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Gov't to shoulder MRT fare at P48 per commuter

Press Release
September 5, 2010

QUEZON CITY  Ė  The national government will spend a total of P7.3 billion next year to subsidize the fare of Metro Rail Transit (MRT) commuters at a rate of P47.77 each, House Deputy Majority Leader Roman Romulo said over the weekend.

Romulo said the amount, contained in the proposed 2011 national budget, is P2.2 billion or 43 percent greater than the State's P5.1 billion "fare subsidy" to MRT commuters this year.

Romulo, who represents the lone district of Pasig City in Congress, favors the sustained fare aid.

"Our sense is, the subsidy is fair and reasonable, based on the principle that those who have less wherewithal are entitled to more support from the State," Romulo said.

"The only other option is to raise fares and take an equal amount, or P7.3 billion, out of the pockets of MRT commuters, mostly salaried employees and wage earners, plus some students, that deserve the subsidy," he pointed out.

"Offhand, a 50 percent reduction in the subsidy would imply a fare increase of P23.88, which is definitely burdensome to commuters," he added.

Romulo cautioned the Department of Finance (DOF) and the Department of Budget and Management (DBM) against allowing a large subsidy withdrawal and a corresponding significant fare increase.

Both departments earlier said they are "in the process of striking a balance" between lower subsidy and higher fares.

Romulo, however, said a substantial increase in MRT fares might be counterproductive, "since this could possibly drive away cost-sensitive commuters, thus implying potential revenue erosion."

"This might force government to later come in and cover the revenue shortfall anyway," he said.

The DOF has also said that maintaining the subsidy to MRT commuters would be "unfair" to taxpayers in the Visayas and Mindanao, who do not benefit from the train.

"In that case, the remedy is not to deprive MRT commuters of subsidy, but to augment infrastructure and other forms of public spending that would benefit people in the Visayas and Mindanao," Romulo said.

The MRT spends around P64 to move each commuter. But since the MRT charges only an average of P14.50 per commuter, government has to pay for the balance, including the train's maintenance and operating costs.

Besides the P7.3 billion fare subsidy, government is coughing up another P1 billion to cover the MRT's operating and maintenance costs in 2011, up from this year's P645 million.

The MRT was built by a private consortium on an assured 15 percent annual rate of return, plus debt obligations that are ultimately guaranteed by the State.