The Modernization of our Transport Systems (Part 3) – The old jeepney buyout

The Public Utility Vehicle Modernization Program (PUVMP) is supposed to cover all public utility vehicles but it mainly focuses on jeepneys as of the moment. For one, there are more jeepneys (PUJs) than any other PUVs simply because they’re the more prevalent form of urban public transportation, have less capacity and thus, require more units per route, and have shorter, but more numerous routes. It’s more iconic, too, and more resistant to design changes.

The jeepney is replaced, or “modernized” because of two reasons; first in relation to the environment (climate change/GHG emissions), and second due to safety issues. This cannot be done simply by remodeling them. But who shoulders the cost? The old units are in various stages of aging but still have remaining years of utility. To place the financial burden of replacement cost wholly on the owner/operators would not only be unfair to them and they would not have the financial capacity to do so. Why would they bear the burden of replacing their units when it is not their fault, and it was the government’s decision to replace them in the first place?

This is a multi-faceted transaction. Firstly, this is a government initiative and thus, it needs to finance it in the first place. However, providing the operators with the new units would seem to give undue financial advantage to them. The government’s decision was to share --provide an equity “subsidy” of ?80,000 per unit, later increased to ?160,000, and which was further proposed to be increased again as suggested by Sen. Grace Poe in the last Senate Committee hearing on the issue. But this is a pittance compared to the more than ?2 million purchase price of new units. The government is offering financing terms but which the operators still have to bear, both in actual amortizations plus the uncertainties.

It seems the reason the government officials on top of this program, both from the previous and present administrations, are wary of providing more/better subsidies is the fear that they might be giving in excess. Maybe they’re afraid of being accused of giving freebies to operators or fear disallowance from COA, but one thing is clear, the huge economic benefit of this program, in both economic and environmental values, are disregarded. The issue of the subsidy is not financial in nature, it’s economic, and many programs and projects all over the world have given more. For ages, we have been giving full/free subsidies on our public roads and bridges simply because they have tremendous economic benefits. This is also true for the PUVMP.

The way forward is simply computing the program’s economic viability and determining up to what extent the subsidy can be given. In the US, they have done this in their “Cash for Clunkers” program, though not mainly for emissions. There are many other examples from other countries, too, even funded by ODA, if they care to do proper research. The World Bank has financed the Vehicle Scrapping and Recycling Program in Egypt for exactly the same purpose as ours. Why reinvent the wheel? (To be continued)