Recent fuel price increases, resulting from higher excise taxes, starting with the P3-per-liter excise tax on diesel for 2018 alone, are triggering inflationary pressures and mounting demands for fare hikes and huge fuel discounts, which can actually be avoided if the Department of Transportation (DOTr) implements fast the right support policies for the transport modernization program.
Instead of a P4 or 50-percent increase in minimum fares as being pushed by Pasang Masda, and the demand of Pinagkaisang Samahan ng mga Tsuper at Opereytor Nationwide (Piston) for a P6-per-liter diesel discount, it is even possible for the jeepney sector to generate at least P10 per liter of diesel or even P14 per liter in consolidated benefits thru a combination of interventions, all riding on transport modernization program.
Koops can gain P5 per liter in value-added tax (VAT) exemptions. Ramil Rodrigo, chairman of the Cubao-Rosario-Sta. Lucia Cooperative, is gung-ho with modernization, which he claims “can only be effective thru cooperatives that enjoy many benefits by law, like tax exemptions.”
The 12-percent VAT exemptions alone for diesel approximates Piston’s demand for a P6-per-liter discount. Piston’s demand is unjustified and cannot be granted, so why demand what cannot be given. At 30 liter daily average, this amounts to P180 a day or P4,690 a month, or much more than the Pantawid Pamilyang Pilipino Program for the indigents.
Pasang Masda’s 50-percent minimum fare hike petition of P4 is also grossly unacceptable and untenable. The P3-per-liter diesel excise tax for 2018 totals P90 a day at 30 liters, but on a 200-passenger conservative minimum per jeepney per day, this means P800 in new revenues, or 788.89 percent more than the P90 in excise taxes. This 200-passenger total is conservative as a 20-seater jeepney can easily hit 200 passengers in five round-trips, and yet more trips are made in14 hours of operations.
As oil firms use excise taxes to increase prices to hide profiteering, Pasang Masda cannot also make fare hikes as an excuse to charge higher boundary income. They must be efficient first before passing on inefficiencies to commuters. The government must check these abuses.
Another P2 to P3 per liter from oil firm tie-ups. Oil firms now more aggressive with competition are willing to build gas stations for transport koop-clusters at P2-to P3-per-liter discounts.
However, they are wary with associations with records of low 30 percent repayment rates compared to cooperatives’ high 97-percent repayments, based on past government financing for transport.
Worse, apart from taking the margins, which is justified, the entire capital costs of fuel inventory were pocketed, all the more recovering the capital investments on the gasoline stations. Businesses wanting to deal with transport groups want fair deals and certainties, making cooperatives as better partners.
Cooperative building must therefore be fast-tracked, as modernization cannot be successful without consolidation thru cooperatives. Unfortunately, there are still many policy barriers to Koop entry, which can be resolved thru technical workshop consultations that concerned groups have long been requesting, but often ignored.
About P3 to P7 per liter in savings from maintenance. With a package of interventions thru best maintenance practices and a combination of technologies, at least 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 observed they spent 6.8 liters per roundtrip of 34 kilometers, or 5 kms per liter, but with maintenance, mileage improved to 5.6 liters per round-trip, or a 17.65-percent mileage increase to 6.07kms per liter.
Proper preventive maintenance by itself will not only result in fuel savings, but will avoid costlier maintenance expenses with engine breakdowns resulting from passenger overload and long 14-hour operations.
No DOTr maintenance policy yet. Although maintenance is vital, more so as jeepneys still believe in many myths and engine malpractices, 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: 1) inspection and 2) maintenance. It has the Motor Vehicle Inspection Service, but has no maintenance program.
Some DOTr officials have ignored 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 at 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 four-year gap against financing of seven years.
In short, maintenance, which is the missing link, will address this huge warranty gap. Costs of warranties can be lowered and limited 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 under-chassis that can even last 50 to 100 years, so focus must only be on engine maintenance. The warranty costs will already be the maintenance costs, which can even be inputted into the financing equation to guarantee ideal conditions remain even beyond amortization periods.
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 for Section 11, mandating the government to make available all the information, techniques, practices and technologies on pollution control. They are also required under Section 46 complementing penalties on smoke-belching violators.
They are also studying variations in packages for jeepneys with different route characterization, different vehicle dimensions, different boundary incomes, different passenger volumes, etc. because DOTr’s one dimension, one uniform amortization, etc. do not match reality. The DOTr must listen before problems explode.
E-mail: mikealunan@yahoo.com.