Government gives go signal for LRT, MRT smartcards

From the Department of Budget and Management

Multi-Year Obligation authority to also cover Cebu airport upgrade

The Aquino administration—through the Department of Budget and Management (DBM)—gave a Multi-Year Obligational Authority (MYOA) to the Department of Transportation and Communications (DOTC), effectively green-lighting a contactless smartcard fare collection system for Light Rail Transit (LRT) lines 1 and 2, as well as for the Metro Rail Transit (MRT) 3 in Metro Manila.

The DBM likewise issued another MYOA to the DOTC for the implementation of the Mactan-Cebu International Airport (MCIA) New Passenger Terminal Project. Both authorities were granted to the Transportation and Communications agency in late December 2013.

“Put simply, a MYOA will allow a department or agency to obligate funds for a project for more than a year, but only if the total cost of that particular project isn’t fully covered by the General Appropriations Act in the first year of the project’s implementation. We issued these two MYOAs to DOTC for that very reason, as well as to jump-start the Aquino administration’s bid to improve key transportation systems in some of our busiest cities,” Budget and Management Secretary Florencio “Butch” Abad said.

The first MYOA covers the Contactless Automatic Fare Collection System (AFCS), which will allow the DOTC to replace the magnetic stripe tickets currently in use in the LRT and MRT with contactless smartcards and tokens in the two railways.

“The switch from magnetic stripe tickets to contactless cards and tokens in the LRT and MRT will help us reduce operational and maintenance costs in both railways, besides strengthening security in the management of cash in the LRT and MRT. Just as important is the fact that these upgrades will improve the user experience for LRT and MRT passengers as they commute from one point to another in the metro,” Abad said.

The AFCS will be implemented through a Public-Private Partnership via the Build/Rehabilitate-Transfer-Operate (BTO/RTO) and Build-Own-Operate contractual arrangements. The total investment cost for the project—which will cover the years 2013 to 2025—will amount to P3.16 billion, with P671 million invested in it for 2013 and another P1.05 billion set for the AFCS this year.

The DBM also noted that the project’s funding requirement for 2013 and 2014 is financed by the private sector, which will support costs for development, financing, and civil works; the initial costs for the smartcards and tokens; and other costs involved in the investment phase.

Meanwhile, the MCIA New Passenger Terminal Project will facilitate the construction of a new passenger terminal building and the renovation and expansion of the existing terminal building in the airport. The initiative will also be implemented through a PPP, specifically on a Build-Operate-Transfer arrangement.

The total investment cost for the MCIA upgrade project—spanning the years 2013 to 2016 and 2021-2023—will amount to P17.5 billion. Last year, the investment cost totaled P2.07 billion, which was wholly funded by the Philippine government.

This year, the Administration will support the project with P123.6 million, as specified in the National Expenditure Program for 2014. This amount has likewise been recommended in the MYOA for the current year, with the additional requirement of P100 million recommended for consideration in 2015.

“Besides ramping up our PPP initiatives, the two MYOAs will help support key innovations in the country’s transportation hubs. The modernization of our LRT and MRT systems, for example, will be kicked off by the transition from magnetic strip cards to smartcards and tokens. The MCIA project, meanwhile, will not only boost our infrastructure spending and encourage the growth of our tourism industry. A new passenger terminal will allow the MCIA to accommodate its growing number of passengers and prime the airport for future improvements and development,” Abad said.