Up to P20 MRT 3 fare hike looms

A STATE-RUN think tank on Wednesday recommended a fare hike of up to P20 for Metro Rail Transit (MRT) Line 3 to minimize the government’s multibillion-peso subsidy.

Ruzette Morales Mariano, research consultant of Philippine Institute for Development Studies (PIDS), said that the fare level in MRT 3 should be raised between P15 and P20 for the current P10 to P15 as this price ranges yields the highest annual revenue.

In turn, Mariano added, such range results in the lowest subsidy requirement without compromising the level of social benefits.

At P10 to P15 fare, the government’s subsidy was P47.50 a rider.

The original fare for MRT 3 was P60 for the whole stretch to make the operation viable.

In raising fare, Mariano said that a main consideration is the riders’ willingness to pay.

“At this time when Filipinos are tightening their belts to get by on a daily basis, a fare hike would be a sensitive issue,” she added.
In determining the correct level of fare pricing, Mariano said that ridership surveys should be conducted about every two to four years.

“This would allow government to get a feel of the riders’ current willingness to pay as well as the resulting fare box revenue and social benefits associated with an increase in the tariff level,” Mariano said.

At about 3,000 to 400,000 persons use the MRT 3 daily.

The transit system runs from North Avenue in Quezon City to Taft Avenue in Pasay City.

The Department of Transportation and Communications had said that MRT fare hike would be at about P20 to P30.

The government planned to increase the MRT fare this month, but it was set for November instead because of lack of public consultation.

The government’s subsidy for MRT 3 operations reached P5 billion between 2007 and 2010.
Mariano said that minimizing the level of subsidy should be highly encouraged.

“In order to help make subsidies reasonable and efficient, it is imperative to identify how the rest of the cost items are funded by the government,” she pointed out.

In financing MRT systems, Mariano said that bulky and hard-to-liquefy components should be financed by government.

Cost components that can be recouped by fare box revenue such as operating and maintenance costs can be financed by a private partner.

MRT 3 had said that the government is shelling out $3.3 million a month as equity payment and $1.67 million for maintenance costs to Japanese operator Tespi Corp., a subcontractor of Sumimoto Corp.

The government also plans to increase fares for Light Rail Transit (LRT) Line 1 and LRT Line 2, as well as giving discounts to students riding the MRT 3.

LRT 1 traverses Monumento, Caloocan City to Baclaran, Pasay City while LRT 2 stretches from Recto, Manila to Santolan, Pasig City. –Darwin G. Amojelar Senior Reporter, Manila Times