INTRO: Even after a long period of apparent decline, rail still enjoys significant potential to help solve the transport problems of the Philippines. Michael Reilly reports on initiatives to develop the national network and mass transit using private and public funding

Years of neglect and gross mismanagement have taken their toll on the Philippine National Railways network, once the envy of other countries in southeast Asia. In recent years the system has appeared to be in almost terminal decline, with the whole of the network north of Manila abandoned in the early 1990s following the eruption of Mount Pinatubo. The remainder of the PNR network has struggled on, despite chronic underfunding and poor management, and the 12000 commuters and 2000 long-distance passengers carried daily provide an indication of the potential for effective service in this country of 70 million people.

Financial difficulties have also hampered the development of urban rail. Built with help from the Belgian government, the first section of Manila’s elevated LRT system opened in 1984. Line 1 has proved popular with the public, carrying some 300000 people daily, and operating costs have absorbed no more than 60% of revenues. For a long period after that no more lines were completed, largely because financial difficulties prevented successive governments from financing the capital costs involved.

The return of political stability and economic recovery in the 1990s encouraged a change in perceptions. Ever-worsening traffic congestion has helped focus attention on the inadequacy of transport infrastructure generally, and on the need for effective mass transit in particular. But the present government has been determined to pursue a policy of strict fiscal rectitude and has looked to the private sector to finance infrastructure improvements through Build-Operate-Transfer (BOT) or Build-Lease-Transfer (BLT) arrangements. Potential builders were initially wary, and tended to focus almost exclusively on toll road proposals.

The discouraging attitude of current PNR management has not helped, but developments elsewhere, such as privatisation in Britain and the separation of infrastructure from operations, have encouraged renewed interest. Since summer 1997, the operators of the Port of Manila have been running dedicated services over PNR metals to an inland container terminal near Santa Rosa, about 45 km to the south, after having first financed rehabilitation of lines in central Manila. Although limited in scale, it has offered a pointer to much wider possibilities.

LRT takes off

The biggest progress at present is being made in addressing Manila’s chronic traffic jams through development of a comprehensive LRT network. Infrastructure work on Lines 2 and 3 is at an advanced stage, and the first section of Line 2 should open next year. Like Line 1, these are both conventional LRT operations running mainly on elevated rights of way along the capital’s busier thoroughfares.

Line 2 will be 14 km long, running between Manila and Quezon City to the northeast, with an hourly capacity of around 30000 riders. Line 3 will run for almost 17 km from Quezon City to an interchange with Line 1 in the south of Manila with a capacity of some 600000 passengers daily. Work is in hand to refurbish and upgrade Line 1, notably by the provision of air-conditioned rolling stock, which should make it more attractive to commuters in Manila’s always hot and often humid climate. The first phase of this upgrade will see capacity raised by 50% to 27000 passengers/h - Line 1 is already running at full capacity for most of the day.

The Line 1 upgrade and work on Line 2 is being financed in traditional fashion, through a combination of government funding and grants as well as soft loans from overseas bodies, notably the Japanese Overseas Economic Co-operation Fund. Line 3 is being built as a BLT project by a consortium that includes leading local property developers such as Ayala Land Inc, part of the largest land-owning corporation in the Philippines. To prevent delays to the project, the government is carrying the risk and will receive all revenue in return for an annual charge paid to the operator. A full article about Line 3 is published in Metro Report 98, which is distributed to subscribers with this issue.

A traditional BOT proposal for the 18 km Line 4 to Novaliches northeast of the capital is currently being considered by the National Economic & Development Administration. The bidding consortium includes Ayala Land, as well as French construction major Bouygues. A significant aspect of the proposal is that the promoters would obtain rights to develop real estate alongside the LRT line, as well as building and operating it. Success may depend on a proposal before the Philippine congress to revise the BOT law and allow the government to give subsidies to make projects more attractive. This is explicitly prohibited at present, but such an amendment could do much to accelerate railway development plans in general.

Northrail on hold

Reform could benefit ambitious plans to rehabilitate PNR routes and enhance services. These plans are on hold until the uncertain economic picture becomes more settled. The two principal projects on the table are Northrail from North Luzon Railways Corp, seeking a mixture of government funding, overseas aid and private finance, and the Manila - Calabarzon Express (MCX), an unsolicited, privately-financed BOT scheme. Northrail and MCX are complementary rather than competing, but differences between the two have added to wider uncertainty.

The US$2bn Northrail project envisages a high-speed line along defunct PNR alignments from Manila to Clark, a former US Air Force base 80 km north of the capital. With superb facilities including two full-length runways and room for growth, Clark is the logical site for Manila’s future international airport. Access is a problem, however, particularly in view of worsening traffic congestion around the capital.

The high cost of the Northrail scheme lies mainly with a subsidiary component, a tunnel under Manila to take the line from Caloocan in the northern suburbs to Fort Bonifacio. This is a major redevelopment area to the southeast, aiming to become the new business centre of the capital but presently hampered by poor transport links. The Northrail scheme is being advanced by the Philippine government’s Bases Conversion Development Authority which is responsible for the Clark and Fort Bonifacio sites and the private-sector group developing Fort Bonifacio.

Doubts about the financial viability of the Northrail scheme and particularly its expensive underground portion have only been reinforced by the current economic slowdown in the region, which has also caused the ambitious plans for Fort Bonifacio to be scaled back. Other problems include the presence of squatters on much of the right of way, removal of whom will be a costly and time-consuming exercise under current legislation, and concerns over the incompatibility of Northrail’s proposed 1435mm gauge with the 1067mm gauge PNR network.

