MRT: the fallacies and folly of privatization

Artwork by Renan Ortiz, an awardee of 2012 Thirteen Artists Awards of the Cultural Center of the Philippines and a member of the Concerned Artists of the Philippines.
Artwork by Renan Ortiz, an awardee of 2012 Thirteen Artists Awards of the Cultural Center of the Philippines and a member of the Concerned Artists of the Philippines.
Bulatlat perspective

bu-op-icons-benjieWhat the government does, corporations can do better and more efficiently. Competition will bring down the prices of services, which were formerly provided by government. Besides, government-owned and controlled corporations are just milking cows of corrupt government officials so it is better to turn it over to the private sector.


Well, these are the justifications for privatization, which are being repeated over and over again by governments and the IMF-World Bank to make the privatization of government services and basic utilities acceptable to the people.

These were the justifications cited by the first Aquino administration, of the late Corazon Cojuangco-Aquino mother of the current president. It became acceptable then especially since the ousted Marcos dictatorship had a monopoly over the provision of basic services and utilities and the profits accruing from it. Privatization became an urgent concern at the tail end of the first Aquino administration when basic services, utilities, and infrastructures were deteriorating because of government neglect and inefficiency.

And yet privatized basic services and utilities are nowhere near the promised efficiency and affordability. There have been a lot of diggings by water companies but water is still an expensive resource and is hardly accessible to poor households. The Philippines has the highest power rate in Asia, fifth highest residential rate and seventh highest industrial rate in the world. This is because of monopoly rate manipulation, unjustifiable charges, and consumers are made to carry the burden of “investments” made by companies in the form of stranded costs.

The latest example of how privatization not only failed to live up to its promises, instead it is even a burden to the people is the long saga of breakdowns and accidents at the MRT/LRT commuter train system.

In April 2014, after numerous complaints about the breakdowns in MRT trains were reported in the news, Presidential Communications Secretary Herminio Coloma Jr. made matters worse by telling the public to go ride the bus instead. Coloma then asked the public to wait for the new train coaches, which was supposed to arrive in February 2015. Well, it is already June.

More tragic is the fact that after a MRT train rammed through the barrier at the Taft station in August 2014 and more mishaps thereafter, the Aquino government had the gall to raise MRT train fares in January 2015. By February, Malacañang had to, for the nth time, ask for the public’s patience after successive mishaps on February 17 and 18. The Aquino government said it is just ensuring the public’s safety.

By March 2015, it was revealed that the MRT was fielding only 13 to 14 trains during weekdays. Just two days ago, after commuters endured long queues, it was reported that now only eight of 20 coaches were running. Again, Malacañang said the government was just ensuring the public’s safety and again asked for the public’s patience.

At the rate this is going, by September of this year, there would be only three trains running. So it appears that the Aquino government is taking commuters for a ride with its promises of improvements in the MRT train system. has published several articles explaining the reasons behind the increasingly frequent MRT breakdowns, the more recent of which are Reasons behind MRT’s frequent breakdowns, mishaps and Poor maintenance to blame for LRT collision, MRT breakdowns.

The articles about MRT breakdowns are based on interviews with MRT and LRT workers and the RILES Network. It was revealed that the increasingly frequent breakdowns are a result of years of neglect by private maintenance service providers. The maintenance service providers turned out to be inexperienced, undercapitalized companies with links to the ruling Liberal Party.

Two successive maintenance providers replaced Sumitomo in 2012, with both having links with the Liberal Party. Sumitomo, the original maintenance provider, was paid P100 million a month for 10 years.

So did the privatization of MRT result in better, more efficient, affordable services? The answer is obvious: the MRT has been deteriorating even as taxpayers have been paying the private investors of Metro Rail Transit Corporation its guaranteed 15 percent return on investment since year 2000 and the current maintenance provider P61 million a month, despite the fact that there have been no new upgrades and investments and that the maintenance of the trains has been neglected.

Taxpayers have also been paying the $485.5 million loan incurred by the government in building the MRT because the private investors merely raised $190 million.
The burden of the Filipino people has been made heavier with the increase in fares in January 2015.

Did it eliminate corruption? Definitely not.

What is the solution of the government to the problems plaguing the MRT train system? The government wants to buy out the equity of MRTC and purchase 48 new trains, again using taxpayer’s money. And when the train system becomes viable once more, it will again be privatized.

Filipinos have a saying to describe what the people have been experiencing with privatization: “Ako ang nagbayo, ako ang nagsaing, saka nang maluto’y iba ang kumain.” (Translation: I did the pounding and the cooking, when it was cooked, someone else ate it.) (

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