SONA 2015: Favoring the rich, oppressing the poor – Aquino legacy, by the numbers

The LRT 1 privatization, cornered by the Ayala-MVP group, shows how the Aquino regime has favored the oligarchs at the people’s expense. Read more here (Image from Rappler)

One of the biggest legacies that President Benigno S. Aquino III will leave behind is how his regime has favored the rich and oppressed the poor.

Below are some numbers.

  • Php168.9 billion – total cost of the 10 public-private partnership (PPP) projects awarded so far by the Aquino administration (An updated report – as of 22 July 2015 – from the PPP Center now pegs the total cost at Php189 billion, reflecting the Php20.1-billion adjustment in the cost of the Cavite-Laguna Expressway from Php35.4 billion to Php55.5 billion)
  • Php104 billion – total cost of the four projects that the Ayala family and Indonesia’s Salim group, as represented by Manny V. Pangilinan (MVP), have cornered so far under Aquino’s PPP program both as a consortium and as individual proponents (the amount is now Php124.1 billion, reflecting the adjustment in the cost of the Cavite-Laguna Expressway) 
  • Php49 billion – total cost of the five PPP projects under Aquino where Henry Sy is involved
  • Php15.9 billion – cost of the lone PPP contract cornered by presidential uncle Danding Cojuangco’s San Miguel Corp. (SMC) under Aquino’s PPP program
  • Php97 billion – total cost of the two PPP projects of SMC that started with previous administrations but finalized under Aquino

Additional information on these PPP projects here

  • Php57.2 billion – total amount allocated in the 2015 budget to guarantee the profits and other commercial interests of investors participating in Aquino’s PPP program (more details here)
  • Php902.3 billion – total reported contingent liabilities of the Aquino administration arising from state guarantees on commercial debts and subsidies associated with PPP projects (more details here)
  • US$35.6 billion or 237 percent – increase in the combined wealth of the ten richest Filipinos, most of whom are in the PPP business, in 2014 compared to their combined wealth in 2010, as listed by Forbes (more details here and here)
  • 12 – number of Filipinos who landed in Forbes’ 2015 list of billionaires in the world, up from just five billionaires in 2010 (more details here and here)
  • 6th – the global rank of the Philippines in The Economist’s 2014 Crony Capitalism Index, with the billionaires’ wealth in crony-sectors such as utilities and infrastructure comprising about 13 percent of the gross domestic product (GDP); in 2007, the country ranked 9th (more details here)
  • 11.4 million – number of families who consider themselves poor, according to the first quarter 2015 survey of the Social Weather Stations (SWS); in the second quarter 2010 or the start of the Aquino administration, it was pegged at 9.4 million (more details here and here)
  • 7 out of 10 – number of Filipinos who believe that poverty did not go down under the Aquino administration, according to the May 2015 survey of IBON Foundation; the same number of people also consider themselves poor (more details here and here)
  • Php129 – increase in the daily cost of living in the National Capital Region (NCR) between June 2010 and June 2015 as estimated by IBON (request additional details here)
  • Php77 – increase in the daily minimum wage of workers (including allowance) in NCR between June 2010 and June 2015 (more details here)
  • 44 percent – the portion of the estimated cost of living in NCR as of June 2015 that can be met by the current minimum wage in the region (request additional details here)
  • Php8 per kilo – increase in the retail price of regular-milled rice between July 2010 and July 2015; well-milled rice increased by Php7 during the same period (request additional details here)
  • Php10 to Php13 – largest increase in fares of LRT 1, LRT 2, and MRT 3 implemented by the Aquino administration starting in January 2015 (more details here)
  • 4 – number of service interruptions every month in MRT 3 in the first semester of 2015, twice the recorded number of monthly incidents in 2010; 193 total incidents of MRT 3 service interruptions from 2010 to June 2015 (more details here)
  • Php3.98 to Php12.65 per cubic meter – increase in water rates in Metro Manila between July 2010 and July 2015 (request additional details here)
  • 0.4 percent – share of the housing budget to the national budget in 2015, even lower than the 0.5 percent in the 2010 budget (more details here)
  • 70,000 – estimated number of urban poor dwellers in Metro Manila that have been displaced by demolitions under Aquino to give way to PPP and other projects, according to Kadamay (more details here)
  • 9 million – number of jobless adults as of first quarter 2015, according to the survey of SWS; in the second quarter of 2010 or the start of the Aquino administration, it was pegged at 8 million (more details here and here)
  • 44 percent – estimated portion of workers who are contractual, non-regular or agency-hired in 2012, up from 37 percent in 2008, based on Bureau of Labor and Employment Statistics (BLES) data compiled by IBON (request additional details here)
  • 1,024 – increase in number of OFWs leaving the country everyday between 2010 and 2014, based on data from the Philippine Overseas Employment Administration (POEA) compiled by Migrante (more details here)
  • 7 – number of OFWs executed abroad under the Aquino administration, the highest among all administrations, according to Migrante (more details here)
  • 144 – estimated number of workers killed due to occupational accidents under the Aquino administration, based on BLES data compiled by IBON (request additional details here)
  • 1.2 million – number of farmers who are still under leasehold arrangements (cited here; request additional details here)
  • 9 out of 10 – number of farmers who are qualified beneficiaries of CARP but are still landless, according to IBON (cited here; request additional details here)
  • 8 out of 10 – number of CARP beneficiaries who have stopped paying amortization and could be at risk of losing their land, based on Land Bank data (cited here; request additional details here)
  • 145 – number of farmers killed by suspected state agents under Aquino as of first quarter 2015; 55 – indigenous people killed; 13 – urban poor killed, according to Karapatan (more details here)

SONA 2015: Aquino’s PPP legacy

(Short video produced by AlterMidya)

First published as IBON Features

“We have so many needs: from education, infrastructure, health, military, police and more. Our funds will not be enough to meet them… Our solution: public-private partnerships… From these public-private partnerships, our economy will grow and every Filipino will be the beneficiary… We will be able to fund public service in accordance with our platform.” 

– President Benigno S. Aquino III, State of the Nation Address (SONA), 26 July 2010

Five SONAs ago, President Aquino declared public-private partnership (PPP) as the key to many of the country’s needs. Ten PPP awarded projects worth Php168.9 billion later and one SONA left to give, how did Aquino’s centerpiece program fare? (An updated report – as of 22 July 2015 – from the PPP Center now pegs the total cost at Php189 billion, reflecting the Php20.1-billion adjustment in the cost of the Cavite-Laguna Expressway from Php35.4 billion to Php55.5 billion)

Aquino has been often criticized for the slow progress of his flagship infrastructure program. There are 15 more PPP projects under various stages of bidding with an indicative cost of Php549.4 billion. Measured against this, Aquino has only awarded 40% of the total number of projects identified. They are equivalent to less than a quarter of the overall indicative cost. Aquino, however, claims that with 10 awarded projects, his administration has already surpassed the six solicited PPP projects of the past three administrations.

