Senate approves new law on subsidies for public transport

By MTT

This is a machine translation of the original press release issued in Spanish.

Santiago, August 14, 2024. “One of the tasks that President Boric asked me to do when he called me to take charge of the Transport and Telecommunications portfolio was: please, level the playing field between Santiago and the regions. Starting today, reducing that gap more quickly will be possible, and that is the relevance of what just happened in this vote,” said Minister Juan Carlos Muñoz. Indeed, with 32 votes in favor and only 4 abstentions, the Senate approved the bill that creates a new public transport financing framework, which updates the current model for the distribution of subsidies, both for the metropolitan transport system (RED) and for those mobility services in regions.

Among the new features established by the new regulations is the provision of greater resources to the Ministry of Transport and Telecommunications (MTT) to create transport projects in isolated areas, mainly in places where there are no subsidized services, but also in those localities where connectivity needs to be strengthened.

The new law also redefines the minimum investment framework linked to the Regional Support Fund (FAR) - also known as "mirror funds" - which is managed by regional governments. Specifically, it establishes that 50% of the resources must be allocated solely to transport infrastructure, fleet renewal or operating subsidies; while the other 50% of the funding will be used to invest in infrastructure to improve and implement transport services or connectivity in isolated areas, for example: improvement of bus stops. Currently, only about 18% of these funds are spent on transport-related projects.

On the other hand, and in order to strengthen a local seal on investment dedicated to transport or new services, the new framework also incorporates the creation of regional transport committees, which will be directly linked to said governments to determine projects, in accordance with their territorial needs and with a comprehensive perspective of the city.

Along with thanking the parliamentary work to enrich this project, the Minister of Transport and Telecommunications, Juan Carlos Muñoz, said that this approval “is a fundamental step that allows us to have concrete tools that aim to raise the standard of mobility in regions, through mechanisms that give greater efficiency and effectiveness to the resources invested in subsidized services. At the same time, it opens the possibility of generating new regulated areas.”

“Whereas previously only 18% of the funds were allocated to investment in public transport, this new regulation requires that 100% of them be used to improve transport connectivity. These resources are managed by regional governments. They will be the ones who can decide on public transport in their regions, with the purpose of giving greater autonomy and territorial relevance to the projects. However, it is important to highlight that the MTT will provide the technical advice that the regional governments need, with the objective of closing gaps in connectivity and quality, and thus increasing the well-being of the people,” added the head of the portfolio.

The new law will also facilitate the financing of zero-emission buses in all regions of the country, with a main emphasis on electromobility. It will also promote the construction of infrastructure associated with this type of project, for example, the terminals or charging centers necessary to supply these vehicles.

Taking into account the permanent changes in mobility, this regulation incorporates cycles for the first time as a sustainable mode of public transport. This will allow, for example, the inclusion of electric micromobility as a potential form of transport eligible for some type of subsidy.

In addition, this new regulatory framework also provides greater stability to subsidized systems operating in all regions of the country, as it extends the allocation of funds until 2032.

It should be noted that, with the Senate's approval, the project is one step away from being enacted and subsequently published in the Official Gazette, and thus becoming the most significant amendment to the public transport financing law in the last 15 years.