Meralco rejects bid of MRT 3, LRTA for 15% discount

Power distributor Manila Electric Co. (Meralco) has rejected requests by the Metro Rail Transit (MRT) 3 and the Light Railway Transit Authority (LRTA) for a 15-percent discount on their electricity bills.

"Not at this time, but maybe in the future, yes," said Meralco president Jesus Francisco.

Meralco cited its tight financial bind for denying the MRT 3 and LRTA proposal. The power distributor is also trimming its operational expenses while it is still implementing a P30-billion refund program for its customers.

Meralco was supposed to make a presentation to the Department of Transportation and Communications (DOTC) and work out a possible reduction scheme in the monthly electricity bills of MRT 3 and LRTA.

"The presentation would explain the present rates after which we can discuss future pricing discounts," Francisco said.

Previously, DOTC Assistant Secretary Roberto Castanares said that in exchange for Meralco’s concession to the MRT 3 and LRTA, the department will help the power utility in finding an independent power producer (IPP) that could sell electricity below Meralco’s existing power rates.

"One of the measures the DOTC was considering was to negotiate with Meralco and ask for a 15 percent discount to bring down the cost of power, or we could talk to the IPPs to bring down the cost," he said.

The MRT3 and LRTA railway systems are finding it difficult to maintain existing transport fare because of the increasing costs of electricity which accounts for 30 percent of their operational costs.

As a result, MRT 3 and LRTA fares are expected to be raised by about P10 this month.

The fare hike is required to recover their huge operating costs and monthly subsidies.

The proposed fare increase will have to be approved by President Arroyo.

The government forks out P180 million worth of lease payment to the consortium that built the MetroStar Express.

Under the build-lease-and-transfer arrangement, the government will pay the MRTC consortium $2.4 billion over a period of 25 years.

For this year, the consortium expects payment of $20 million, $38 million in 2005 and $39 million in 2006. The payments will total $118.33 million in 2010.

MRT 3 general manager Roberto Lastimosa said the current fare structure of MRT 3 is inadequate to sustain operating costs and monthly lease payments.

On the average, MRT 3 generates P120 million from about 400,000 commuters.

"It’s about time we increase the rates to lessen government subsidy, which is P5 per passenger. We are losing P2 million a day," said Lastimoso.

On the other hand, the LRTA lost P600 million in the first half of the year because of the huge subsidies provided to the LRT 2 that runs from Pasig to Manila.