOTC cannot be expected to carry this out with professional competence. This failure would have serious political repercussions for the administration and the Liberal Party in the coming election.

Given the track record of DOTC officials, it is likely that they would backtrack and kick the problem down the road for the next administration to deal with. Marking time is all that the boys of Mar Roxas at DOTC are good at.

And if Mar Roxas, by some miracle, wins the presidency, we can expect the indecision to continue for the next six years.

PWU

What is happening at PWU is sad, but not surprising. That’s what happens when the progeny of the founder generation fail to keep the legacy they inherited in tiptop financial shape. It isn’t just PWU. UE and NU are no longer owned by the original families. The Jhocsons of NU sold out to the SM Group. The Dalupans of UE sold out to Lucio Tan. The Yuchengcos now own Mapua Institute of Technology and the heirs of Bulletin’s Emilio Yap are now in control of Centro Escolar.

That seems to be the case for many other businesses too. Where is the Cheng Ban Yek Group now? China Bank is now owned by the Henry Sy Group and no longer by the original Dee family. There are other examples.

It could well be that the succeeding generations were too spoiled to run the inherited businesses properly. Unlike the founding generation, they were not hungry enough to see the businesses through. They were happy to milk the businesses they inherited until there was no more.

In the case of PWU, it seems unfair for the Benitezes to now try to rally alumni and other stakeholders to bail them out of the consequences of their decision to tie up with STI. They didn’t consult the stakeholders when they signed away their legacy.

The younger Benitezes are no match to the entrepreneurial zeal of Yosi Tanco who built STI into a profitable concern from scratch. However, Yosi should also respect the historical roots of PWU and JASMS and not be too aggressive in converting a nice campus, like JASMS, into a condo development.

The younger generations of Benitezes have only themselves to blame for mismanaging the institutions. If it is not Yosi, some other entrepreneur would have taken over and done the exact same thing that is happening now. If Yosi didn’t bail them out, BDO would have foreclosed and the Sys would have had another university to run.

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco