LRT-1 operator to seek 10% fare hike in August

The Light Rail Transit 1. INQUIRER FILE PHOTO

MANILA — The private sector operator of Light Rail Transit Line 1 will seek a 10 percent fare increase for the busy railway line in Metro Manila in August this year, in line with a contract it signed with the government, according to a shareholder.

Light Rail Manila Corp., led by the Metro Pacific Investments Corp. and Ayala Corp., won the P65-billion public private partnership deal that calls for the extension of the 20.7-kilometer LRT-1 in Metro Manila to Cavite province. It also assumed operations of the LRT-1 in September last year.

David Nicol, chief financial officer of Metro Pacific, said that the next fare increase would be in August 2016, and would be at around 10 percent, subject to regulatory approval.

He said under the PPP contract, fares would be adjusted every two years. Railway fares were last adjusted on January 4, 2015. It should have come in 2014, but this was pushed back due to the unpopularity of the move.

“The contract is clear,” Nicol said at the sidelines of Metro Pacific’s first quarterly briefing. He added that the group knew that this hike would come right after the installation of a new government in June.

“This is about a month into the new administration. This will be a test [for the new government],” Nicol said.

Light Rail Manila is investing to expand the LRT-1 by another 11.7 kilometers to Bacoor, Cavite. It has locked horns with the government in the months since winning, saying the train line’s condition was worse off than what was stated in their contract. Light Rail Manila earlier sought P1.8 billion in compensation, which the government, through the Department of Transportation and Communications, is disputing.

Light Rail Manila argued the amount was fair, and would go toward helping rehabilitate the LRT-1 in Metro Manila that would cost about P10 billion over the next two years. The LRT-1 opened in the early 1980s, making it Southeast Asia’s oldest metro rail system.

The last fare hike at the LRT-1, LRT-2 and Metro Rail Transit Line 3, was considered a controversial move, partly because of its timing in January 2015.

For that process, the DOTC implemented a previous agreed upon fare hike structure calling for a base fare of P11 plus P1 per succeeding kilometer. The three lines serve over a million commuters daily.

The DOTC justified the 2015 fare increase by saying it had to cut costly subsidies amounting to about P12 billion annually by about P2 billion. It said the money would instead be redirected to other social infrastructure and relief projects across the country. The last fare increase for LRT 1 before the 2015 hike was in 2003.

Light Rail Manila said the LRT-1 served an average daily ridership of 419,081 for the first quarter of 2016, an improvement of 11 percent since it took over in September last year. The company noted that out of the 100 Light Rail Vehicles committed to be delivered upon takeover, only 77 were in safe operating condition.

Since the handover of the LRT1, Light Rail Manila has restored a further 14, bringing the total in operation to 91 by end of March 2016.  SFM