A substantial portion of the loans extended to jeepney
operators under the government’s Public Transport Modernization Program (PTMP)
has fallen into arrears, raising concerns over the financial sustainability of
the modernization drive.
The Development Bank of the Philippines (DBP) reported that
approximately P4.1 billion in loans obtained by public utility vehicle (PUV)
cooperatives remain unpaid beyond their deadlines. The amount represents about
55 percent of the P7.5 billion that the state-run bank has released to
operators who acquired modern jeepney units.
DBP said its financing covered at least 3,249 modern units
deployed for public transport. Of these, as many as 2,753 units are linked to
past-due loans.
The figures highlight a central difficulty confronting the
modernization program: replacing aging jeepneys requires not only new vehicles
but also a financing structure that operators can sustain over years of monthly
payments.
The Land Bank of the Philippines has reported a similar
problem. It disclosed around P2 billion in past-due loans involving 51 PUV
cooperative borrowers, further indicating the repayment pressure faced by
transport groups that took on financing for modernization.
Government Moves to Prevent Foreclosures
To ease the immediate financial burden, the Department of
Transportation (DOTr) recently issued a notice of cash allocation amounting to
P1.5 billion for the payment of outstanding amortizations by PUV cooperatives.
The agency is also moving toward equity subsidies under the
PTMP. Instead of relying solely on loans, the approach is intended to provide
operators with additional government support and reduce the risk of modern
jeepneys being repossessed because of unpaid obligations.
That intervention, however, could face a major funding
constraint in 2027.
The DOTr had initially proposed P2.17 billion for the PTMP
in next year’s budget, largely to support subsidies and related modernization
measures. The Department of Budget and Management approved only P177 million,
leaving a significant gap between the agency’s proposed requirement and the
amount included in the proposed allocation.
For operators already struggling with loan payments, the
reduced funding could limit the government’s ability to provide financial
assistance and prevent further foreclosures.
High Cost Remains a Major Barrier
The financial pressure stems partly from the substantial
cost of acquiring a modern public utility vehicle. A single modern jeepney can
cost as much as P3 million, placing the investment well beyond the capacity of
many individual drivers and small transport groups without access to financing
or government assistance.
The government consequently partnered with state-run banks
to make loans available to operators transitioning from traditional jeepneys to
newer units.
The PTMP, previously known as the PUV Modernization Program,
was introduced to replace older public utility vehicles with units designed to
meet updated safety and environmental standards. But the scale of the required
investment has made the transition particularly challenging for transport
operators whose earnings must also cover daily operating expenses, maintenance
and loan amortization.
The current loan figures illustrate the problem.
Modernization may provide a new vehicle, but for operators, that vehicle also
becomes a long-term financial obligation. When revenues are insufficient to
cover the resulting costs, government-backed financing can eventually turn into
a repayment problem.
The budget outlook adds another layer of uncertainty.
Several DOTr priority projects are entering the 2027 budget cycle with sharply
reduced funding or no allocation at all. The EDSA Busway, for instance, was
left without funds in the proposed budget.
The funding constraints could therefore become a critical issue for the government as it attempts to sustain the PTMP while addressing the growing volume of overdue loans among transport cooperatives.
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