Before he steps down, Aquino aims to award five more PPP items. The largest is the Php122.8-billion Laguna Lakeshore Expressway Dike. Like others in the PPP portfolio, the bid schedule for this mega-project has been moved by several months. As such, doubts persist on meeting the target of 15 awarded PPP projects.

But the number of contracts Aquino has sealed will not define his PPP legacy. His biggest contribution is the kind of PPP environment that his regime has began to build. Aquino made a three-decade old neoliberal scheme even more desirable to the local oligarchs and their foreign backers. He has paved the way for more and bigger privatization deals for his successor. Twenty-seven more projects in various stages of pre-bidding preparations are in the pipeline of the PPP Center.

The country, in fact, is recognized globally for its PPP program. UK-based Economist Intelligence Unit (EIU) recently named the Philippines as the “most improved country in Asia Pacific for PPP readiness”. Aquino’s reforms led to distinctions as “most-improved regulatory and institutional frameworks” and “improved investment climate and financial facilities”. Aquino made this possible through perks and guarantees unprecedented in the history of privatization in the Philippines.

Creating the most favorable climate for private investors has been one of the earliest and top concerns of Aquino. Less than a year into his term, economic managers started conducting consultations with business groups and foreign aid agencies on revising the Implementing Rules and Regulations (IRR) of the BOT Law.

Approved in October 2012, the revised IRR introduced new provisions that make the PPP program more palatable to private business. Chief of them are explicit provisions guaranteeing that PPP proponents will be able to collect the contractually agreed fees or charges that they can impose on the public, regardless of regulatory intervention that may affect (i.e. lower) such fees or charges.

This is contained both in the context of granting final approval of grant of the franchise by the regulator and of regulatory determination of tolls, fees, rentals and charges that the proponent can charge to the public. Such government guarantee is absent in the old 2006 IRR.

Back in November 2010 at the international PPP Summit that government organized, Aquino referred to this as “regulatory risk guarantee”. Before 200 foreign businessmen, Aquino said, “When government commits to allow investors to earn their return from user fees, it is important that that commitment be reliable and enforceable. And if private investors are impeded from collecting contractually agreed fees – by regulators, courts, or the legislature – then our government will use its own resources to ensure that they are kept whole.”

An example is the so-called Deficit Payment scheme in the Concession Agreement (CA) Aquino signed with the consortium of Ayala and Pangilinan for the Php64.9-billion LRT Line 1 Cavite Extension and Operation & Maintenance project. The LRT 1 Deficit Payment scheme states that government will shoulder the disparity between the Notional Fare, which the Ayala-Pangilinan group is entitled to impose under the CA, and the Approved Fare that the Light Rail Transit Authority (LRTA) may grant.

Aquino likewise issued Executive Order (EO) No. 78 in July 2012 that mandates the use of Alternative Dispute Resolution (ADR) in all PPP contracts. ADR provides for alternative avenues outside of court to settle disputes or conflicts, which may arise during the contract lifetime of a PPP project. ADR includes conciliation and negotiation, mediation and arbitration. ADR makes for a more inviting climate for investors. Costs are shared and investors have a say in the final decision. The process is also less tedious since watchful and assertive public interest groups are shut out unlike in regular judicial courts or public hearings.

The arbitration mechanism in the CA of the Metropolitan Waterworks and Sewerage System (MWSS) with the Ayala and Pangilinan-led concessionaires is a form of ADR. Under it, investors and regulators sit down in a panel to settle dispute away from any form of public scrutiny, much less participation. The LRT 1 PPP contract also contains a provision on ADR.

The worst of Aquino’s PPP reforms, however, are yet to come. As a “continuing legacy for the people”, Aquino seeks to pass the PPP Act that will amend the 26-year old BOT Law. Lobbying for the PPP Act are the Joint Foreign Chambers in the Philippines (JFC) and the Makati Business Club (MBC). The bill has already been approved by the House committee on public works and highways. It is currently pending at the appropriations panel which will discuss the bill’s funding provisions.

When passed, the PPP Act will consolidate, institutionalize and expand the already outrageously investor-friendly reforms Aquino has initiated. Aside from institutionalizing EO 78 on the ADR, for instance, the PPP Act will also substantially further weaken the courts and regulatory bodies by directly restricting their mandate.

The PPP Act will disallow courts from issuing temporary restraining orders (TROs), preliminary injunctions and preliminary mandatory injunctions against practically all PPP-related acts. Court officials who will violate this would be expelled from the judiciary and face criminal and civil liabilities. While the Supreme Court (SC) can still issue a TRO, etc. against a PPP project, such order will only be effective for a maximum of six months.

Aside from weakening established judicial and regulatory processes that the public can resort to for protection, the PPP Act will also guarantee that public funds are available to protect the commercial interests of investors. It will ensure, for instance, that funds are accessible to finance government obligations arising from regulatory risk guarantees like LRT 1’s Deficit Payment Scheme through a Viability Gap Funding (VGF).

Moreover, the PPP Act will also institutionalize a Contingent Liabilities Fund (CLF) to be funded by foreign debt and local resources. Permanently appropriated, the CLF will ensure a steady source of public funds to meet government’s financial obligations arising from PPP contracts. Such obligations include performance undertaking where government guarantees payments for debts incurred by the private investor. One of the PPP projects that enjoy performance undertaking is the Php69.3-billion MRT 7 of presidential uncle Danding Cojuangco.

Remember the Ramos sweetheart deals with independent power producers (IPPs) that until today bleed the National Power Corporation (Napocor) dry? Those are also examples of PPP-related contingent liabilities. In 2011, the public debt arising from such liabilities still stood at US$16.73 billion despite a staggering debt servicing of US$18 billion since 2001.

Like his predecessors, Aquino justifies PPP because of limited public funds. But his proposed PPP Act will even further worsen government’s fiscal woes. Aside from the VGF and CLF, the PPP Act will likewise allow government to shoulder more than 50% of a project’s cost, lifting the cap under the current BOT Law. Perks like exemptions from local and real property taxes will be institutionalized as well for the big-ticket projects of the oligarchs like power plants, toll roads and mass transport.

Aquino has actually already given these generous perks to the Ayala-Pangilinan consortium in the LRT 1 PPP deal. Of the total project cost of Php64.9 billion, Aquino agreed to shoulder Php34.9 billion or 54% of the total. Government share includes expenses for right of way acquisition, purchase of additional coaches, civil works and construction of depots. The Ayala-Pangilinan group also enjoys real property tax exemptions reportedly costing Php64 billion.

Through his PPP program, Aquino has successfully built a legacy of completely surrendering public interest and the people’s sovereignty to profit-driven corporate agenda. His term will be remembered for making the Sy, Pangilinan, Cojuangco, Ayala business groups and the foreign interests behind them more powerful and richer than ever.
Meanwhile, commuters are forced to endure trains that break down every week and greatly risk their safety even as fares jumped big time. Consumers are forced to bear rising water rates amid questionable charges. Households are forced to cope with steep electricity bills, manipulated charges, and insecure power supply.