The line’s promoters have now submitted a revised proposal which suggests that the government would meet the cost of building the infrastructure, with the promoters responsible only for operating train services. If the government accepts this, it is logical to suppose that the way would then be open for rival promoters to submit their own bids, either to build and operate the link or to provide train service only.

Three contracts for MCX

At first glance the MCX project appears even more ambitious, described as a new line between Manila and Batangas, a fast-growing port some 100 km to the south. While this is the long-term aim of the promoters, their initial proposal is altogether more limited, concentrating on providing effective commuter service on upgraded routes to Calamba and Carmona, both 50 km from PNR’s Tayuman terminus in Manila. Commuter trains currently run once a day.

The Japanese government has already funded restoration of double track as far as Sucat, 25 km from Tayuman, although the absence of signalling and a shortage of rolling stock prevents PNR from making the most of the increased capacity. Locally-funded work is ongoing to clear squatters from the right of way, provide more effective fencing, and widen the alignment at least as far as Alabang (28 km from Manila) to accommodate a third track. The MCX proposal aims to undertake further track improvements and widening, provide full signalling and introduce new rolling stock, so as to offer a frequent commuter service from Manila to the south throughout the day.

The principal promoter of the scheme is once again Ayala Land, which has strong reasons of its own for a better rail network. Manila’s Makati business district was developed and is still largely owned by Ayala, and its continued attractiveness as a business location (especially in the face of new developments such as Fort Bonifacio) will hinge on improved access that only an enhanced rail service can provide. Ayala also has extensive landholdings to the south of Manila, but development is currently hindered by traffic congestion on inadequate roads.

In its submission to the government last summer, Ayala put the value of Phase 1 of MCX in the region of US$600m. A major devaluation of the Philippine peso has since forced a reappraisal of the project, and a new study of the price elasticity of commuter traffic is in progress as part of this.

Further delays might arise if the new administration decides to reconsider the proposal following the presidential elections last month. But as traffic congestion continues to worsen, senior Ayala executives are confident that the revised pricing proposals they intend to put to the government will be approved and that the project will proceed. If so, three separate contracts are likely to be let for permanent way reconstruction; provision of rolling stock and signalling, and train operation.

Stimulating change

The Northrail and MCX proposals have served to stimulate wider interest in the possibilities of rail transport in national development, including proposals to privatise PNR as the best means of achieving this. The new congress is likely to consider soon a bill to create a Rail Network Authority for Manila. The authority’s primary objective would be to tackle chronic underfunding of the existing Light Rail Transit Authority, as well as restructuring its finances to enable both network expansion and operations to be placed on a firmer footing.

Numerous proposals have been aired for reopening long-abandoned PNR lines and for undertaking new construction, for example on the southern island of Mindanao (RG 8.97 p508). The likelihood of these being realised has to be slim, but in the hands of efficient private-sector operators much more could be done to utilise the existing network effectively. This would certainly be the case for freight and long-haul passenger services, for which the existing road network is ill-suited. Moves in this direction could do much to change the viability of a rail network which until recently had almost been written off. o

CAPTION: PNR’s long-distance passenger services are currently limited to two trains a day between Manila and Ligao (above), 445 km from the capital in southern Luzon

CAPTION: Encroachment on the right of way by squatters continues to pose problems for PNR. Here a market garden business is using the space between tracks to grow shrubs

CAPTION: Work on the rehabilitation of PNR’s main line through the centre of Manila (above) is handicapped by a shortage of funds and the encroachment of squatters on to the alignment. Rolling stock has received less investment, with consequent shortages resulting in severe overcrowding of the few commuter trains which operate

CAPTION: Manila LRT Line 1 has been a great success, carrying around 300000 people a day. Further expansion of the network is currently under way (Metro Report 98 p49)

Developers hold the key to recovery

Years of neglect, gross mismanagement and chronic underfunding have taken their toll on the Philippine National Railways network, and the main line north of Manila was abandoned in the early 1990s following the eruption of Mount Pinatubo. The return of political stability and economic recovery has changed the outlook for the future of rail services, and property developers are keen to get rehabilitation and new line projects under way. Michael Reilly reports on initiatives to use private and public funds to kickstart work on both main line and urban rail proposals

Les promoteurs détiennent la clé de la reconquête

Des années de négligence, de grossières erreurs de management et un financement insuffisant chronique ont eu raison du réseau des Philippine National Railways, et la ligne principale au nord de Manille a été abandonnée au début des années 1990, à la suite de l’éruption du Pinatubo. Le retour à la stabilité politique et le redressement économique ont changé les perspectives d’avenir des services ferroviaires, des promoteurs s’acharnent à obtenir leur réhabilitation, des projets de ligne nouvelle sont en cours. Michael Reilly rend compte des initiatives relatives à l’utilisation de fonds privés et publics pour donner le coup d’envoi de travaux, faisant suite à des propositions touchant à la fois les grandes lignes et les réseaux ferrés urbains

Planer halten den Schlüssel zum Aufschwung

Jahrelange Vernachlässigung, Mismanagement und chronischer Geldmangel haben sich verheerend auf das Netz der Philippinischen Staatsbahnen ausgewirkt, und die Hauptlinie n