[sustran] Re: Determining MRT fares?

[Ronaldo R. Manahan]

The contract between the Philippine Government and PT Citra Lamtoro, who
built the Manila South Skyway (elevated urban expressway), included a
parametric formula for toll rate escalation, based on a number of factors
such as exchange rate, inflation, and a host of others.  Should government
not be able to enforce the pre-agreed rate (e.g. due to political pressure,
or a court-imposed restraining order), then government pays PT Citra the
difference.  This rate increases cover the whole duration of the concession
agreement.

If government decides not to impose the increases, then non-users will
again end up paying for the benefits gained by the users.

In the case of the MRT Line 3 along EDSA, there has been prescribed fares
included in the financial analysis as part of the proposal submitted to the
government, which is cleared by the Investment Coordination Committee of
the National Economic and Development Authority (NEDA-ICC).  Of course,
these are financial numbers which would determine viability of the project.
 As operator, government should have thoroughly scrutinized these numbers,
and presumably they did.  I remember an average fare of about P1.30 per
kilometer in 1995, when we did some studies on this project.

Conditions now are much different from conditions then.  For one, the
financial crisis was not taken into account when they first run those
numbers, and when the project was first approved.  The costs would have
presumably changed, but that is a risk for the prime contractor (Sumitomo)
to insure against.  Anyway, government must have done a review of those
numbers to take all account of these considerations, and decided on the P44
fare.  President Estrada has ordered that this be lowered, but I am not
sure where he got his new figures.


Dojie Manahan
Transportas



At 15:16 03 12 99 +0800, you wrote:
>I do not think there is anything wrong with determining fares close to the
>opening of the project. At the planning stage the fares are notional. On
>such free-standing project (I mean those projects targeted with a financial
>or economical viability) and especially railway project where construction
>period is long and accurate financial budgeting is often inaccurate, it is
>difficult to determine fares at the planning stage (meaning at least 5-6
>years before opening). Generally, a minimum return is targeted from the
>planning stage and fares to achieve that return are determined closer to the
>opening of the project (I am just stating what is common practice. It may
>not be the best practice)
>
>Alok Jain
>Hong Kong
>-----Original Message-----
>From: Roberto Verzola [mailto:rverzola at phil.gn.apc.org]
>Sent: December 3, 1999 8:51 PM
>To: heckler at quickweb.com.ph
>Subject: [sustran] Re: Determining MRT fares?
>
>
> >Skytrain, there has been debate about what fare to charge. It's a BOT 
> >project so the builder wanted to charge Php 44 (Php 40.8/US$1) from 
> >Quezon City where it starts to Makati where it currently ends. It is 
> >not clear whether fares would be distance based although there is 
> >talk to that effect. Anyway, the operator said that they needed to 
> >charge this much in order to get economic returns although malls are 
> >being built at the major stops from which the operator will earn 
> >income (in fact, at its inception, the malls were included precisely 
> >so that fares could be kept low and the operator could recoup its 
> >investment from their operation rather than the fare). The current 
>
>It is a sad reflection of the kind of planning done with the Metro
>Manila rail transit that the fare is being debated on when the project
>is about to be finished, rather than before it was to be approved...
>
>Roberto Verzola
>