More than meets the eye: People’s fact-finding on Mamasapano

Life Interrupted: Civilian communities terrorized by commando assault in Mamasapano

Initial Report of the People’s Fact-Finding Mission
Mamasapano, Maguindanao
February 9-11, 2015

The Government of the Philippines (GPH) and the Moro Islamic Liberation Front (MILF) are participating in ongoing peace talks. Prior to the signing of the Bangsamoro Basic Law (BBL) last year, signed agreements between both parties were already in effect, one of which was the Agreement on the General Cessation of Hostilities signed on July 1997. This agreement established the mechanisms to prevent hostilities between the armed forces of both parties, in order to prevent danger to civilian populations.

Despite these agreements, the encounter between the PNP-SAF and the MILF forces in Mamasapano, Maguindanao on January 25 suggests the agreement on the cessation of hostilities was violated. The loss of civilian life during the incident raises serious questions regarding violations of human rights and international humanitarian law, which are investigated in this report.

The reports and testimonies gathered regarding the presence of US personnel in the area during the encounter attests to the continuing ‘War on Terror’ campaign of the US and Philippine governments, which have undermined the peace talks and the rights of innocent civilians.

There is more to the Mamasapano incident than meets the eye.

While the media coverage have so far mainly focused on the death of the 44 police commandos after the botched operation on January 25, little has been publicly said about the Moro communities in Mamasapano, Maguindanao. But on the ground, reports of human rights abuses, violations of the International Humanitarian Law during combat, and involvement of US military personnel were persistent. Spurred by these reports from the commnunities, Suara Bangsamoro, Kalinaw Mindanao and Kawagib initiated a People’s Fact-Finding Mission in affected barangays of Mamasapano, Maguindanao on February 9 to 11, 2015.

About 100 individuals participated in the mission, which included Moro leaders, human rights advocates, children’s rights advocates, church leaders, youth leaders, labor leaders, women leaders, and alternative journalists. Two progressive parliamentarians from Makabayan bloc – Bayan Muna Rep. Carlos Zarate and Gabriela Women’s Partylist Rep. Luz Ilagan – also spearheaded the mission.

The People’s Fact-Finding Mission covered four affected barangays in Mamasapano, Maguindanao where initial reports of abuses came from: Tukanalipao, Pidsandawan, Pimbalkan and Tuka. These covered about 5,000 individuals in the said barangays. The mission was able to collect 11 sworn affidavits, as well as recorded testimonies, photographs and videos of the interviews with witnesses and affected individuals, as well as photographs of the affected areas.

Among the cases of human rights violations, as well as violations of the International Humanitarian Law, that the Mission was able to document are the following:

  • Extra-judicial Killings
  • Frustrated Extra-judicial Killings
  • Forced Evacuation
  • Destruction of Properties
  • Divestment of Properties
  • Child Rights Violations

The Mission was also able to gather sworn affidavits from residents of the affected barangays who testified to the use of drones before and during the botched police operation on Jan. 25. In addition to these, it was also able to gather testimonies of various witnesses in Brgy. Tukanalipao who said they saw the body of at least one (1) US personnel (purportedly military) among the other remains of SAF commandos in the aftermath of the bloody encounters. Undoubtedly, this direct US involvment in a military/police operation in the Philippines amounts to a clear violation of the country’s national sovereignty.

Highlight Cases:

Extra-judicial Killings & Frustrated Extra-judicial Killings

At around four in the morning of January 25, farmer Badrudin Langalan, 18, just came from his farm and was on his way to charge his cellphone at the Tukanalipao proper when he was ostensibly chanced upon the position of the blocking force of SAF members before he was able to cross the wooden bridge. Later in the day, after the encounters and when residents started to bring the bodies of fallen SAF members to the barangay proper, Badrudin’s lifeless body was found among the fallen SAF members, his hands and feet were bound.

Meanwhile, around the same time that Badrudin chanced upon SAF members, Sarah Pananggulon, 8 years old, was sleeping with her parents and younger brother in their house in Sitio Inugog, Brgy. Tukanalipao in Mamasapano town when they were awaken by loud explosions and gunshots outside their house. They realized armed individuals whom they later identified as members of the Special Action Force (SAF) were shooting in their direction. Sarah was shot on her side, while her parents, Samrah Sampulna and Pananggulon Mamasalaga, were wounded as they tried to evacuate from their houses.

Forced Evacuation & Indiscriminate Firing

Farmers Iskak Salao, 48, and Saada Teb, 25, were residents of Sitio Inugog, Brgy. Tukanalipao. They were sleeping in their respective houses when they and their neighbors heard gunshots. Iskak, Saada and many others were compelled to evacuate from their houses, as members of SAF fired upon their location. Saada, a mute and a student of the Mahad (one of 330 Arabic students in nearby madrasah in Brgy. Inugog), was hit by a bullet. Since then, the students and the Arabic teachers have not resumed classes and residents remain evacuees because of fear that their community will be again assaulted.

Meanwhile, Amina Kamiron, 40, lives in Tukanalipao proper, which is a few kilometers away from the site of encounters. She was taking her bath when she heard loud gunshots. She was shocked and fell on the floor. Amina was brought to hospital and is still recuperating, as of this writing.

At around nine in the morning of Jan. 25, residents of Tukanalipao proper who live along the main road were forced to evacuate from their homes when SAF tanks stationed along the main road began indiscriminately firing on their houses. They showed to the Mission members the holes in their concrete houses which were supposedly caused by gunshots from the tanks.

An estimated 1,500 residents of different barangays also hastily evacuated to nearby communities where they had relatives, according to the ARMM HEART program of the Autonomous Region for Muslim Mindanao (ARMM).

Divestment of Properties

Several residents who live along the highway in Brgy. Tuka complained that SAF members, who were stationed along the highway during the entire time of the encounters, had divested them of their properties. At four in the morning, Saneah Solaiman, 25, complained that SAF members allegedly divested Saneah of her belongings—among others, three pots, cups, kettle and goods from her sari-sari store.

ARMM HEART data revealed that P300,000 worth of farm crops were destroyed during the encounters, while more than a million pesos worth of properties were partially or fully damaged. Six (6) houses were partially damaged.

Other faces of grief

The women shared the ordeals they and their children had to go through to escape the fighting. There was indiscriminate firing and they had to either crawl or dash to safer grounds, some with a baby or toddler in hand. The women who lost their husbands told the FFM of the grief and the economic uncertainty they now face.

The wives of the saheed (martyrs), four elements of the MILF who were fired upon and killed upon by an unidentified SAF element while they were sleeping in a pangguiamanan (mosque-hut) near the tulay na kahoy (wooden bridge) at two in the afternoon of January 25 in Brgy. Tukanalipao, also told their worries to the fact-finding team through a discussion group with the women’s team. Their husbands who were killed are Omar Dagadas, 24; Ali Ismael, 25; Mosif Hassim, 22; and a certain Rasul, 21, were members of the 105th Base Command of the Bangsamoro Islamic Armed Forces (BIAF) of the Moro Islamic Liberation Front (MILF).

