“P14 minimum PUJ fare pushed.” This came up in many of the news reports in Cebu a few days ago, both in print and digital media. Not that this was unexpected --news items reporting a series of increases in fuel prices equally filled our news streams. The invasion of Ukraine is easily understood to be the main culprit and Russian strongman Vladimir Putin tagged as the main cause.
These were still petitions, though, not yet approved, but I guess many of our city residents are resigned to the certainty that this will be. The petitioners/public transport operators/groups do have legitimate reasons to file their requests as fuel is one of the main costs of their operations. The war on the other side of the globe caused a worldwide spike in oil prices, which affects everybody --operators, drivers, and passengers alike. So, I guess some of these petitions maybe granted somehow.
The questions to be revisited are only of two types: 1.) Are our financial and contractual formats for public transport provision so frail as to be affected by fluctuations in fuel prices? And 2.) Why don’t we have a regulatory system that is transparent such that everybody knows how our fares, and their increases, are calculated? On the second question, we have for countless times asked the government how fares are fixed, but no answers were given. Instead, the system requires petitions to be filed, which are approved (or not) by LTFRB. If we have a transparent formula for calculation, no such processes have to be required, the government can automatically increase (or decrease) fares, and all will agree since we know the formula used. It’s a guessing game.
Which should not be. In most countries with better systems, fare rates are protected against fare rate adjustments due to fuel price fluctuations. Even in many of our ASEAN neighbors, public transport services are done through service contracting which embed such automatic adjustments to maintain the levels of fares for the duration of the contract. This is because the system calls for an overarching commitment of the government to provide efficient and stable public transport services which are equitable to the operators, drivers, and passengers. After all, provision of public transport services is a function and responsibility of the government, which metric for effectiveness and efficiency is measured in economic rather than financial values.
What many people may not realize is that transportation, or mobility, is one of the primary drivers of economic development, and it generates such a level of economic returns, by itself and the industry it supports, that it can afford to provide the buffer for fluctuations without actually losing. But we need to get out of the primitive --that is the “boundary system” centralized fare-setting, passenger-pays-operator/driver, format. For some time now, the government has been dangling the “service contracting” arrangement that most countries espoused long before, but it seems to miss the mark in actually realizing it. It seems many people in government haven’t really got it – that it’s the “economics” of it, and not the “finances”. Until such time as we go into “real” service contracting,” we’ll continue with this archaic petition-approval cycle with the computation shrouded in darkness.