Part 1 of a two-part series
As more cooperatives registered to meet the program’s final extended deadline of March 2023, implementation barriers and shortcomings hampered momentum and mirrored the reasons for the program’s reluctance among the most affected stakeholders, the jeepney drivers.
By MAVIC CONDE
ALBAY – For the past 20 years, Erwin Mendoza has made a living by driving jeepneys. His franchise and those of 58 drivers and operators in Camarines Sur have been consolidated into an existing cooperative to comply with the public utility vehicle modernization program (PUVMP).
He and his fellow drivers and operators want to regain the income, which supported their families pre-pandemic. Organization leaders are figuring out how to do so under the PUVMP, which is now in the rollout phase for modernized jeeps in key cities nationwide under one-franchise, one route policy for “an efficient and environment-friendly road-based transport sector.”
However, as more cooperatives registered to meet the program’s final extended deadline of March 2023, implementation barriers and shortcomings hampered momentum and mirrored the reasons for the program’s reluctance among the most affected stakeholders, jeepney drivers like Mendoza.
Formalization before electrification
According to German development cooperation (GIZ), formalization of the public transportation industry is one of two different starting points for its decarbonization. The GIZ provided technical support to the Philippines government for the development of the PUVMP as one of its nationally appropriate mitigation actions (NAMA) in the transportation sector. The NAMA has four components: national transport policy, institutional reorganization, improved public transportation planning, and jeepney fleet consolidation and modernization.
The transportation sector is also the most polluting, accounting for 34 percent of the country’s energy-related greenhouse gas emissions, and is expected to increase by 236 percent from 2010 to 2030 under a business-as-usual scenario, not to mention the societal cost of pre-pandemic traffic congestion, which is estimated at 51 million USD per day due to lost working hours and additional fuel consumption, among other factors, according to its NAMA report, JICA’s 2014 study, and the National Framework Strategy on Climate Change, respectively.
The GIZ noted in the same report that countries that are still reliant on informal public transportation must first formalize and professionalize their public transportation industry before gradually introducing and sustainably maintaining electric buses at scale. Its proposed strategy is based on structural changes in the public transportation market, with a 10-year implementation period from 2016 to 2026.
Weak institutional integration, capacity
It’s not as easy as it seems.
Jaime Aguilar, secretary general of the National Confederation of Transport Union, said in a phone interview that modernization cannot occur without the necessary system in place. To illustrate, he asked, “See how the LPTRP [Local Public Transport Plan] cannot be implemented effectively because LGUs lack capacity?”
The LPTRP, which comes before fleet modernization and industry consolidation, has yet to be completed. It is the responsibility of the city and provincial governments, but the Department of Transportation (DOTr) can step in if the former is not yet ready to determine the number of appropriate transport modes for a given route based on passenger demand.
Its goal is to optimize fleets through land use and density distribution planning in order to reduce travel time, which also means less emissions, less congestion, and more efficient passenger trips—all of which are reasons for the modernization initiative.
“The consolidation of franchises was almost complete in Camarines Sur when the directive for an LPTRP came in December 2021, halting government finance institutions like Landbank in approving loan applications,” said Arthur Cledera from the Land Transportation and Franchise Board in Naga City.
Cledera said it entailed forming a technical working group and conducting a survey. Because accurate passenger data was impossible to obtain due to the pandemic, they based passenger demand on 10 percent of a locality’s population. Only four cooperatives in the Bicol region currently have the Euro IV-compliant fleets because they were able to get financing prior to the LPTRP requirement: one in Albay, two in Sorsogon, and one in Masbate.
Mendoza’s cooperative, the Libmanan Transport Cooperative (LIBTRASCO), is one of the cooperatives whose loan application is pending with the bank. Yet this delay seems favorable for him, as he said the unit is costly and the cooperative doesn’t have funding yet. “My current earnings only range from P200 to P500 pesos per day, compared to P1,000 net daily earning pre-pandemic,” he said. Drivers of modernized fleets must also pay the monthly amortization of P26,000, or P800 to P1,000 per day, in addition to the yearly six percent interest rate.
