Previously on Byte, I discussed the application of RFID and m-code in the MRT, and their limited success and the fact that they are useless. In short, I said that this was a classic case of technology not solving anything.
Reader Jeff asked what solution can I offer? The reason my reply to his question is posted on this section is that the solution does not lie with technology. But first, a disclaimer: I am not an expert on transport technology, and on the transportation industry in general. I regularly take the MRT, and thus my opinions are based on what I experience everyday.
When the MRT began operating in 1999, the maximum fare was thirty pesos (that is, from North Avenue Station up to Taft Station). The riding public complained that the fare was too steep; then President Joseph Estrada gave in, and the maximum fare was reduced by half. Still reeling from the Asian financial crisis, the MRT Consortium balked at the price reduction, and the original build-operate-transfer (BOT) agreement was revised to become build-lease-transfer (BLT) agreement.
And thus the current state of the MRT.
As you can see, the effects of a populist decision made a decade ago is manifesting itself. Looking at the MRT ridership data, the MRT cannot cope up with the increase. The monthly revenues that the MRT earns go to maintenance and wages. And since the government guarantees monthly payment to MRT Consortium via subsidies, the MRT has no money to get new trains to keep up with the volume.
The solution is economic, political, and social in nature.
To cope up with the volume and to operate optimally (to reduce breakage), the MRT needs to augment its fleet. To do this, the MRT must have the necessary funds. To get new funds, the MRT must be allowed to set the fare price according to economic realities.
However, the weird nature of the BLT leads to more questions: who should buy new trains – the owner (MRTC) or the one leasing (the DOTC)? The MRTC will not buy new trains, since the lease payments are just enough to pay out loans taken for the construction of the MRT. The DOTC cannot buy new trains not only because it has no funds and the revenues are just enough for maintenance, it does not own the MRT itself. The goverment can opt to buy out the MRT Consortium, but that would cost us billions of pesos.
Note that the government is subsidizing the operation of the MRT, by shouldering half of the real fare per passenger. Someone said this is unfair to Filipino taxpayers who don’t take the MRT – like those from the Visayas and Mindanao. We are technically buying out MRTC, only on a monthly basis.
And then we have to factor in the displacement effect that a fare increase would cause. I submit that even increasing the fare to maximum Php30 is more economical – it would be less than what you would pay when taking a airconditioned bus from North Avenue up to Taft Avenue. At the same time, the MRT is faster; the traffic along EDSA has not improved, contrary to Bayani Fernando’s Metro Gwapo propaganda. After all, you are paying for convenience and speed when taking the MRT.
Ultimately, the solution is political. Basically, what do we want to do with the MRT? If we can’t even agree on an answer to that question, then no major improvement can be made with the MRT.
The government, through Development Bank of the Philippines and Land Bank of the Philippines, acquires 56% of MRTC, and it intends to acquire up to 76%.
News reports say that the MRT is still BOT, but I find it weird that it is the government who is operating the MRT while MRTC owns the MRT. And with the government paying an annual subsidy of Php 5.7 billion, I think it is BLT.