‘High costs still a barrier to jeepney modernization’

December 29, 2025 | 12:00am

MANILA, Philippines — The cost of fleet modernization remains unaffordable for most jeepney operators and cooperatives as subsidies cover only a small share of vehicle costs, forcing operators to shoulder expenses, according to a report by Green Finance Institute (GFI).

Noting that private banks remain wary of lending to fragmented and high-risk groups, the report said that most operators lack sufficient equity or collateral, while high energy costs limit savings from electrified transport options.

“Although government lenders offer subsidized loans, most operators lack the equity or collateral to access them. Energy costs are high and even electrified options offer limited cost savings without broader grid decarbonization,” it said.

The GFI report estimated that P417.3 billion is required to fully modernize the fleet. The Land Bank of the Philippines and the Development Bank of the Philippines are offering financing at a six percent interest rate over seven years, alongside an equity subsidy of P280,000 per unit.

However, it said that the subsidy accounts for only about 12 to 15 percent of the purchase price, leaving operators to absorb the bulk of the cost. GFI added that imported modern jeepneys are priced at roughly P1.6 million to P2.3 million per unit, further straining affordability

“With private banks viewing potential loans as high-risk as cooperatives, composed largely of individual jeepney owners with volatile incomes, often fail to meet conventional lending criteria,” the report said.

The jeepney sector is still dominated by small owner-operators, with around 80 percent owning just one vehicle, according to the GFI.

Meanwhile, the report indicated that cooperatives struggle with governance and capacity challenges, while banks continue to demand stable revenue projections and consolidated repayment structures.

“Fragmented public transport routes and uncoordinated route planning reduce visibility over projected ridership and revenue, undermining financial models for both fleet electrification and private investment in infrastructure,” the GFI said.

It added that the absence of binding mandates and revenue guarantees, coupled with conflicting signals from national agencies and suspension orders, continues to weaken investor confidence.

“Although government lenders offer subsidized loans, most operators lack the equity or collateral to access them.

Energy costs are high and even electrified options offer limited cost savings without broader grid decarbonization.”