So you saved the PNR, now what do you do with it?

Ben D. Kritz

With little debate, the Senate on Monday voted to extend the charter of the Philippine National Railways (PNR) for another 50 years, a move without which the corporate life of the problematic rail service would have expired next month. In passing Senate Bill 1831, the Senate plenary overrode the recommendation of the committee headed by Sen. Cynthia Villar, which called for the charter to be extended for another 25 years with an option for an additional 25-year extension.

The decision was probably smart, if for no other reason than there was not any sort of “post-expiration” plan ever developed for the PNR.

If its corporate charter had been allowed to lapse, salvaging some value out of what remains of a rail system that once stretched over 1,000 kilometers of tracks from La Union to Bicol would be difficult and time-consuming at best. And with the metropolis in particular and the country generally in the midst of a transportation crisis, eliminating any sort of transport infrastructure is neither practical nor politically wise.

That is not to suggest, however, that keeping the PNR on life support is actually a good idea. The PNR is a complete mess, a Monty Python-esque caricature of a government-operated public transit system—or a government-operated anything, frankly. Although efforts are being made to revive the railroad’s commuter service in the Bicol region and the long-distance route from Manila to Legazpi, the only operations the PNR is able to carry out with anything resembling consistency are along the relatively short commuter line between Manila and Santa Rosa, Laguna, which is served by a motley collection of ancient rolling stock and hand-me-down railcars acquired from Japan and Korea. These first have to be fitted with protective steel grates over the windows because the line runs through areas that are apparently populated entirely by Sand People.

A cursory look at the 2012 Audit Report provides some insight into what an administrative and financial train wreck (sorry, I could not resist) the PNR really is. Among the more interesting items is the discovery that improper accounting led to income gains from the sale of properties in the past three years to be overstated by about P280 million; that the year-end valuation of P17.11 billion (roughly 32 percent of PNR’s total assets) for property, plants, and equipment in 2012 was not actually based on an inventory or reliable records; about 83 percent of the 2012 year-end accounts payable balance of P137.43 million had no records of when and for what the expenses were incurred; some P47 million in railroad ties that were, according to contract specifications, supposed to be made of durable hardwood were subject to a bait-and-switch by the Chinese supplier, who instead provided soft larch wood ties that were completely unsuitable for use; and a record of P242.1 million for wages paid to regular and contractual employees that was submitted for audit without necessary documentation such as time records, payroll registers, or records of remittances to employees’ bank accounts.

And in what surely had to be a bit of unwelcome news to the Japanese, Korean, and European creditors holding some P3.13 billion in outstanding loans to the PNR, General Manager Alan Dilay made the disclosure in a House Committee on Transportation hearing this week that the system is losing an estimated P250,000 per day in unpaid fares, thanks to the lack of a reliable ticketing system.

Despite its problems, however, the PNR does actually provide a faint glimpse of potential: Passenger numbers have been increasing and are now estimated to be about 100,000 per day, although thanks to the primitive ticketing procedure, the figure does have a significant degree of uncertainty. The current management of the PNR for its part has ambitious plans; in the Transport Committee hearings, Department of Transport and Communications (DOTC) Assistant Secretary Jaime Raphael Feliciano described a P270-billion project to extend the current commuter service from Malolos, Bulacan to Calamba, Laguna, a rather optimistic vision that tends to belie the charge made by some that the DOTC and its “secret” head Mar Roxas II are intent on dismantling the PNR.

Even so, the latest idea for upgrading the PNR from a third-world embarrassment to a respectable component of the transport infrastructure is nothing more than that—an idea—one that is not too different from any of the dozens of others that have been raised during decades of waste and neglect. But having committed to extending the life of the PNR, the government has committed to doing something productive with it – assuming, of course, that President BS Aquino 3rd doesn’t reach into his oft-used bag of “Dumb Reasons to do Even Dumber

Things” and find one to justify vetoing SB 1831. Franchising the operation and maintenance of the line to a private operator—the suggestion made by DOTC’s Feliciano—would free the government to make capital investments in the PNR’s equipment, facilities, and right-of-ways, provided of course those expenditures are actually made, and provided government planners attend a few classes on “how to design a public-private partnership that actually benefits the public”.

If the PNR did not exist at all, there might be good reasons not to build it.

While trains are enormously more efficient and environmentally friendly than other commuter transport systems, a surface-level railroad through a densely populated and flood-prone city is probably not an ideal application. But it already exists and in a sense, it is “too big to fail”—even operating at far less than its full potential, it moves a number of people who, if they were suddenly dumped onto the rest of the metropolis’ overstretched transportation systems, would very likely push those systems beyond the breaking point.

benkritz@outlook.com