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Untying the 'Gordian knot' of jeepney modernization.

THE government's Jeepney Transport Modernization program remains tied down with several proverbial 'Gordian knots' that need to be untied to achieve a smooth, effective and affordable implementation.

The proverbial Gordian knot was difficult to untie because it had no beginning or end, which today is likened to a dilemma or problem.

Reverse drive before accelerating? One such dilemma is the handling of rising fuel prices. It may seem unfair for the public transport sector not getting any relief, but allowing fare hikes may trigger a price spiral that can even worsen our poverty situation.

So, before jeepney groups intensify their demands for fare hikes and fuel discounts, or their criticisms against perceived defects of the Jeepney Modernization program, it is worth noting that many jeepney groups do not have the moral engine power to complain as they themselves are not serious in correcting their own inefficiencies, but prefer to pass on the problems to government or to commuters through fare hikes, disregarding their impact on inflation.

Inefficiencies of jeepneys and their lopsided one-way solutions of passing on problems through fare hikes have emerged recently, amid surging fuel prices. Piston earlier demanded for a P6-per-liter fuel discount; Pasang Masda, an increase in minimum fares from P8 to P12; while Atty. Vigor Mendoza, an increase in fares to P10.

For operators, they just see a mirage, which is a false vision of opportunities, when they should be driving back to their garage to improve their engine efficiency to help absorb costs as it is also unfair for commuters to absorb their inefficiencies.

Improving ef f ic ienc y absorbs spike in fuel prices. Improving efficiency is indeed one way to untie the Gordian knot. Engr. Dave Garcia of ATIN'TO Development Services and a transport cooperative organizer, argues it is even possible to increase jeepney mileage from 5 kilometers per liter to 8 kms per liter, but even a minimal improvement to 6 kms per liter is already a 20-percent increase that can cover increases in diesel prices.

If diesel prices are at P45 per liter, a low mileage rating of 5 kms per liter costs P9 per km, but at only 6 kms per liter, this means an improvement of 16.66 percent. Assuming diesel prices rose by a total of P6 from P39 per liter, this 15.38-percent increase is still lower than the 16.6-percent improvement in fuel efficiency.

Based on the experience of progressive transport groups that have experimented on a combination of interventions and best maintenance practices, fuel savings can even reach as much as 30 percent, which means at P45 per liter diesel price, fuel savings could reach P13.50 per liter or more than the total fuel price hike.

DOTr offer good, but reform needed. Instead of rejecting outright Department of Transportation's (DOTr) modernization, jeepney drivers must not consider it a threat, but an opportunity to empower themselves by modifying the program's 'Clean Fleet Management' system, anchored on 1) Clean for emissions-free and 2) Industrial Consolidation through Cooperative-building.

On emissions-prevention alone, which is achieved through better maintenance and technological interventions, fuel savings can reach as much as 10 percent to 30 percent, or P4.50 to P13.50 per liter, or more than the P6 per liter that Piston demanded.

On consolidation, jeepneys can go the way of consortiums or corporations, but the logical and viable option is cooperativism owing to its numerous privileges and benefits with value-added tax exemptions alone, which would translate to P5.40 per liter in earnings.

As cooperatives, oil firms can set up gas stations for clusters of transport cooperatives and offer additional P3 per liter in fuel discounts. Oil firms prefer cooperatives as experience of financing on transport shows that cooperatives have higher (97 percent) repayment rates compared to associations (32 percent).

More benefits can be derived from cooperatives, but more reforms are needed to cut down tedious red tapes in the registration of cooperatives. Registration can drag up to 10 months, while SEC registers companies in just two to three days.

Segmentizing solutions. The DOTr's one formula for all may not work as there are lucrative major routes, where drivers can earn P1,000 to P2,000 a day and can thus afford the P800 plus daily amortizations for the P1.6 million diesel vehicle replacements. There are high-end routes like Global City, which are appropriate for electric vehicles that can charge premium rates.

However, there are small jeepneys with boundaries of only P600 to P700 a day, and could not afford the daily P800 amortizations. Perhaps, LPG engine vehicles costing only P1 million could bring down amortizations to only P500 a day. And if you add the 10 percent to 30 percent efficiency improvements derived from technological and maintenance best practices, it is possible to 'effectively' reduce daily amortizations to as low as P350 per day, which is reasonable for both drivers and operators, Garcia added. In short, the DOTr must allow all options as the industry is highly segmented, therefore the approaches and solutions must also be segmentized. After all, electric vehicles may not work in flooded and sloping areas, neither could diesel vehicle builders supply all the 250,000 jeepney units. Meanwhile, all vehicles have to be modernized.

Maintenance is missing key. Either option, which is the consumer's choice by law, needs regular maintenance. If humans need maintenance like good diet, sleep, exercise, vitamins, vehicles also need periodic maintenance.

Jeepneys, which run 14 hours a day under passenger overloads, are therefore likely to break down. This could affect the daily amortizations. Maintenance, therefore, allays the fears and prevents the nightmare of the modernization program turning into a multibillion peso failure simply because drivers and operators en masse failed to pay their amortizations.

Under Section 21 of the Clean Air Act, the DOTr is mandated to implement emission standards through 1) Motor Vehicle Inspection Service and 2) A Maintenance Policy and program, which is still nonexistent. The government will not do the maintenance, but sets maintenance policies, like integrating it in the modernization financing.

Simply put, maintenance must be a periodic daily habit or activity of jeepneys, whether the government operates an inspection or anti-smoke belching drive. This is easy and sustainable if maintenance becomes the transport cooperative's business and a source of additional livelihood for the jeepney sector, which is its own market.
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Publication:Business Mirror (Makati City, Philippines)
Date:Jun 5, 2018
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