Light Rail Manila awaits LRT-1 rate hike

Photo of LRT-1 train taken from Metro Manila Roadway, an MMDA initiative (MMRoadway.com)

MANILA, Philippines – A long-delayed rare increase for the Light Rail Transit Line 1 (LRT-1) Cavite extension is required by the Light Rail Manila Consortium before they would lend money to finance its share of the P65-billion project.

According to Metro Pacific Investments Corp. (MPIC) President Jose Ma. K. Lim, the Light Rail Manila, mostly comprised of MPIC and Ayala Corp., would start construction of the Cavite extension ‘immediately’ upon takeover or within the next 12 months. And so, they expect to achieve financial close sooner with the higher fares agreed upon.

“The rate increase is quite important for financial closing. We don’t know when the government will implement [the increase]. They were supposed to do that last Aug. 1 but they have not yet implemented it,” Lim said.

Once the financial agreement is finalized, the Light Rail Manila will put up an 11.7-kilometer railway line extension from Baclaran to Bacoor, Cavite. The railway construction period is from 2014 to 2018 and is scheduled to open by 2019. The consortium will then manage the expanded 32.4-km LRT-1 for a period of 32 years, as stated in the PPP deal.

The Light Rail Manila’s share of the PPP deal would be largely financed by bank debt at P35 billion.

Department of Transportation and Communication (DOTC) Secretary Joseph Emilio Abaya said that the LRT-1 extension will provide the much needed transportation services to people living south of Metro Manila and nearby provinces.

“This extension took over a decade to be planned, approved and tendered out. Having made it to this point, the DOTC is committed to the infrastructure development of this country,” Abaya said.

Regarding the final decision for a rate increase, the agency has previously said that any fare increase for public mass transit systems is a politically sensitive issue.

This concern caused the setback for the implementation of the higher fare proposal that was already approved in 2011. The plan is based on an P11+1 formula. Meaning, a boarding fee of P11 plus P1 for every kilometer travel will increase the ‘average rates for the average rider’ by P5 per trip. In the existing 20.7-km LRT-1A, P20 is the highest fee currently paid for a one-way trip.

However, billions of pesos a year is used up by the national government to fund money-losing elevated railways in Metro Manila.

Metro Pacific vice president for business development Ferdinand Inacay said that the DOTC would have to pay off Light Rail Manila for the difference if it decides to hold off an increase in fare rates.

With report from Cyra Moraleda