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.

1. Railways Philippines 2012
A Presentation for the American Chamber of Commerce
By Rene Santiago, Managing Director, Bellwether Advisotry Inc.
29 February 2012

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. 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. 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. 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. 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. 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 DOTC
LRT1-SEP (12-km)
request;
2002: construction was
On-going study (again!)
supposed to start (SNC-
Lavalin contract)
2006: PPP implementation
per IFC study, aborted
2009: Unsolicited proposal MRT-3 (17-km)
via JVA •Frequent system
2010: DOTC study to breakdown, due to overloading;
merge with MRT-3 & bid
•MPIC proposal to
out O&M
takeover, double capacity, &
2011: Service contract for
upgrade system in limbo
OM&R
2012: ???

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. 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. 3 – Provincial/Inter-Urban Rail
Decline of inter-urban railways
Manila-Clark (Northrail)
•10% accomplishment from
2006-2010
Main Line North •Works suspended since 2010
closed 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. 3 – Provincial/Inter-Urban Rail
“Zombie” Railway Projects
Reviving a 1985 „carcass‟
The Mindanao Railway fantasy

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. Thank You!
renesan@thebellwether.net