Child Rights Violations

Classes in elementary and high school students of different public schools in the various barangays were disrupted by the heavy fighting on January 25. School officials of Linantangan Elementary School in Tukanalipao proper told the Mission that the said school was forced to cancel classes for two weeks after the incident.

According to ARMM HEART, 13 schools with 5,963 students and 124 teachers were affected by the bloody encounters. Aside from this, classes for the 300 Mahad/Arabic students were also disrupted.

During the psychosocial intervention to the children affected, the team found out that children are traumatized due to the incident and their consequent evacuation. According to the children, the encounter occurred because the PNP SAF did not inform the community and the MILF regarding their operation. They also narrated some of their experiences. They also recalled the deafening sounds of gunfire and how they evacuated. Most of the children were among those families who were temporarily displaced due to the incident. According to them, they stayed in several houses and barangay centers that served as the temporary evacuation center for two days and were only able to attend class a week after the incident. Many of them are still afraid, especially during night time. According to them, they fear nightfall as the incident might happen again. Their daily routines disrupted specially on education and economic aspect and they have the feeling of insecurity. Up to this time, many pupils have not reported back to school.

Deep US involvement

The Mission was able to interview, on condition of anonymity, some witnesses who said they saw one Caucasian (“white-skinned, long, blue-eyed, and had narrow, long noses”) who died among the SAF members in Brgy. Tukanalipao. Meanwhile, several residents from Tukanalipao, Pidsandawan, Lusay and Tuka submitted sworn affidavits that state that they saw drones fly above their communities for at least seven (7) days before the bloody encounters on Jan. 25. One witness said that the drone would hover above their houses, sometimes waking them up at night. Meanwhile, residents of Brgy. Tuka and Brgy. Pidsandawan called the drones “airplanes” that twinkled at night time. However, the night before the clash the sound of the drones was exceptionally noisy and busy. The drones, they said, were gone after Jan. 25.

Preliminary Findings: 

  • The PNP-SAF police operation undermined the civilian community and GPH-MILF peace process;
  • There was a violation of the ceasefire agreement or the Agreement on the General Cessation of Hostilities that resulted in a breach in the peace negotiations and human rights violations;
  • The lives of the residents have yet to return to normal, the farmers cannot easily go back to their farms for fear of possible clashes, and unexploded bombs continue to reside in local fields;
  • There is no normalcy in the lives of child residents, as evidenced by the significant decline in the attendance of students in elementary schools;
  • Further investigation should be undertaken into the role of the US government in the Mamasapano incident, based on the following reports: that US troops were seen during retrieval operations; that drones were heard and seen flying before and during the police operation; and that possible Caucasians were sighted with the PNP-SAF during operations, including the body of an alleged Caucasian among the slain PNP-SAF;


  • The government must indemnify, give justice to the victims of human rights violations and be held accountable for the Mamasapano encounter;
  • Violations in the ceasefire agreement should be seriously looked into;
  • US participation in the Mamasapano incident must be investigated;
  • Call for an independent body, such as a truth commission or a people’s movement for truth and accountability, to probe deeper into the Mamasapano incident.

Aside from initiators Suara Bangsamoro, Kalinaw Mindanao and Kawagib, other groups from various provinces in Mindanao as well as national organizations joined the mission, namely:

KARAPATAN-Southern Mindanao Region
KARAPATAN-West Mindanao
Gabriela Women’s Partylist
Children’s Rehabilitation Center
Union of People’s Lawyers in Mindanao
Kilusang Mayo Uno
Nonoy Librado Development Foundation
Sisters Association in Mindanao
Oblates of Notre Dame
Social Ministry Episcopal Diocese for Southern Philipppines
Cotabato Annual Conference – United Church of Christ in the Philippines
United Methodist Church in the Philippines
Liga ng Kabataang Moro
League of Filipino Students
Panalipdan-Southern Mindanao
Community-Based Health Services Association
Anakpawis Partylist
Bayan Muna Partylist
Alternative media outfits Pinoy Weekly, Radyo Ni Juan Network and Kilab Multimedia

Maynilad says 65% of rate hike will be used to pay for its income tax


Manny Pangilinan and his foreign backers and financiers, who have interests in LRT, MRT and Maynilad, must be grinning widely right now.

With the public still reeling from the huge LRT/MRT fare hike, Maynilad Water Services Inc. announced that it will soon implement a significant increase in its basic charge. The average increase is P3.06 per cubic meter. What makes this rate hike as awfully unjust as the LRT/MRT fare hike is that 65% of the increase (about P1.99 per cu. m) will be used to recover the income tax of Maynilad. This was disclosed by the water firm’s Chief Finance Officer as quoted in a news report.

This means that hapless consumers will continue to pay for the corporate income tax of a highly profitable big business that has been cashing in on a basic service. In 2013, Maynilad reported a core income of P7.53 billion. (See chart below) Since 2010, its core income has been growing by more than 16% annually. Maynilad’s rising profits are mainly pushed by ever increasing water rates due to periodic and automatic adjustments allowed in its Concession Agreement with the Metropolitan Waterworks and Sewerage System (MWSS). Since taking over in 1997, Maynilad’s water rates have already ballooned by more than 500 percent. Since 2010, its all-in tariff (basic charge plus other charges) has jumped by more than 40 percent, which could further go up when the higher basic charge is implemented.

Image from Metro Pacific

Image from Metro Pacific (Core earnings represents earnings associated with business operations, and exclude earnings from goodwill, gains or losses from nonrecurring items, pension gains, legal settlements or employee stock options; source: Investopedia)

But while it has been earning billions of pesos from onerous and skyrocketing water rates, Maynilad wants to further milk the consumers dry by passing on their obligation to pay income tax to their customers. How does Maynilad justify this patently scandalous practice? A direct statement from its Chief Finance Officer: “Siyempre ang negosyante, ini-invest niya ‘yung pera niya para may return. So ang usapan dito, magkano ba ang tubo na dapat kitain ng pera na ‘yun. Importante ‘yung computation ng taxes kasi kailangan natin malaman magkano ‘yung net na iuuwi.”

To recall, the MWSS-Regulatory Office (RO) disallowed Maynilad and Manila Water Co. from including income tax recovery in their computation of the basic charge. Maynilad and Manila Water separately challenged the decision through arbitration led by the International Chamber of Commerce (ICC), a dispute resolution mechanism established by the Concession Agreement. Manila Water is still awaiting the result of its own arbitration case as of this posting.

More than eight million Maynilad customers are supposed to enjoy a reduction in their monthly water bill. In its decision last September 2013, the MWSS-RO ordered Maynilad to cut its basic charge by P1.46 per cu. m (which shall be distributed in five tranches at P0.29 per cu. m. per year) Now instead of a rollback, consumers are faced with a big rate increase. (Download the MWSS-RO resolution here)

The income tax is actually just one of the various issues raised by the MWSS-RO against Maynilad and Manila Water. Another is the P1 per cu. m. currency exchange rate adjustment (CERA), which the regulators ordered Maynilad to discontinue charging to its customers since a similar recovery mechanism – the foreign currency differential adjustment (FCDA), which recently also pushed water rates up – is already being imposed by Maynilad. But apparently, because of the arbitration, the CERA will remain in Maynilad’s water bill, and is now tucked in the basic charge.

