New jeepneys to replace old ones to cost less than R1 M per unit – Lopez

The planned modern jeepneys to be assembled under the government's Public Utility Vehicle (PUV) Modernization Program should cost less than R1 million per unit, according to Trade and Industry Secretary Ramon M. Lopez.

“It has to be below R1 million because R1 million is already expensive for a public utility vehicle,” said Lopez. The current jeepney already costs R1 million depending on the features of this unit.

The Department of Finance has estimated that modernization project of the 220,000 jeepneys over a five-year period will reach R400 billion or $7.9 billion.

Two state-owned banks – Development Bank of the Philippines (DBP) and Land Bank of the Philippines – are going to extend financing for this inter-agency public utility vehicle modernization program.

Under the lending program, the DOF said that the government will actually subsidize the equity of the jeepney drivers.

Land Bank may extend a loan of up to 95 percent of the price of the new PUVs and the 5.0 percent equity will come from the government. The loan will carry an interest rate of 6 percent per annum payable in seven years.

The DBP, meanwhile, is looking at a financing mix of 90 percent loan and 10 percent equity with an interest rate of around 6 to 8 percent annually, but payable in seven ears.

The DOF said that the financing of the PUV modernization through DBP and Land Bank will be taken from the additional revenues to be generated from the proposed Tax Reform Program.

On the part of the Board of Investments, it plans to extend assistance tapping the unutilized third slot of the CARS Program, which has $200 million in remaining allocation.

The tax incentives may be extended to assemblers and investments on major parts manufacturing ventures.

The new jeepney will have a seating capacity of 21 to 25 and with a side entrance. More important, it must be a Euro4 emission standards compliant.

Lopez said the assembly of the new PUVs will also be strictly reserved to Filipino motor vehicle assemblers only while the major manufacturing facilities like the painting facility are the kinds of operation that may be granted tax incentives.

So far, there are three local body builders that are likely to qualify as PUV assemblers.

Since it is an inter-agency program, the BOI will be in charge of accrediting the local participants which requirements may include track record, access to technology from supplier for major parts such as power train, body, peripherals and global positioning system.

Lopez said the project may have a three-year roll-out period.

There are an estimated 220,000 jeepneys across the country plying the streets for more than 15 years already.

But these iconic jeepneys are already old and dilapidated and are causing air pollution having been installed with second-hand diesel engines.