As a result, he prefers the boundary system, though he is open to the salary-based approach if they have enough passengers when their modernized fleets are finally funded. According to him, they also have competitors such as trains, which are always full due to lower fares.
While the absence of LPTRP from Mendoza’s province had no effect on the LIBTRASCO members, it raised several issues for LGUs, cooperatives, and even the LTFRB Naga. One issue the latter dealt with was having to repeat a technical training since several LGUs trained workers on a job order.
A staff member from a city planning office in the Visayas region who asked for anonymity said, “It confuses us why there are already modern vehicles when there’s no LPTRP yet. Then, the LTFRB is rushing us on this when [it has] the power to grant franchises [without the LPTRP].”
Cooperatives are forced to take loans from private banks at a higher interest rate in the absence of LPTRP since they must have modernized fleets within six months to one year of being awarded a franchise. Unless they can justify it, their route will be given to another cooperative.
Cebu NCTU coordinator Angie Mata said in a Zoom interview there are about 38 units that were financed last year with an interest rate twice the Landbank’s fixed six-percent rate. “There are a lot of modern fleets now in Cebu but where are the routes?” she said.
However, in Iloilo City, where the city government has a local route plan, it has had the reverse effect: reduced income and repetitive trips. Therefore, according to Frank Ileonos, chairman of Aerostar 1 cooperative, “a lose-lose experience for commuters and drivers.”
Ileonos claimed that the city’s LPTRP reduced the traditional jeepney drivers’ 15-kilometer journey to three kilometers, resulting in income loss for drivers and increased travel time and cost for commuters from the province who now must make three trips to school or work.
In addition, he refused to accept any new drivers into the cooperative. “We only have 47 consolidated franchisees, but we’re already dealing with these problems; how much worse would it be if we take more?” he said.
The LPTRP team is supposedly composed of officials and representatives from the LGU and national government agencies, as well as commuter and transport groups, the academe, and other members of the private sector.
Ileonos is, however, taking the risks head on. Rather than waiting for Landbank to finish his coop’s loan application, he accompanied the fleet supplier to the bank to ensure funding and release the units. The cooperative collects the entire day’s earnings which will cover its operating expenses, including the drivers’ daily 500-peso rate salary, as well as capital costs, including daily amortization, an installation cost of P300,000 pesos for a large TVA transformer and a monthly charge cost of P120,000 pesos for the 10 solar-powered units.
Taking risks, he says, is part of running a business, but he hopes it will be accompanied by better coordination among government institutions.
Early evaluation of the PUVMP
In the 2019 report evaluating the PUVMP’s early performance, GIZ said that early participants “have principally been operators and commercial entities already demonstrating a level of consolidation and professionalization.” There’s an increased economic importance too using the following metrics: vehicle operating hours, number of staff employed per vehicle per day, fuel economy per passenger-km, daily ridership, and daily staff earning.
However, these participants were only a handful. Old habits, such as “frequent stopping to allow the boarding of small numbers of passengers,” persist, the report added.
According to Cebu NCTU’s Mata, many jeepney drivers and operators were sentimental about their individual franchises and day-to-day earnings yet they consolidated their franchises as a fallback, even without knowing what’s ahead of them as a cooperative.
Mendoza feels the same way for he hasn’t given the changes brought about by the PUVMP much thought. But being a member of LIBTRASCO gives him confidence because the cooperative provided them loans and free franchise renewal and birthday cash gift. Unfortunately, due to the pandemic’s impact on its operations, it can only provide the latter.
Sociologist and university lecturer Athena Charanne Presto and her co-authors of a 2022 case study suggests that “A more realistic and amenable timeline would consider the capacity of the government and the appetite of the stakeholders in mobilizing the moving parts integral to the program.”
This story was supported by the Institute of Climate and Sustainable Cities for the Jaime Espina Klima Correspondents Fellowship.