Arbitration further exposes the privatization of MWSS, the region’s largest public-private partnership (PPP) deal in the water sector, as greatly anti-people and contrary to public interest. The Maynilad case clearly shows that effective public regulation is a sham in a program like PPP that is heavily biased to private corporate interests. The MWSS privatization was designed precisely to undermine government regulation as decisions are ultimately made by an arbitration panel where the concessionaire and a representative of foreign business interests have a say. ###

For background/additional information and discussion:

PNoy and the Big Water monopolies

Water arbitration: Issues and implications

Water rate hikes: Maynilad, Manila Water want P153B in future income tax passed on to consumers

Manila Water, Maynilad’s multi-million “pa-pogi” also charged to consumers

Maynilad, Manila Water ads further expose anti-consumer MWSS privatization

PH water rates among Asia’s highest

LRT/MRT fare hike and the Aquino admin’s irrational, baseless claims

Image from RILES Network

Image from RILES Network

On 4 January, the Department of Transportation and Communications (DOTC) will start implementing the controversial fare hike for light rail transit (LRT) 1 and 2 and metro rail transit (MRT) 3. The issues surrounding the fare hike have not changed, with the administration mouthing the same irrational and baseless claims to justify the increase. Meanwhile, the fare hike has been further exposed as merely benefitting big business interests. The privatization of LRT 1 as well as the DOTC admission that the fare hike will not be used to upgrade MRT 3 despite the many glitches and breakdowns illustrate this.

‘Distance-based fare scheme’

According to the DOTC Order No. 2014-14, the new formula that shall be implemented is Php11 base fare + Php1 per kilometer. It is similar to riding a taxi – the flag down rate is Php11 and the meter goes up by Php1 for every additional kilometer. The DOTC calls this a ‘distance-based fare scheme’ and is consistent with the so-called ‘user-pays’ principle.

Under this scheme, commuters of the light rail system are facing a significant increase in fares. An end-to-end trip in LRT 1 and 2 will cost commuters Php10 more. In MRT 3, the additional cost for an end-to-end trip is Php13. The fare hike ranges from 0-50% for LRT 1; 25-79% for LRT 2; and 30-87% for MRT 3, depending on the station of origin and destination. (See Tables 1, 2 and 3)

Table 1

LRT 1 old and new fares, single journey (Php)

From Baclaran to: Old New % increase
Edsa 15 15 0
Libertad 15 15 0
Gil Puyat 15 15 0
V. Cruz 15 15 0
Quirino 15 15 0
Pedro Gil 15 20 33
UN Avenue 15 20 33
Central Terminal 20 20 0
Carriedo 20 20 0
Doroteo Jose 20 20 0
Bambang 20 20 0
Tayuman 20 30 50
Blumentritt 20 30 50
Abad Santos 20 30 50
R. Papa 20 30 50
5th Avenue 20 30 50
Monumento 20 30 50
Balintawak 20 30 50
Roosevelt 20 30 50
Sources of data: LRTA and DOTC
Table 2

LRT 2 old and new fares, single journey (Php)

From Recto to: Old New % increase
Legarda 12 15 25
Pureza 12 15 25
V. Mapa 12 15 25
J. Ruiz 13 20 54
Gilmore 13 20 54
Betty Go-Belmonte 13 20 54
Araneta-Cubao 14 20 43
Anonas 14 25 79
Katipunan 14 25 79
Santolan 15 25 67
Sources of data: LRTA and DOTC
Table 3

MRT 3 old and new fares (Php)

From North Avenue to: Old New % increase
Quezon Avenue 10 13 30
GMA-Kamuning 10 13 30
Cubao 11 16 45
Santolan 11 16 45
Ortigas 12 20 67
Shaw Boulevard 12 20 67
Boni Avenue 12 20 67
Guadalupe 14 24 71
Buendia 14 24 71
Ayala Avenue 14 24 71
Magallanes 15 28 87
Taft 15 28 87
Sources of data: LRTA and DOTC

(Download the complete fare matrix for LRT 1 stored value and LRT 1 single journey; LRT 2 stored value and LRT 2 single journey; and MRT 3)

The main reason cited by the DOTC for the fare hike is the need to cut down government subsidies for the light rail system. Supposedly, government is subsidizing 60% of the cost for each passenger of LRT 1 and 2, and 75% for each MRT 3 passenger. The average fare for LRT 1 and 2 is Php14.28, implying that the ‘actual cost’ is around Php35.70. This results in a deficit of Php21.42, which represents government subsidy per passenger. Similarly, the average fare for MRT 3 is Php12.40, with the actual cost at about Php49.60 and government subsidy at Php37.20 per passenger.

Authorities estimate that around Php2 billion in such subsidies will be freed up due to the fare hike. These savings, said the DOTC, can be used for ‘development projects and relief operations’ in areas outside Metro Manila to benefit those that do not use the LRT and MRT.

Irrational and baseless

But this argument is irrational and baseless.

First, it is wrong to pit the interest of LRT/MRT commuters against the interest of those from outside Metro Manila. It’s like saying that taxes from Metro Manila should not be used to pay for the cost of building and running public hospitals in Mindanao because the people of Metro Manila do not use the said facilities. Or that government support to Mindanao’s public hospitals should be reduced, and the money be used instead for relief and rehabilitation of typhoon victims in Metro Manila. Such argument eliminates the role of government in raising revenues and distributing them to fund the various needs of the people, regardless of where they are, such as key infrastructure like mass transportation and social services like hospitals.

Second, government should support the LRT/MRT as a mass transportation system. It offers social and economic benefits that even the DOTC recognizes: “Most urban railway systems in the world are not financially viable, but are implemented for their socio-economic benefits. Our Manila Light Rail Transit (LRT) systems promote the use of high-occupancy vehicles, thereby reducing traffic congestion on the corridors served, local air pollution and greenhouse gases emissions. Besides the substantial savings in travel time cost of LRT riders, the LRT systems reduce infrastructure investment in Metro Manila road expansion”. (See “Fare Restructuring Executive Report”)

When monetized, it is possible that the benefits far outweigh the government subsidies as related literature suggests. In its study on German rail subsidies, Swiss researchers found out that rail upgrades resulted to about 1.75 billion euros in benefits from road accidents prevention and lower nitrogen emission. (See “Does Supporting Passenger Railways Reduce Road Traffic Externalities?”)

The Japan International Cooperation Agency (JICA), in its separate study, calculated that traffic congestion in Metro Manila costs Php2.4 billion daily in 2012. With a reliable public transport system comprised of a large and efficient railway system, the losses can be reversed. Government can even save as much as Php4 billion daily by 2030, according to JICA. (See “Roadmap for Transport Infrastructure Development for Metro Manila and Its Surrounding Areas”) Thus, instead of reducing the subsidies, government should even invest more in the expansion and development of the rail system.

