Bayan rues ‘End of an era’ as Aquino privatizes LRT 1

“We maintain that the concession agreement is grossly disadvantageous to the public. It will be disastrous for commuters.” – Renato Reyes, Bagong Alyansang Makabayan

Read also: Public to shoulder more costs than Ayala-MVP in LRT deal — Ibon


MANILA — Today marks the end of the LRT 1 as a public service, the multisectoral group Bagong Alyansang Makabayan said of LRT, a viable mass transport system that is working fine under government control, in stark contrast to the accident-prone, private-owned MRT3 that has also been costing the public more in subsidies and profit guarantees.

The Aquino government is privatizing the operations of the LRT 1 train line in favor of the Ayala and Metro Pacific consortium, the sole qualifying bidder in a signing ceremony today through the Department of Transportation and Communication (DOTC). Transportation and Communications Secretary Joseph Abaya is currently facing a corruption probe concerning another train line, the MRT.

First operated in 1984, LRT Line 1 is the first light rail system in Asia, owned and operated by the government. Since then its operations have expanded from Baclaran to Central Terminal Station to Monumento by 1985 and to Roosevelt station by 2010.

It currently operates along a 20.5 km elevated railway system with 20 stations servicing the Taft Avenue – Rizal Avenue and North Edsa corridors, and handling about 475,000 passengers a day, according to the LRTA 2013 accomplishment report.

As of today the profitability of the entire LRT1 system has been maintained, based on its financial statements. The public has finished paying for the loans incurred to construct it.

The national government, which took over the operations and maintenance of the entire system from the private sector, specifically, the Metro, Inc., a subsidiary of the Meralco Corp., in 1999, has combined what its employees described as “prudent spending” and hard work on its resources to bring an efficiently running LRT 1 today.

Under the Estrada government, the planned privatization of LRT was first opposed by its workers who launched a strike. The Estrada government responded with summary dismissal of all strikers and union-busting. After years of court cases the union finally won their case of illegal dismissal but until now, their last union president, Sammy Malunes, said the workers have not yet received any restitution.

Worse, the privatization they fought against is now being pushed through, and the contractual workers in LRT 1, the workers employed to replace the dismissed unionists, are reportedly uncertain about whether they would be absorbed, if they would become regular on the job.

Malunes told that LRT workers have retained the culture of public service they had always have from the start, even if the workers changed from being private sector workers under subcontractor Metro, Inc. to government contractual employees under LRTA (Light Rail Transit Authority).

Danger ahead

The concession agreement with the private consortium allows for automatic fare increases, profit guarantees and will result in additional debt burden on the public, warned Renato Reyes Jr., secretary general of Bagong Alyansang Makabayan.

He noted too that amid these sacrifices to be passed on to the public, the government and thus the public, too, will actually be shelling out more in the deal because the contract guarantees private profits.

Lrt-1 privatization
File photo: Picket protest against LRT-1 privatization

“We maintain that the concession agreement is grossly disadvantageous to the public. It will be disastrous for commuters,” Reyes said.

He listed the following provisions in the contract, which, he said, would be detrimental to the commuters and the public in general. These include the following:

1. The contract allows private operators a 10.25% fare increase every 2 years and a 5% increase upon the completion of the extension project.

2. If the fares set by government is less than the fares demanded by the private operators, government will have to pay for the difference. This is called the Deficit Payment.

3. Commuters or the government will pay for surges in electricity rates. Under the agreement, this is called the Differential Generation Cost. This lays the basis for another fare hike or another government payment.

4. Fares will be adjusted based on the prevailing inflation rates.

5. Government pays for the real property taxes for the 32-year duration of the contract. This can reach up to P64 billion for the term of the contract.

6. The concessionaire will only pay the government 10% of the Concession Fee of P9.3 billion up front after the signing of the contract. The rest of the concession fee will be paid starting on the fifth year of the contract. This means that the payments for the concession fee may actually be coming from the operations of the existing train lines.

7. Around 964 employees of the LRTA are in danger of losing their jobs as they will only be absorbed by the private operator for six months.

8. The consortium of Ayala and Metro Pacific is now a train monopoly that controls the operations and maintenance of the LRT Line 1, the extension project, the automated fare collection system and even the common station in Trinoma. They will be in a unique position to dictate fares and everything else related to running the train system.

Similar to other consumer groups opposing LRT privatization, Bayan clarified that they are not against the LRT extension to Cavite. What they are against is “the onerous contract that places private interests above public good.”

Critics like Bayan have assessments of similar privatization deals with Maynilad and Manila Water and other strategic utilities to draw lessons from.

“The Privatization of the MWSS has resulted to periodic increases in the cost of water, now totaling nearly 400 percent. The privatization of the assets of the National Power Corporation has placed power generation in the hands of big business and has increased power rates by a 100 percent from the time EPIRA was enacted,” said a position paper on the privatization of the LRT1 operations and maintenance and the implementation of the LRT Line 1 extension PPP project. The paper was distributed among LRT employees by a network of concerned individuals, employees and commuters forming an alliance against LRT privatization.

Bayan accused the Aquino government of displaying “utmost insensitivity towards the commuting public” once again.

Prior to the LRT 1 privatization deal, the Aquino administration’s transportation department has delayed the LRTA’s planned rehabilitation plan. The LRTA reported in 2013 a lower than expected Major Final Output citing the non-completion of three out of 15 targeted rehabilitation projects, which it blamed on bidding processes which are under the DOTC control led by Sec. Joseph Abaya.

The delay has meant increased crowding and discomfort of train riders.

Reyes of Bayan called on commuters to oppose the LRT privatization deal and any impending fare increase. He also demanded government disclosure to the public of the terms and conditions of the concession agreement. (

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