Rail in the Philippines 2012


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Past, present, and future of railway systems in the Philippines: a presentation to the American Chamber of Commerce of the Philippines by Rene Santiago, Managing Director of Bellwether Advisory Inc.

Published in: Investor Relations, Business

Rail in the Philippines 2012

  1. 1. Railways Philippines 2012 A Presentation for the American Chamber of Commerce By Rene Santiago, Managing Director, Bellwether Advisotry Inc. 29 February 2012
  2. 2. Outline of Presentation Introduction • Why the interest on rail • Historical context Intra-urban Rail lines • Lines 1 and 2 and proposed Extensions • MRT 3 and upgrade • MRT 7 • Others (BRT, Monorail, Cebu MTS) Inter-urban rail lines • PNR Main Line South (existing • PNR Commuter South • Northrail • Panay Railway • Mindanao Railway Conclusions and Q&As
  3. 3. 1 - Introduction Rail in Manila‟s history  Electric Tramway, 65kms in 1905 and 85 kms by 1925  Ridership: 35,000 per day in 1906, and 126,000 in 1920:  MERALCO: an American company w/50-year franchise, owned and operated the electric tram, up to 1945.  Closure of rail after WW2, gave rise to jeepneys Like other cities in many countries, the emergence of automobiles in the 1920s led to the decline of railways, and/or government takeover
  4. 4. 1 - Introduction Antecedents of PNR• General plan for Railways in Luzon prepared in 1876, with the Ferrocaril de Manila-Dagupan opened in 1892 Built via a concession granted to Dagupan Station Manila Railway Company Ltd (a British firm), w/guaranteed 8% ROI At its peak,1,140 kms operational line; managed by a SOE that was a model of corporate efficiency Tutuban Station Source: Iwata, Shizuo, “Development of Public Transport in Metro Manila, Philippines”, 1993.
  5. 5. 1 - Introduction Why the interests on rail? USA not a global rail supplier/exporter (except, perhaps in locomotives) Philippines railway sector is "small fish in a big ocean"  50-km urban rail lines, less than 10% of daily trips in MManila  422-km Main Line South (Bicol); 2 trips/day on Mnl-Naga (today) Special emphasis on High-speed Rail in "Arangkada Forum“  Very few countries can justify HSR  USA still in the throes of heated debates; Acela Express nearest to HSR  Nostalgia, for the grand railroads of yesteryears?
  6. 6. 2 – Intra-Urban Rail Rebirth of Rail in Manila • 1972 Study -proposed a system of expressway and railway network (ala Tokyo), including 135.1 km of subway • 1977 MMETROPLAN study, recommended street-level tram car along Rizal and Taft Avenue • 1979 - Decision to build LRT Line 1, 15- km, fully-elevated • 1984 - Partial operation of Line 1 • 1985 - Metrorail Network Study, proposed LRT Lines 2, 3 and 4 • 1989 - Failure of BOT bidding for Line 2 • 2001-02 – Opening of Lines 3 and 2 Premised on the belief that a large metropolitan area can only be sustained by rail, and that urban transit is the business of government
  7. 7. 3 – Intra-Urban Rail Metro Manila Rail MRT-7 (22-km)5.4-km North Loop was Contract signed in 2009;completed in 2010; but Oct 2010 expiry extended;interface with MRT-3 still Concession flipped 2x;unfinished Currently in holding pattern LRT-2 East (4-km) 3 F/S since 2006, could‟ve been tendered in 2008; JICA F/S in 2011, per DOTCLRT1-SEP (12-km) request;2002: construction was On-going study (again!)supposed to start (SNC-Lavalin contract)2006: PPP implementationper IFC study, aborted2009: Unsolicited proposal MRT-3 (17-km)via JVA •Frequent system2010: DOTC study to breakdown, due to overloading;merge with MRT-3 & bid •MPIC proposal toout O&M takeover, double capacity, &2011: Service contract for upgrade system in limboOM&R2012: ???
  8. 8. 3 – Intra-Urban Rail Flavor of the Month for LRT-1 SEP Project Cost ~Php59 Billion •June 2012 tender, via so-called “Hybrid” PPP •CW to be funded & built by private investor •Rolling Stock & Satellite depot via ODA (hence, gov‟t) •30-year Concession, Fares adjustable with CPI •Winning bidder takes over line management, from start
  9. 9. 3 – Intra-Urban Rail Other Mass Transit Projects No study (pre-fs or FS) yet; Maybe, 2026 Unsolicited proposal (B-O-O) of Ayala Land for a BRT System on Ayala Avenue presented to DoTC in Oct 2011; no response BRT System for MetroCebu and Davao City 2009 study and proposal, backed by IBRD
  10. 10. 3 – Provincial/Inter-Urban Rail Decline of inter-urban railways Manila-Clark (Northrail) •10% accomplishment from 2006-2010Main Line North •Works suspended since 2010closed in 1984 •Impasse with Sinomach, likely to follow the T-3 fiasco Main Line South (448-km from Mnl- Naga) Operations ceased in 2006 due to typhoon- induced damage Re-opened in 2011, 2 trips/day Rehab plan ~Php29 billion
  11. 11. 3 – Provincial/Inter-Urban Rail “Zombie” Railway Projects Reviving a 1985 „carcass‟ The Mindanao Railway fantasy
  12. 12. 4 – Conclusions Concluding Remarks  Expect no acceleration in project implementation • But, miracles do happen (rarely)  Absence of a coherent and sustained rail policy • LRTA and PNR are financially bankrupt; financial re-structuring plans unacted, for more than 10 years already • Toxic environment for rail to flourish and thrive (e.g., amateurs at the helm, low fares, poor maintenance, etc.)  High Interests on rail from ODA & Private Sector • Lending portfolio of ADB (strategy 2020) for urban transport to scale up by 5x in 5 years • Big players (SMC, Ayala, MPIC, foreign investors, etc) on-the-prowl for opportunities [Texan saying:“Big Hats, No Cattles”]
  13. 13. Thank You!renesan@thebellwether.net