Third, commuters have already been bearing their share of the burden by paying for the full cost of operation and maintenance (O&M). The farebox ratio or the proportion of fare revenues to total O&M cost measures this. A farebox ratio of 1.0 means that fare revenues cover 100% of O&M cost. From January to September this year, the average farebox ratio of LRT 1 and 2 is pegged at 1.10. Meanwhile, latest publicly available data show that the MRT 3 has a farebox ratio of 1.17 in 2012.

In relation to O&M costs, Filipino rail commuters actually pay more than commuters in North America and Europe where the public transportation system is heavily subsidized. In the US, for instance, the farebox ratio ranges from 0.12 to 0.71. In Canada, its 0.39 to 0.78; Spain, 0.41 to 0.90; France (Paris), 0.30; Germany (Berlin), 0.17; and the UK (London), 0.91. (See Farebox recovery ratio, Wikipedia)

Fourth, government expenses in LRT/MRT are bloated not because of low fares. As just mentioned, current fares, in fact, already pay for the cost of O&M. In the case of MRT, the costs swelled because of the onerous financial obligations of government arising from its build-lease-transfer (BLT) contract with the privately owned MRT Corporation (MRTC). Under this deal, government agreed to pay for the guaranteed annual 15% return on investment (ROI) of the MRTC in the form of equity rental payments (ERP), as well as the settlement of MRTC’s tax liabilities.

These financial obligations under the BLT comprise about 81% of total MRT 3 expenses, while only 19% go to O&M (based on 2012 latest available data). (See Table 4) The DOTC admitted that the MRT fare hike would go not to the much-needed improvements of the infrastructure, amid glitches and breakdowns, but to serve government’s questionable financial obligations to the MRTC. Note that half of the projected Php2-billion ‘savings’ that government expects to generate from the fare hikes will come from the MRT.

Table 4

Summary of MRT 3 financial operations, 2012

Items MRT % distribution
Expenses (Php billion) 9.33 100.0
     Opex 1.82 19.5
     BLT financial obligations 7.51 80.5
         Taxes, duties & fees 2.01 21.5
         Equity Rental Payment & admin costs 5.50 59.0
Revenues (Php billion) 2.16 100.0
     Rail revenues 2.14 98.8
     Non-rail revenues 0.03 1.2
Farebox ratio (rail revenues/opex) 1.17
Source of data: DOTC

For LRT 1 and 2, bulk of the expenses goes to debt servicing with more than 47% and depreciation of the infrastructure with almost 16% (also based on 2012 data). (See Table 5) Government, through people’s taxes, shoulders these expenses since the LRT system is a public investment. But what makes the fare hike more unjust, particularly in the case of LRT 1 that has been recently privatized, is that the people will bear an increasing share of the debt-servicing burden even as the system generates private profits for the consortium of the MVP-Ayala group (which won the LRT 1 public-private partnership or PPP project) and their foreign backers and partners. Indeed, in the context of the PPP, LRT 1 commuters and all taxpayers (including those who do not use the LRT 1) are oppressed with regular and automatic fare increases and profit guarantees and generous tax exemptions granted by the Aquino administration to the MVP-Ayala group. LRT 2, which is also in the PPP pipeline, will soon be under a similar situation.

Table 5

Summary of LRT 1 & 2 financial operations, 2012

Items LRT 1 & 2 % distribution
Expenses (Php billion) 8.37 100.0
     Opex 3.03 36.2
     Depreciation 1.33 15.9
     Capex 0.06 0.7
     Financial obligations 3.95 47.1
         Loan payments 2.43 29.1
         Interest expenses 1.51 18.1
Revenues (Php billion) 3.67 100.0
     Rail revenues 3.44 93.8
     Non-rail revenues 0.23 6.6
Farebox ratio (rail revenues/opex) 1.13
Source of data: DOTC

Applying these data to the estimated full cost that LRT 1 and 2 and MRT 3 passengers must pay will suggest that:

  • Of the Php49.60 per passenger that represent the full cost of an MRT 3 ride, about Php40.18 represent the onerous BLT financial obligations of government. This means that without such onerous obligations, the cost would only be Php9.42 per passenger, Php2.98 smaller than the current average fare for MRT 3 of Php12.40; and
  • Of the Php35.70 per passenger that represent the average full cost of an LRT 1 and 2 ride, about Php22.49 represent debt servicing and depreciation. If these will not be passed on to the commuters, the cost per passenger would only be Php13.21, Php1.07 lower than the current average fare for LRT 1 and 2 of Php14.28.

Clearly, there is no need for a fare hike if only government will fulfill its mandate of providing a reliable and affordable mass transportation system and avoid passing on to the commuters unjust, onerous and unnecessary burden. So why then is government adamant in pushing the fare increases?

PPP and the user-pays principle

The Aquino administration’s PPP program is the underlying reason for the LRT/MRT fare hike. President Aquino announced the supposed need for a fare hike in his first State of the Nation Address (SONA) in 2010 together with his declaration of PPP – including for Metro Manila’s light rail system – as his administration’s centerpiece economic program. A fare hike and mechanisms to automatically implement and guarantee fare adjustments are meant to make PPP for the light rail system palatable to private investors.

The so-called ‘user-pays’ principle that the DOTC cited in its order is a neoliberal principle that simply means government will no longer be responsible in ensuring public access to LRT/MRT as a key infrastructure and public good. Subsidies will eventually be totally eliminated and commuters have to pay for the full cost, i.e. operation, maintenance, capital expenditures, debt servicing, etc. that would push fares to onerous and exorbitant levels. A review of the concession agreement between the Aquino administration and the MVP-Ayala consortium for LRT 1 shows how the user-pays principle will operate and oppress the commuters and general public. It is unjust because fares in LRT and MRT as a mode of mass transportation and as a public good should be premised on the people’s ability to pay and overall economic and social benefits, and thus should be supported through a progressive distribution of public resources.

Private profits at public expense

A closer examination of the profile of LRT/MRT commuters will further illustrate the oppressiveness of the user-pays principle while further supporting the need for a public good approach to Metro Manila’s light rail system. A previous study by JICA showed that almost 32% of LRT/MRT users during weekdays are students; 49% are employees and workers; and almost 10% are unemployed. This means that 9 out of 10 LRT and MRT commuters are ordinary income earners, students and jobless/job-seekers, and need substantial government support. (See “Chapter 8: Passenger Ridership Characteristics and Origin-Destination Patterns,” Mega Manila Public Transport Study, April 2007)

While commuters are burdened with unnecessary and oppressive fare hikes, big business interests will cash in big time from LRT/MRT. These business interests have close ties with the Aquino administration and in fact are the leading players in the PPP program of government. The MVP group, which also represents Indonesia’s Salim business empire, has economic interests in MRT 3 and together with the Ayala family and Australian investment giant Macquaire, will expand, operate and maintain LRT 1 through the Light Rail Manila Consortium (LRMC).

