Senate eyes extension of PNR franchise

MANILA, Philippines - Despite a multi-billion debt, the Senate will work on the passage of the measure that will extend the charter of the 50-year old Philippine National Railway (PNR), whose franchise will expire in June.

Sen. Cynthia Villar, chairperson of the Senate committee on government corporations and public enterprises, said the Senate is rushing the passage of the measure so that PNR’s charter is extended before Congress adjourns sine die by June.

“We are filing the bill on May 5 which is next week. If not, we cannot hope to finish this by the end of the month because that is the deadline. We will just be in session for one month,” Villar said.

Congress resumes session on Monday until June 13. It goes on sine die adjournment from June 14 to July 27 in preparation for the President’s State of the Nation Address (SONA).

Upon instructions from Senate President Franklin Drilon, Villar said she hopes to sponsor the measure by May 6 or Tuesday.

The Senate committee held a public hearing on Tuesday in a bid to speed up the extension of the charter of PNR, which has in its pipeline two pending Public-Private Partnership projects under the Aquino administration.

Before coming out with the committee report, Villar directed the Bureau of Treasury to provide the Senate panel as soon as possible with the review of the PNR’s expenses.

During the hearing, Villar lashed out at the DOTC officers for failing to initiate  efforts to extend the PNR charter.

“I am also surprised why the DOTC seemed disinterested in renewing the franchise of the PNR,” she said.

Sen. Ralph Recto also lamented why the DOTC has not been pro-active about the need to extend the PNR’s charter now that its 50-year old franchise is about to expire by June.

“We started 101 kilometers from La Union to Legaspi, now you are only operating from Tutuban to Sta. Rosa. What happened? It would appear that PNR is a failure, 50 years since 1964,” Recto said.

Huge Debts

Citing records, Recto noted that the PNR has an outstanding liability of P 22 billion, which is being subsidized by the Bureau of Treasury.

“Otherwise, even their operations are double than their revenues,” Recto said, checking on the financial standing of the PNR that gets  P500-million a year subsidy from the treasury department.

As per records, PNR’s total assets are pegged at P52.8 billion, while liability stands at P26 billion for 2013.  Recto pointed out that the revaluation of land assets, based on zonal values, was pegged at P39 billion.

The PNR stated in its income statement for 2013 that its losses amounted to P491 million.

Recto pointed out  that if the fare matrix of the average of  71 cents per kilometer is doubled at about P 1.50/kilometer, then the PNR could recoup its expenses.

After analyzing the revenues of PNR for the past four years, Villar said that the PNR’s operational expenses are increasing prportional to the hike in the number of passengers.

In her opening statement, Villar stressed that the PNR is essential in transporting passengers and goods via freight movement.

She added that the PNR is also crucial in providing Filipinos with proper transport system as well as decongesting traffic in Metro Manila.

Villar also mentioned PPP projects in her speech during the hearing last Tuesday.

“There are plans to construct new railway lines and extend existing once through the PPP,” she said, noting that there were projects shelved or stopped such as the North Railway project.

Villar also asked the PNR officials to present before the Senate committee any plans that it envisions for the railway system as the Senate seeks to expand its charter.

At present, the PNR operates  commuter service trains between Naga and Sipocot in Camarines Sur, and Tutuban in Manila to Sta. Rosa, Laguna.

The senators stressed the need to maintain the PNR because it is the best mode of transport which provides the lowest cost of transport for passengers and cargos.

PPP to the rescue?

Recto sought assurances from DOTC and PNR executives to ensure that the extension of its charter will provide new opportunities for railway improvement in the country.

“We know the importance of our railroad infrastructure that is why I filed this bill, moving forward… There is definitely a need to extend the charter, there is no doubt about that but I have not seen [that] in any of your plans as of the moment,” Recto added.

Recto said he does not want the PNR to become a failure even as Congress extends its charter for another 50 years.   Villar said she is ready to allow the extension of the PNR charter for the next 25 years so that it can reviewed intensively by the government.

DOTC assistant secretary Jaime Fortunato Caringal  pointed out that the PNR has two pending investments such as the North-South commuter railway system and the integrated Luzon railway system.

Caringal reiterated a number of times during the Senate hearing that the DOTC has no plans to liquidate the assets of the PNR at this point.

“We are exploring every possible means  by which we can improve the services,” Caringal said when asked by Recto if the DOTC is looking into joint venture projects.

Caringal explained that the two current projects in the pipeline are considered to be in PPP-mode. The Japan International Cooperation Agency (JICA) had produced a study about North-South commuter system, he said.

PNR exec bats for better railway development in next 50 years

Recto said there is a need to work  towards an improved, sustainable transnational railway system covering not only Luzon, but Visayas and Mindanao.

Joseph Allan Dilay, PNP general manager, and  his consultant Tony Soriano, presented before the Senate panel why the PNR’s corporate life should be extended beyond June this year.

“PNR, given a chance to be the progressive railway network, will provide transportation for the masses…PNR can be the backbone of countrywide development by providing a safe and efficient means of transportation for people and cargo,” Dilay said.

Dilay noted that PNR, through congressional support, is fully committed to railway development.

Through the years, PNR executives said debt payments had been decreasing attributing it to zero loans incurred in the past years.

“We believe  that there is a need to catch up in terms of  railway infrastructure  in order to promote more inclusive growth,” Dilay said.  The Bureau of Treasury pays for the loans of PNR directly, the executive said.

“Incidentally, we humbly request the honorable members to extend… If not, under the law, we go into a mandated three-year liquidation period,”  Soriano said.