MANILA (Mabuhay) — An official of the Department of Transportation and Communications (DOTC) on Wednesday said the government can prevent private contractors from implementing fare hikes every two years for the Light Rail Transit (LRT) 1.
At the House of Representatives’ Metro Manila Development committee’s hearing, DOTC Undersecretary Jose Perpetuo Lotilla confirmed the existence of a fare hike provision in the concession agreement signed by the government with the Light Rail Manila Consortium (LRMC).
Lotilla, however, clarified that the government can prevent the fare hike if the private contractor fails to comply with its obligations as stated in the concession agreement.
“The provision [for the fare hike] is there but we must remember that the government has the discretion whether or not to enforce it. There’s a provision, for instance, which allows [for the fare hike not to be enforced] as a result of the contractors’ non-enforcement of its obligations,” he said.
The DOTC official added that the government can also prevent the fare hike if certain assumptions in the agreement turn out to be untrue.
“Let’s say the assumptions turn out to be untrue or there are certain changes in circumstance such that those assumptions will no longer hold… Under our law, [the change in circumstance] is akin to the so-called physical impossibility of performance [of obligations],” Lotilla told reporters at the sidelines of the hearing.
To illustrate, Lotilla said a “drastic” drop in oil prices will change the computation regarding the share of electricity in operating expenses for the LRT-1.
Under the 32-year concession agreement signed by the government and the LRMC, the private operators will be allowed to hike fares for the LRT-1 by 10.25 percent every two years.
The LRMC is composed of the Metro Pacific Investments Corp.’s Metro Pacific Light Rail Corp., Ayala Corp.’s AC Infrastructure Holdings Corp. and Macquarie Insfrastructure Holdings (Philippines) PTE Ltd.
The contractor will operate and maintain the existing LRT Line 1 and construct an 11.7-kilometer extension from the existing end terminal in Baclaran, Parañaque City to Bacoor, Cavite.
Despite Lotilla’s explanation, Bayan Muna party-list Rep. Neri Colmenares maintained that the fare hike provision in the concession agreement is unacceptable because it institutionalizes the increase of train fares.
“This government has contracted a way to erase people’s rights to due process. Tataas ang fares sa LRT kahit anong mangyari dahil nakapaloob ito sa kontrata. Ngayon lang kami nakakita ng rate increase na di nakabase sa pagtaas ng operating costs o foreign exchange, pero nakalagay sa kontrata,” he said.
In DOTC’s defense, Caloocan City Rep. Edgar Erice advised against jumping to conclusions regarding the immediacy of the fare hike since lawmakers have yet to examine the contract for themselves.
“I think we should look at the contract first and see the computations made by the two parties before they arrived at the rate of increase. This has been studied for a long time by the government, so let’s look at the contract first,” he said. (MNS)