Should we resign ourselves to the prospect fare hikes are inevitable once government privatizes the operations of the money-losing Metro Rail Transit Line 3?
A qualified yes. And only if we subscribe to the argument that any public rail system should pay for its own costs through fares.
But what if we don't subscribe to such a pedestrian argument at all?
Particularly since the argument may be no more than a lazy take on the issue mouthed by dimwit car-centric bureaucrats egged on by private interests.
First, however, a brief background on how the MRT privatization buzz came rolling into motion last week.
Right off, the 1997 build-lease-transfer agreement between the Department of Transportation and the private consortium Metro Rail Transit Corporation is set to expire in 2025.
Under the deal, the DoTr handled the collection of fares for the vital MRT-3 along EDSA while the consortium took charge of the maintenance of trains and the rail lines. The DoTr paid MRTC monthly fees from collected passenger fares.
Throughout the years, controversies dogged the deal.
But the more important fact here is that government now admits it can no longer afford to spend P9 billion yearly for the maintenance of the railway after ticket revenues fell and couldn't cover operating expenses.
News reports say the government spent at least P8.93 billion every year to operate and maintain the MRT-3. Yearly revenues from fares, however, are only averaging P1.72 billion, just 19 percent of the annual expenses.
Government, in short, is bleeding tons of money operating MRT-3.
But with the contract expiring, the DoTr is left with the prospect of running everything on its own.
The government, however, prefers not to be alone in sustaining MRT-3's expensive operations and maintenance and wants the private sector in. Hence, the privatization plans.
Commuters groups, however, don't buy the government's intentions and see such plans as sinister, saying it will only lead to eventual fare hikes without guaranteeing improved MRT services.
The government, however, insists privatization won't lead to unaffordable fares for the MRT-3.
Fare hikes, therefore, are the bone of contention.
And, this brings us back to the earlier point there is no need for a public rail system to pay for its massive expenses through increased fares.
How is that not crazy?
It is crazy when we only focus solely on MRT's losses.
But it would sound less crazy should the government start treating those huge costs of having an efficient rail system as public investments in other social issues.
In fact, MRT's huge costs can be recouped in the form of environmental and public health savings.
Nearly a decade ago that's how Germany resolved such a contentious issue when it found that its massive subsidies for increasing its passenger rail service and running it efficiently had in fact benefits that were hard to calculate in strictly financial terms.
Germany found efficient rail travel reduced things like pollution and road accidents. This, even without resorting to stale arguments rail travel saved time and money for commuters and eased traffic congestion.
So, as efficient rail travel took hold and more Germans got off the roads and onto the rails — reducing car and motorcycle use by nearly 3 percent on commutes and leisure trips alike — Germany thought of monetizing these public benefits to prove its case.
It soon found that monetary benefits are in the same order of magnitude as the costs of subsidizing their rail systems.
In fact, the German government that what it had paid in massive rail subsidies was the same it saved from environmental and public safety costs.
The challenge, therefore, is for this government to look beyond MRT-3's losses.
As such, the government should instead focus on ways and means of efficiently operating MRT-3 as the rail system performs a larger service to Metro Manila's other urban social concerns that are ultimately more important than the losses.
Email: nevqjr@yahoo.com.ph