Meanwhile, the MVP-Ayala group is also positioning itself to corner the LRT 2 PPP deal, which is up for bidding this year. Other prospective bidders include San Miguel Corp. (SMC) of presidential uncle Danding Cojuangco and his right hand man Ramon S. Ang, and Japan’s Marubeni Philippines Corp. as well as other big local tycoons such as Aboitiz, Consunji and George Ty.

Petitions at the SC

Various groups have already expressed plans to question the LRT/MRT fare hike before the Supreme Court (SC). It is interesting to see how promptly the SC will act on the petitions that will be filed considering the urgency of the matter. Note that every day that passes without a temporary restraining order (TRO) on the new fares means millions of pesos are being collected from the commuters. These may no longer be returned to them in case the SC decides against the fare hike. It is extremely necessary, therefore, that the SC immediately issues a TRO to mitigate the harm on the commuters.

Another issue that must be closely watched in relation to the SC is the LRT 1 concession agreement. Assuming that the SC issues a TRO and later declare the fare hike illegal, this will not prevent the MVP-Ayala group from still collecting their additional revenues from the fare hike through ‘deficit payments’ from government under the LRT 1 PPP deal. This will make the SC decision practically futile unless the concession agreement between the MVP-Ayala group is also declared illegal. ###

US troops: A pattern of atrocities

Photo from LGBTQ Nation

Photo from LGBTQ Nation

For Filipino and American officials, “there can’t be a worse timing” in the murder of Jennifer Laude allegedly by a US Marine, later identified as Private First Class Joseph Scott Pemberton. The Philippines and the US are discussing the implementation of the Enhanced Defense Cooperation Agreement (EDCA), signed early this year. It will allow the US to build more military bases and station more troops in the Philippines through so-called “agreed locations”. But the possible involvement of a US Marine in a heinous crime will make the already controversial EDCA contentious even more.

Olongapo City, where Laude was brutally killed, is among EDCA’s expected “agreed locations”. In less than a decade, Olongapo has now seen two high-profile criminal cases involving US soldiers. In 2005, Lance Corporal Daniel Smith raped a Filipina there while fellow marines cheered him on. The city’s Subic Bay has been a frequent host to US warships and troops that participate in military exercises through the Visiting Forces Agreement (VFA). Subic Bay used to be a US naval base until 1992. But the Americans, through the VFA and now, EDCA, really never left it.

For our Defense department, the Laude murder is an “isolated case” and should not be blamed on EDCA or the VFA. But the growing presence of US troops in Subic and other parts of the country has resulted in increasing incidents of criminal acts done by American soldiers. Aside from the rape and murder in Olongapo, US troops were also implicated in less publicized incidents of criminal acts.

One was the Gregan Cardeño case in 2010. Cardeño was an interpreter hired by an elite unit of US Special Forces called the Liaison Coordination Elements (LCE). He was found dead inside a Joint Special Operation Task Force (JSOTF) facility in Camp Ranao in Marawi City on Feb. 2, 2010 after allegedly committing suicide. Less than two months later, Capt. Javier Ignacio of the Philippine Army – a friend of the Cardeños helping to shed light on his death – was shot dead by unidentified gun men. Before his death, Cardeño separately called his sister and wife and told them that his job was “hard and not what he expected”. Ignacio, meanwhile, was killed while on his way to meet human rights groups to execute an affidavit on what he discovered about Cardeño’s death.

Another was the Abham Juhurin case in 2012. Juhurin and his son were on their small fishing boat off Hadji Mutamad town in Basilan when the US military speedboat Mark V hit them. Juhurin was killed while his son suffered injuries. Philippine military authorities quickly absolved the Americans, claiming that the fishing boat had no lights. No investigation was conducted to determine the liability of the US troops as the Americans quickly sought a financial settlement with Juhurin’s family.

Laude’s death is an isolated case? There is clearly a pattern of atrocities against civilians whenever and wherever there is US military presence.

In Okinawa, Japan, host to about 26,000 US troops, some 5,584 criminal cases involving American soldiers have been reported. The cases include murder and rape, among others. There was a gang rape of a 12-year old girl by three US service personnel. The latest rape case was just last year where the US soldiers also robbed their victim.

Worse, like in the Philippines such as in the Subic rape case, US soldiers found guilty of sex crimes in Japan did not go to prison, according to an Associated Press (AP) report early this year. Offenders were simply fined, demoted, restricted to their bases or removed from the military. In about 30 cases, a letter of reprimand was the only punishment, said the AP article. It added: “Even when military authorities agreed a crime had been committed, the suspect was unlikely to serve time. Of 244 service members whose punishments were detailed in the records, only a third of them were incarcerated.”

Just a couple of months ago, US troops in Seoul, South Korea were accused of “inappropriate behavior”. On May 31, 2014, two American soldiers sexually harassed two female employees in a local theme park and assaulted their male co-worker. Intoxicated, the US soldiers refused to cooperate with the police, punching one officer and spitting in his face, according to reports.

These are just the latest incidents of abuse by US troops in South Korea, which also include the rape of an 18-year old girl in 2011. Government data show that there is a rising crime rate among US servicemen in the country. Between 2000 and 2010, rapes rose from zero to 11; burglaries from 9 to 24; and violent crime in general from 118 to 154, according to authorities. US officials dismissed the figures as “low” considering that they have 28,500 troops stationed in South Korea. What arrogance!

US military presence is supposed to guarantee our security. But the brutal murder of Laude reminds us that the presence of US troops is a threat to the security of our own people. That we can’t have custody over a criminal US soldier reminds us how our supposed friend and ally utterly disrespect our sovereignty as a country.

With the VFA and EDCA, and the overall submissiveness of our foreign policy to US interests, there will be more Jennifer Laudes. The next victim of US atrocities could be a transgender, or a woman; it could be a farmer, or a fisherman; maybe even a child.

Presidential pork, election budget and Aquino cronies

Image from the DBM website

Image from the DBM website

Massive presidential lump sums and discretionary funds in the 2015 National Expenditure Program (NEP), along with a redefined savings, expose the proposed P2.6-trillion budget to abuse by the Aquino administration. It is vulnerable, in particular, to patronage and electioneering by the ruling Liberal Party (LP). The LP is desperate to bolster the low popularity of its president-on-leave and perceived 2016 presidential bet – Department of Interior and Local Government (DILG) Secretary Mar Roxas. Local government units (LGUs), including the barangays, play a key role in ensuring the electoral victory of a presidential candidate. With enormous pork barrel-like funds at Aquino’s disposal, the LP and Roxas have the resources to buy the political loyalty of governors, mayors and barangay captains for the 2016 presidential race. Vice President Jojo Binay may be the most popular choice right now as the next Chief Executive according to various polls, but Roxas boasts of a bottomless election war chest.

