Money: The fuel the PUV modernization lacks most

Modern Jeep

Public utility vehicle (PUV) drivers, who number in the hundreds of thousands, have been among the worst hit by the pandemic and the subsequent lockdowns enforced by the government to stem the spread of the virus.

We’ve seen them often, either in the news or out on the streets—jeepney
drivers holding out plastic jugs, begging passersby for loose change to tide
them and their families over the day, lamenting that they hadn’t received any support from government ever since the community quarantines began in mid-March.

Their plight seems to have caught the attention of the man in Malacanang.
During his July 27 5 th  state of the nation address, President Duterte ordered the interior and local government (DILG) and the social welfare and development (DSWD) departments to look into these gaps in the SAP (Social Amelioration Program), though he quickly followed this up by mentioning that “PUV drivers were given assistance through the Pantawid Pasada Program”.

In a report by Rappler, a few days prior to the Sona, 25 transport groups and unions released a statement urging Duterte to consider all stakeholders
before implementing the Public Utility Vehicle Modernization Program

The PUVMP was kicked off by the Department of Transportation in 2017, with the goal of making the country’s public transportation system efficient, safe, comfortable, and environment-friendly by 2020. The program aims to phase out old and dilapidated jeepneys and replaced by units that are either
powered by Euro 4-compliant engines or electrically powered with solar
paneled roofs. The PUVMP’s premises—based on various sources—were that buses and jeepneys served 67 percent of demand, yet used just 28 percent of the road space; jeepneys dominate road-based public transport, with 180,000 units nationwide and 90 percent of which are 15 years or older; jeepneys account for 17 percent of the ambient air pollution in Metro Manila and up to 80 percent in other cities, and; jeepney passengers were 10 times more likely to get into accidents than in private vehicles.

The PUVMP was met with strong resistance from many transport groups,
which viewed the program as being “anti-poor”. The modernized PUVs being produced by many truck manufacturers cost between P1 million and P2 million per unit, while loans granted by the government via banks such as the Development Bank of the Philippines and Land Bank of the Philippines were seen to be too inadequate for jeepney operators to make a decent start on.

Not even the government’s equity subsidy of P2.2 billion, to be spread out
over a targeted 200,000 modernized PUVs, was seen to be a big help.
Transportation Assistant Secretary Goddes Hope Libiran, in a text to Inquirer Motoring, clarified that the total government subsidy would amount to P160,000 per modernized PUV unit.

“The cost of modernizing the PUV fleets themselves won’t be shouldered by
the government. That’s on the operators, with a subsidy from the government which is P160,000 per unit,” she explained.
She added that there are modernized PUVs cheaper than P1 million.
“This is precisely why consolidation and fleet management are essential so
that not just one individual will have to shoulder the cost of the modernized
PUVs. That’s why we are asking operators to establish cooperatives or
corporations,” stressed Libiran.

For a perspective from the supplier side, Inquirer Motoring interviewed Felix J. Mabilog Jr., a mechanical engineer who runs the Columbian Autocar
Corporation assembly plant of modernized PUVs in Laguna International
Industrial Park in Binan, Laguna. His plant has, so far, produced and sold 200 PUVs.

Mabilog, who’s now 81, has been working with the auto industry for nearly
five decades. An accomplished multi-tasker, Mabilog had been running the
plant even while at the helm of three other international brands, Kia, Peugeot, and Mahindra. Since relinquishing control of Kia and Peugeot, Mabilog has focused his energies on Mahindra as a president and the CAC assembly plant.

Mabilog lauded the intent of the PUVMP, saying that the first batch of
assembled PUVs coming out of his plant “were received well.”
“The first batch of PUVs ordered from us were liked by operators, drivers and passengers. You’d see passengers would run and line up when they see these

PUVs. They know these modern PUVs are comfortable, air-conditioned, with
free wifi even. “The only problem (I saw with the PUVMP) was, where would the operators and drivers get the money to buy a vehicle that is worth P2 million and up?
We have a small one, at just only about P1.1 million. But the capacity is only
for 13 people, and better suited for narrow roads,” said Mabilog.
The major issues surrounding the PUVMP involve the banks, and
consolidation, he said. “The PUVMP involves a tripartite arrangement. What the government did was to ask operators and drivers to form groups or cooperatives. The funding would be from Landbank and DBP. But as we have said, the devil is in the details. When they consolidate or form a cooperative, maybe 80 percent of them are first-timers in a group, the first time to realize what their responsibilities are as members of a group. That alone takes time for them to get used to, a year or two to form a corporation. Now, going to Landbank and DBP is another problem. These banks have so many requirements.

They ask members of the groups, ‘What education did you complete? How long have you been in transport industry?’ These groups, it’s their first time to ask for a bank loan,” said Mabilog.

“The process of consolidation and tons of requirements are proving to be a
challenge for drivers and operators to comply with. If you put all the most
stringent requirements there, and you know these drivers have no
background of running a corporation, dare I say it, the permits and
documents from LTFRB will take too long to accomplish. So, this tripartite
arrangement isn’t really that efficient.”

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Mabilog stressed that no manufacturer would dare risk P2 million of its own money on every vehicle.

“We need to order parts. We need to pay after ordering. We have to pay
them in 30 days. If our lead ordering time is 3 to 4 months, before the
powertrain arrives in three-and-a-half months, we still have to take into
consideration assembly time, which is under one month. That’s four-and-a-
half months in total. In the meantime, we have to pay the suppliers. If there’s no assurance of payment, the manufacturer suffers, so we need a bank guarantee from DBP or Landbank that the loans (of operators) have been approved and that when we deliver to the operators, we will be paid. But the problem is, only two banks are financing. And so far, they said, they are only allocating P2.2 billion. Divide that with the P2 million per unit, that’s only just 1,100 units. And the required number of units is 200,000 in the next five years.

Our assembly plant has been making nothing but modernized PUVs.
What’s our production so far, 200 a month? That’s only 2,400 in one year.
The other plants run by Japanese car manufacturers, they’re also using their assembly facilities for their other vehicles. So, the bulk of the modernized PUV production falls on us body builders. And we simply don’t have the production capacity to meet the targets in time,” said Mabilog.
Pet project “The PUVMP has been one of the President’s pet projects. It took some time to start the program. We were able to immediately prepare for this project, so much so that we were the first to come out with the modernized PUV.

In 2018 we launched the Mahindra jeepney project in Quezon City in partnership with JAM Transport,” recalled Mabilog. This partnership involved Mabilog’s plant to manufacture nearly a thousand modernized PUVs for the transport company.

Mabilog also disclosed that his plant has been assembling small, multi-cab
configurations on the Mahindra cab and chassis platform.
“We convert these into panoramic vehicles (utility or passenger carriers). We import the Mahindra cab and chassis, we make the bodies, and that’s what we supply to various companies.

“When the PUVMP began, Mahindra supplied for us the engine and chassis
alone. We call it the driveway chassis—a complete running powertrain
consisting of the engine, transmission, axle and chassis. We make the
jeepney body, seat assembly, roof lining, side panels/walls, and air-con (fromKorea).

“We have made our modern PUVs feel truly comfortable, convenient, and
safe. Our air-conditioners are the coolest among all modern jeepneys,”
Mabilog quipped. Cool air is easy to come by. But the cold, hard cash to make the modern PUV world go round? That’s another animal, entirely.