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LTFRB sets formula for PUV fare adjustment

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By Alexandria Dennise San Juan 

The Land Transportation Franchising and Regulatory Board (LTFRB) has set the formula on fare adjustment for public utility vehicles (PUVs).

LTFRB’s Memorandum Circular No. 2019-035, signed July 26, was issued to serve as a standard for regulators in adjusting fares for PUVs to promptly address fuel price changes.

(MANILA BULLETIN)

(MANILA BULLETIN)

The MC, penned by board chairman Martin Delgra III, and members Ronaldo Corpus and Antonio Gardiona Jr., was released following Transportation Secretary Arthur Tugade’s directive last year to have a “pre-determined” fare matrix wherein clear cut guidelines will be given when fares should be increased or lowered.

Based on the outlined formula, the Board took into consideration some factors including fuel pump price report from the Department of Energy (DOE), the total operating and maintenance cost of the operator as verified by the LTFRB, and the base fare or the prevailing rate before the adjustments are put in effect by the regulators.

Under the memorandum, the formula will be: Fare Adjustment = Fare Base (1+[Fuel Price] [Fuel Cost Share in Total Operation and Maintenance]).

In a sample computation, the minimum jeepney fare is P9 for the first four kilometers plus P1.40 per succeeding kilometer, while fuel price was at least 35 percent of the operator’s total cost. If the fuel price increased to P55 from P50, the adjusted fare would be P9.315 plus P1.449 per succeeding kilometer.

“Once established, a fare matrix will be prepared by the LTFRB. The fare adjustment shall become effective ten days from publication,” the memorandum stated.

“The LTFRB shall, without the need for public hearings and other special proceedings, increase or rollback the fare whenever such change occurs in fuel price,” it further read.

Aside from jeepneys, the fare formula also covers passenger buses, taxis, and UV Express and shall apply only on the distance related portion of the fare structure.

“As of now, the principal consideration on the fare formula would be based on the changes of fuel prices. We know that fuel is but a portion of the operation and management [costs] of a franchise. Now, in so far as jeepney is concerned, based on a study, it constitutes something like 35 percent. We do not know yet how much on other PUVs,” Delgra said in an interview on Wednesday.

The memorandum added that the LTFRB will evaluate the fare formula after six months of implementation “without prejudice to the directive from DOTr.”

According to Delgra, the information they will input will be based from the data gathered within six months.

When asked if the formula can only be used six months from now Delgra answered, “In a general sense, based on our provision, that is correct.”

“There is a period [of six months] that we are looking at but at the same time we are not fixed on that period. Kung makita natin na may sunud-sunod na pagtaas o pagbaba ng presyo, then the Board can intervene and check as to whether there is a need already to change the fare whether up or down,” Delgra explained.

The latest memorandum took effect on Monday, July 29.

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