Thus, we see in the 2015 NEP mammoth increases in the administration’s planned spending for LGUs, many of which will be directly handled by Roxas as DILG head. A glaring example is the huge 80% increase in lump sum allocations for LGUs – from the current P17.3 billion to P31.1 billion next year. The amount includes P27.9 billion in LGUs’ Special Shares in Proceeds of National Taxes and P3 billion in Local Government Support Fund (LGSF), including P2.8 billion under the controversial Grassroots Participatory Budgeting (GPB) scheme and P200 million for “financial assistance to support various priority programs and projects”. The balance is comprised of a “death benefit fund” for barangay officials worth P50 million and shares in proceeds of fire code fees pegged at P200 million. The P31.1-billion LGU allocation is part of the P48.1 billion that Department of Budget and Management (DBM) Sec. Butch Abad has admitted as lump sum in the 2015 NEP. The remaining P17 billion is composed of P14 billion in disaster fund, P1 billion in rehabilitation fund, and P2 billion as presidential “contingent” fund. These amounts pertain to DBM-admitted lump sums; to be sure, much larger discretionary lump sums are tucked in various items of the NEP.

But another feature of the NEP seldom discussed is how the proposed spending plan, including presidential lump sums, will be used to support rich families and business groups with close ties to the Aquino administration. Through budgetary support for the Public-Private Partnership (PPP) program, these elite families and groups, and their foreign partners and patrons, will continue to receive presidential favors under the pretext of infrastructure development. Indeed, the proposed 2015 budget will be used not only to promote the political interests of LP’s presidential wannabe; it will also be used to promote the economic interests of presidential cronies.

Some P57.2 billion in public funds have been allocated in the 2015 NEP to guarantee the profits of investors participating in Aquino’s PPP program, pay for an onerous PPP contract, and facilitate the implementation of more PPP projects. The amount includes: (a) P30 billion for the Risk Management Program (RMP); (b) P10.9 billion for the Department of Public Works and Highways’ (DPWH) PPP for Infrastructure Projects; (c) P7.4 billion to support the LRT 1 and LRT 2 extension projects of the Light Rail Transit Authority (LRTA); (d) P4.7 billion to pay for government obligations under its Build-Lease-Transfer (BLT) deal with the Metro Rail Transit Corp. (MRTC); (e) P2.7 billion for the Department of Transportation and Communications’ (DOTC) PPP for Transport Projects; and (f) P1.6 billion for the Department of Education’s (DepEd) PPP for School Building Projects.

The P30-billion RMP, according to the NEP, is meant to “manage the National Government’s fiscal risks and enhance the country’s credibility among potential PPP proponents”. Executive agencies and departments as well as government-owned and -controlled corporations (GOCCs) can avail of the RMP fund to “cover commitments made by, and obligations of, the National Government, in the concession agreements relative to PPP projects”. The amount shall also be tapped to pay for all the obligations of a GOCC in concession agreement covered by a performance undertaking or any similar instrument issued by the National Government. A performance undertaking usually involves government assuming debt or other financial obligations related to a PPP project. One of the projects covered by the Aquino administration’s performance undertaking is the P62.7-billion MRT 7 of presidential uncle Danding Cojuangco and his right hand man Ramon S. Ang.

Aside from performance undertaking, RMP will also cover “contingent liabilities arising from regulatory risks assumed by the National Government”. One project that enjoys Aquino’s regulatory risk guarantee is the P64.9-billion LRT 1 extension and privatization of the Ayala family, a longtime ally of the Aquinos, and the group of presidential supporter Manny V. Pangilinan (MVP) and his Indonesian patron, the Salim family. Under the concession agreement that will be signed with the Ayala-MVP group, if the notional LRT 1 fares stipulated in the contract are lower than actual or approved fares, government will pay the difference through a so-called Deficit Payment Scheme. Notional fares refer to the adjusted fares as scheduled in the concession agreement. Such situation may arise, when, for example, a regulatory body or local court intervened and prevented the collection of the notional fare. To fulfill its deficit payment obligation with the Ayala-MVP group, which is essentially a profit guarantee, government will disburse from the RMP fund paid for by the people’s taxes. The RMP is actually just one of the many favors that Aquino is giving the Ayala-MVP group in relation to the LRT 1 project. As part of the contract, the common station that will link the LRT 1, MRT 3 and the soon-to-be-built MRT 7 was taken away from Henry Sy’s SM North and moved to the Ayala’s Trinoma Mall. (The SM group questioned this before the Supreme Court and got a temporary restraining order or TRO. In response, the DOTC said they might just build two common stations to accommodate Henry Sy and the Ayalas.) The Ayala-MVP group is also exempted from paying real property taxes, which government agreed to shoulder and could reach P64 billion throughout the 32-year concession agreement. These are on top of the P5-billion startup subsidy and P34.9 billion in loans that government will borrow for the project.

Meanwhile, the P10.9 billion allocated for DPWH’s PPP for Infrastructure Projects will be used to cover the costs of right of way (ROW) acquisition and relocation of affected communities. The projects identified in the NEP where this fund will be used include those controlled by the same groups with close presidential ties such as San Miguel’s P15.52-billion NAIA Expressway Project and P18.1-billion Tarlac-Pangasinan-La Union Toll Expressway Project, and the Ayalas’ P2.01-billion Daang Hari SLEX Link Road Project. Similarly, the DOTC’s P2.7-billion PPP Transportation Infrastructure Project fund will be used for ROW costs particularly for the P2.5-billion Integrated Transport System, which San Miguel, Ayala, MVP and Henry Sy, among others, are also eyeing. Meanwhile, DepEd’s P1.6-billion PPP for School Building Projects 2015 fund will be used for the amortization or lease payment of the total project costs of school buildings constructed by Henry Sy-affiliated Megawide Corp. and other firms.

P4.7 billion under the proposed 2015 PPP budget will go to the servicing of onerous contractual obligations with the MRTC, which is 48% controlled by the MVP group. The BLT contract, a PPP deal signed during the Ramos administration, tied the national government to paying Equity Rental Payments (ERP) to MRTC for its guaranteed 15% return on investment (ROI). Instead of rescinding, or at least renegotiating, the patently unfavorable contract with MRTC to build and operate the MRT 3, the Aquino administration continued to honor it because doing otherwise would undermine its PPP program. To supposedly correct the situation, Aquino has set aside P53.9 billion in the 2015 NEP’s unprogrammed appropriations to buy out the MRTC and scrap the BLT. But this approach means government will shell out more people’s money while legitimizing the illegitimate financial obligations with the MVP group.

Lastly, the P7.4 billion allocated for LRT 1 and LRT 2 extension projects will be used to support the privatization of both lines. The Ayala-MVP group will take over LRT 1, as already mentioned, soon. On the other hand, the LRT 2 operation and maintenance project, estimated to cost P14.3 billion, is scheduled for bidding within the year or in early 2015.

These planned expenditures show how public funds, raised mainly through taxes of ordinary wage earners and consumers, are being wasted and drained not only through corruption and political patronage but also through questionable economic policies that only benefit a favored few such as big business groups involved in PPP projects.