DBM releases P7 billion for service contracting program
MANILA, Philippines — The budget department said it has already released P7 billion to the Department of Transportation (DOTr) to roll out the State's service contracting program (SCP) which seeks to provide cash subsidies to PUV drivers in a bid to help affected sectors cushion the impacts of the fuel price hikes.
This comes days after domestic oil prices announced rollbacks in gas, diesel and kerosene, but these are still not able to offset the continuous increases in oil prices since the start of the year.
The SCP guarantees regular performance-based subsidies to PUV drivers based on the number of trips they made per week, regardless of the number of passengers they served.
"Under the SCP, operators of PUVs will be contracted via an agreement based on a plan prepared by the Land Transportation Franchising and Regulatory Board," the Department of Budget and Management (DBM) said in an emailed statement on late Tuesday.
DBM explained that beneficiaries will receive the subsidies through two types of contracts — net cost contracting and gross cost contracting.
Under the net cost scheme, drivers are partly subsidized to cover reduced passenger capacity and increased operational expenses, according to a 2021 journal article from the Philippine Transportation Journal.
Meanwhile, gross cost contracting pays operators the full amount which covers all their expenses and assured revenues per kilometer. In this scheme, there is no fare collection.
"The SCP forms part of the government’s targeted assistance to help cushion the impact of the consecutive oil price hikes to vulnerable sectors," DBM said.
This is on top of the P6.1 billion in subsidies allotted for the government's two programs- the Pantawid Pasada which provides fuel subsidy cards to the transport sector and the fuel discount program for farmers and fisherfolk.
President Rodrigo Duterte earlier ordered the Finance department to look for funds so that the State can release a monthly cash assistance of P500 each for poor households affected by the fuel price hikes and the pandemic-induced inflation.
This week, local oil firms announced a reduction in gas prices by P5.45 per liter, diesel by P11.45 per liter and kerosene by P8.55 per liter. This is still not enough to cover the sustained fuel price increased which took place in the past 11 weeks.
Before the rollback, the net increases in oil products since the start of 2022 were as follows: P20.35 per liter for gasoline, P30.65 per liter for diesel and P24.9 per liter for kerosene.
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