Due to rising fuel prices, jeepney transport groups are seeking fare hikes, which must be addressed urgently through systematic targeted fuel discounts and a fast-track cooperative-building program for multiple benefits. Otherwise, allowing fare hikes will trigger disastrous consequences like a price spiral on all commodities on top of an existing inflationary situation that could worsen the poverty problem.
A demand from the man on the wheel? Rightfully, the driver on the wheel deserves some relief, as he is hit the most with fuel-price hikes, while his operator is not affected, as he gets a “fixed boundary income” regardless of increasing fuel prices or whether the driver has fewer passengers or not.
Operators can only justify increases in their boundary income during fare hikes, and rightfully so, perhaps. Thus, jeepney groups seeking fare hikes are led by their operators, who want to increase by 25 percent the minimum fares from the current P8 to P10, plus P2 every succeeding kilometer and an additional P1 price surge during rush hours.
A driver cannot complain much, as he does not own the means of livelihood—the jeepney, which he shares with another driver for an operating time of 12 to 16 hours a day. He also faces mounting daily traffic problems as more private cars are sold every year. Last year 415,000 four-wheeled vehicles, mostly cars, were sold, a bulk of which ended up in Metro Manila.
Few will deserve fuel discounts. Some free-market purist friends abhor giving out subsidies, claiming this only distorts market pricing. On the contrary, government intervention is necessary for free markets to operate effectively and ironically, if we go by what increasingly popular economist Ha-Joon Chang says in his book 23 Things They Don’t Tell You About Capitalism.
Records show jeepneys only account for 4 percent of total vehicles, so subsidizing this few with substantive fuel discounts will not really be much of a burden. In short, it is wiser to offer even a temporary substantive but “targeted fuel-discount system” solely for jeepneys, as they serve the poor, whose situation will worsen with fare hikes.
Perhaps, both the government and oil companies can have a co-sharing arrangement. The government raises so much in excise taxes from fuel, and can thus absorb the costs of these discounts.
Similarly, if oil firms can give 5 percent or about P3 per liter now in gasoline discounts through credit-card promo tie-ups, for instance, why not much more for jeepneys. They can add up more discounts as part of their corporate social responsibility, this time giving back to the sector, which has been buying fuel, oil and lubricants from them without any institutionalized patronage refund in the form of meaningful services.
Co-ops gain P5 per liter in VAT exempts alone. A more sustainable and lasting price-absorbing strategy is for the government to fast-track the transformation of transport groups (jeepneys, tricycles and UV express) into cooperatives to optimize the benefits they can get from cooperatives.
Once converted into cooperatives, these jeepney groups can enjoy tax-exemptions. Thus, on value-added tax exemptions alone, at current diesel prices of P42 per liter, exemptions from the 12-percent VAT alone already amounts to about P5 per liter, which already approximates Piston’s earlier demand for a P6-per-liter discount, or better than Pasang Masda’s earlier demand for a P4 or 50-percent increase in the minimum fares, from P8 to P12.
A fare hike will trigger demands from labor groups, etc., and worsen poverty, particularly among poor residents residing in the city outskirts. Effectively, what they earn just goes all to food and transport and nothing left for other needs.
P3 per liter rebates through co-ops. Oil firms are willing to set up gas stations for transport groups and offer additional P3 per liter in price rebates, provided transport groups transformed first into cooperatives.
Some oil companies prefer cooperatives owing to their higher repayment track record of 97 percent, compared to the 32 percent low repayment rates of jeepney associations in past government financing programs. The gas stations can be built to service clusters of transport cooperatives
Worse, some oil companies had past experiences with transport groups that did not only take their due margins, which is justified, but did not return the entire capital costs of fuel inventory, much more failed to allow the recovery of the capital invested in building the gasoline stations.
P4 to P12 per liter more in savings from maintenance. The Department of Transportation’s transport modernization mandates a “clean fleet management,” which necessitates clean air emissions and consolidation.
With a package of interventions through best maintenance practices and a combination of technologies, a minimum of 10-percent to 20-percent increase in mileage or fuel savings equivalent to over P3 to P7 per liter can easily be realized.
Pasig-Mandaluyong-Quiapo Jeepney cooperative Chairman Ruben Vasquez and Manager Sonny Letrodo observe that they spend 6.8 liters per round trip of 34 kilometers, or 5 km per liter, but with maintenance, mileage improved to 5.6 liters per round trip, or 17.65-percent mileage increase to 6.07 km per liter.
Proper preventive maintenance by itself will not only result in fuel savings but will also avoid the costlier maintenance expenses once engines break down from passenger overload and long 14-hour operating time.
No DOTr maintenance policy yet. Although maintenance is vital, more so as jeepneys still believe in many myths and engine malpractices that can only be corrected through education, the DOTr does not have yet a maintenance policy. And yet, Section 21 of the Clean Air Act mandates the DOTr to implement emission standards through inspection and maintenance. It already has the Motor Vehicle Inspection Service, but has no maintenance policy or program.
Some DOTr officials have long been ignoring consulting with knowledgeable technical people immersed on the ground with mechanics who have more superior practical know-how than people in academe. One such fellow is Gerry Manila from another jeepney cooperative still undergoing application, who was exposed as early as 9 years old and could even overhaul a jeepney engine when he was 12.
Without preventive maintenance, jeepneys undergoing 14 hours of average operating time and high passenger loads are likely to suffer breakdowns often, thus affecting daily amortizations of the modernization financing. This is causing shivers to banks as vehicle manufacturers can only offer warranties for three years, leaving a gap of four years against the financing of seven years.
In short, maintenance, which is still the missing link, will address this huge warranty gap. The costs of warranties can be lowered to be limited only to the “friction zones” like engine wear and tear. The body, even if exposed to rain, sun and wind, will not break down, more so the underchassis that can even last 50 to 100 years, so focus must only be on engine maintenance, which will cost probably no more than P100,000 to cover the four-year warranty gap. In short, the cost of maintenance can be inputted into the financing equation to guarantee the ideal conditions all the way, even beyond amortization periods.
Cooperative building must therefore be fast-tracked. This brings us to the strategic importance of cooperatives for jeepneys, to maximize all the benefits and privileges by riding on modernization. Unfortunately, there are still too many policy and procedural barriers to Coop entry, which can be resolved through workshop technical consultations, which concerned groups have been requesting, but often ignored.
Transport research continues. These transport groups are willing to learn and experiment on their own, at their cost, without government help. These efforts are their contributions to the unimplemented Section 15 of the Clean Air Act on Pollution Control Research, the results of which are the supposed content of seminars in compliance with Section 11, mandating the government to make available all the information, techniques, maintenance practices and technologies on pollution control. The same seminars are supposedly required under Section 46 to complement penalties on smoke-belching violators.
E-mail: mikealunan@yahoo.com.