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Report

Achieving Cost Savings by Transitioning to a Low Carbon Vehicle Fleet

Charles Cole B. Navarro
Business Acceleration Specialist

I. Background

  1. The Promotion of Low Carbon Urban Transport Systems in the Philippines (LCT) Project of the UNDP, in partnership with the Department of Transportation (DOTr), has three components that create an enabling environment for the commercialization of low carbon urban transport systems1 in the Philippines:
    1. Effective enforcement of policies and support provided for the promotion of low carbon modes of transportation;
    2. Capacitating pilot cities in the adoption and implementation of low carbon transport plans and/or programs; and
    3. Increasing private sector participation and investment in the deployment and commercialization of low carbon transport systems.
  2. The proposed electric vehicle (EV) program with Transport Network Vehicle Services (TNVS) providers is one of the activity targets under Project Component 3. TNVS is the official term used to describe vehicle owners who provide transportation services ride sharing and last mile logistics companies (collectively called “Transport Network Companies” or “TNCs”), according to Memorandum Circulars 2015-017 to 018 of the Land Transportation Franchising & Regulatory Board (LTFRB).
    1. Given intended scope and outputs of the EV Program as defined in the ProDoc and the terms of reference of the Business Acceleration Specialist, the LCT project team determined that it may be more effective and efficient to execute the partnership with TNCs, rather than individual TNVS providers working for them. A TNC refers to a corporation that owns an online platform that enable consumers to connect and hail nearby transport or logistics providers in real time using a mobile phone or web application. Grab Philippines (Grab), Lalamove and Angkas are among the largest TNCs operating in the country. Each TNC subcontracts their public transport and last mile logistics activities to third-party TNVS providers. Therefore, a partnership agreement with a TNC to implement an EV Program will enable the LCT Project to leverage the existing relationships between the TNC and its TNVS providers.
    2. The EV Program detailed in the partnership agreement supports Output Indicator 3.1.1 of the LCT Project, which measures the “number of entities involved in the deployment and commercialization of low carbon transport systems by the end of the project (EOP); and Sub-activity 3.2.3, which aims to “introduce and operationalize at least 15 – 20 new hybrid vehicles or EVs for mass transit.” If successfully implemented, sub-activity 3.2.3 will also contribute to Project Output Indicator 3.2.2, which measures the “cumulative investment in low carbon vehicles by EOP.”
    3. The EV Program must also follow the additional guidelines stated in the terms of reference of the Business Acceleration Specialist, particularly Output 4. Output 4 requires the EV program to “increase consumer awareness [on electric vehicles],” create a “new revenue stream for PUV Operators”, execute a “partnership agreement with a [TNC],” and submit a report that “describes how the EV program will be operationalized and [Output 4] outcomes will be achieved.”
  3. Given the ongoing PUV Modernization Program of the Department of Transportation and the intention of the EV program to enhance the revenue streams of PUV Operators, the LCT Project made it a point to identify and collaborate with TNCs that work directly with mass transportation providers such as jeepney, business or tricycle associations. Unfortunately, none of the TNCs recommended by DOTr focused on transportation segments. The LCT Project broadened the search for potential partners to include any technology company that enhances the Philippine public transport system and its stakeholders. After consultation with various investor networks in the Philippine startup scene, a company called Sakay Mobility Pte. Ltd. (Sakay) was referred to the LCT Project. Sakay is unique in that its mission is to digitize all public transportation routes in the Philippines, including jeepney, bus and tricycle routes, and use big data to match public transport supply and demand in real time.
1 Includes both hybrid and electric vehicles