Just privatize PNR

The current PNR general manager should probably be given a medal for his heroic efforts to make the government-owned railroad company run its trains again all the way to Bicol. He is most probably of my generation, albeit a few years younger, to feel so passionately about the Bicol Express. There is something romantic about the PNR in those days… it wasn’t the Orient Express but it served our needs.

So now we are being told that after years of neglect and abuse, PNR will once again run a Bicol Express service. According to newspaper reports, they apparently conducted the test-run the other weekend and it covered more than 400 kilometers through a newly refurbished locomotive train with several hand-me-down tourist class coaches donated by the Japanese government.

“In my assessment, the Bicol test-run we conducted was 95 percent successful and we are nearing our objective to put back in operation the commercial PNR trips to Bicol region,” said PNR general manager Junio Ragragio Jr. The Manila-Naga trip took nine hours, shorter than the usual 10-hour travel time through bus, Ragragio said. He added that all train coaches for the “Bicol Express” will be air-conditioned.

“We also have two types of sleeper coaches. One is a family suite that is good for a family or barkada of four to six persons. And we also have the executive class for passengers who would like extra privacy and the inclusion of a dining car with the ambiance of a first class restaurant,” he added.

“In the tourist class we have reclining chairs with more leg room compared to commercial buses. This includes a wide screen LCD with state-of-the-art sound system to comfortably watch movies during the long trip,” Ragrario said. We didn’t even have it this good in the good ol’ days.

They will also renovate several train stations traversing along the provinces of Laguna, Quezon, Camarines Sur and Albay. I also heard that they will try to get back the historic Paco Station and restore it to its old grandeur. They are also thinking of putting up railway connections to Batangas, Camarines Norte and Sorsogon. Definitely too good to be true!

Back to reality… the coaches are 30 years old. . . the Japanese gave us train coaches they have already junked. Maintenance costs will be high… for ‘brakepads’. (common source for PNR graft), aircon/engine repairs and extraordinary expenses for regular mishaps and accidents (diskarel) will plague this band-aid solution. . . expect the usual landslides along the old tracks resulting from typhoons and continuous rains during the rainy season.

I e-mailed Ray Altarejos, Ragragio’s high school classmate and fellow Bicolano about this development. Altarejos is a New York-based entrepreneur who is now in Brazil looking for business opportunities. Here is his comment:

“I told Jun Ragragio to focus on changing the narrow-gauge PNR tracks to wide-gauge and make it run freight trains all the way to Sorsogon. In the 1930’s, PNR (then known as the MRR or Manila Rail Road) was extended to Albay to haul abaca to Manila. Manila hemp was a major dollar earner.

“But a PNR for freight has no political constituency. Warren Buffet is now making tons of money with his big bet on Burlington Northern. With the high price of oil, Burlington Northern has stolen the business of long-distance trucks. Brazil has a great train system into the interiors hauling soybeans, corn and iron ore bound for China.

“Bicol despite the usual typhoons could have a dynamic agri sector.”

At least they are doing something to resuscitate the PNR rather than pillage what is left of PNR assets, which politicians in the past apparently did quite well. The next 12 months will show whether the P500M P-Noy gambled on these old coaches running on the old PNR tracks will be worth it. . .

Worthy of praise as these current efforts are, I think there is a better way: privatize PNR. The faster they do this, the better before more of PNR’s assets get dissipated. Somebody in a past administration even sold its air rights over the tracks!

It isn’t as if there isn’t any private sector interest. San Miguel made a proposal to buy 51 percent control of PNR and still have government as a partner in its development. At no further cost to taxpayers, San Miguel offered to develop a national railroad system starting with the Luzon line of PNR that will run slower trains on at-grade level and fast trains on top.

Ramon Ang told The STAR last year that they have commissioned a group that includes international companies with experience in bullet trains to study the possibility of building a bullet train railway that will run from the north to the south end of Luzon. San Miguel proposes to run the bullet train railway on the Laoag-Manila-Bicol route. SMC’s top executive expressed optimism about the possibilities that this venture… a high-speed train service is also expected to help boost the economy in general.

I asked Ramon how he expects to make money considering the large amount of capex he must invest on it upfront. He said he is looking at PNR not only as a train company but a general logistics company. Consumer goods marketers will find the railroad the more efficient way to do Luzon wide distribution of their products… exactly what Altarejos was suggesting. San Miguel will run telecom, water, electricity lines along the right of way. He will develop the adjacent real estate and make money on malls and other property ventures near train stations.

Ramon said he has made a pitch to Secretary Ping de Jesus who just gave him a polite “we will study” kind of reply. But from the discussions, it was clear that the bureaucrats, specially the powerful usec that Ping depends on, do not want anything that does not require ODA financing. They also want to keep government control over PNR even if the past decades have shown government is totally incapable of running it, except to run it to the ground.

It is stupid to ignore a proposal like this. What is there is lose with taking Ramon Ang on his word? PNR isn’t exactly the epitome of operational efficiency and profitability. If Ramon Ang fails, the attempt would still have generated economic activity and the failure will cost PNR and the taxpayers nothing. But if the venture succeeds, the government and the people benefit tremendously.

ODA will only get us so far in rehabilitating PNR. In fact, ODA has failed to do anything for PNR for years now. If San Miguel is willing to stake its money and its reputation on reviving a dead duck like PNR, they should be given the chance to do so. We need bold measures like what San Miguel has proposed.

San Miguel would not give me a copy of their proposal out of respect for Secretary Ping who promised to study it. But such proposals should be made public if only to put pressure on unimaginative bureaucrats that they have to think boldly to move this country onward. Or could it be that the bureaucrats are afraid of losing lucrative rackets imbedded in ODA-financed projects? Secretary Ping should not forget how to think like a private sector manager. Right now, he is allowing his usec to repeat proven failures… the old bureaucratic way.

We are spending money on international road shows supposedly to entice foreign investors to invest on our PPP initiatives. But here, we have a local investor ready and willing to invest big bucks on a major infrastructure program and all our government could tell them is that they “will study it”. This is absolutely ridiculous. The earlier P-Noy cracks the whip to get his people moving and thinking boldly, the better for his credibility rating and for our country’s future. –Boo Chanco (The Philippine Star)