Orders renegotiation of loans for 3 big-ticket projects

PRESIDENT Ferdinand Marcos Jr. wants more investments in the rail transport sector as he directed the Department of Transportation (DOTr) to go back to the negotiating table to secure the loan agreements for three big-ticket railway projects, the agency said on Saturday.

“The President was referring to the Subic-Clark Railway Project, the Philippine National Railways (PNR) South Long-Haul Project and the Davao-Digos segment of the Mindanao Railway Project (MRP),” DOTr Undersecretary for Railways Cesar Chavez said.

Chavez said the three railway projects were to be funded under China’s official development assistance (ODA) through loan agreements between the governments of the Republic of the Philippines and the People’s Republic of China.

“There was a policy discussion on three China ODA Rail Projects in last Tuesday’s Cabinet Meeting during which the President commented that as a matter of policy, we should encourage more investments in rail and that we should focus more on rail transport,” Chavez said.

Chavez explained the status for each of the three big-ticket railway projects:

Last January, the contract for the P142-billion PNR South Long-Haul Project – also called the PNR Bicol Express – was awarded to the joint venture of China Railway Group Ltd., China Railway No. 3 Engineering Group Co. Ltd. and China Railway Engineering Consulting Group Co. Ltd.

The P83-billion Tagum-Davao-Digos segment of the MRP, on the other hand, failed to proceed after China was unable to submit a shortlist of contractors for its design-build contract.

Meanwhile, the contract for the construction of the P51-billion Subic-Clark Railway Project was awarded to China Harbour Engineering Co. in December 2020.

Chavez had said the loan agreements for the three railway projects are now considered “withdrawn” after the Chinese government failed to act on the funding requests by the Duterte administration.

He said negotiations for the three projects began in 2018 and these were approved by the National Economic and Development Authority to receive ODA loan from China.

From 2021 to 2022, Chavez said, the Department of Finance informed China Eximbank that the submitted loan applications would only be valid until May 31, 2022, and would be automatically withdrawn if not then approved.

Former Finance Secretary Carlos Dominguez III later decided to cancel the loan applications with China in light of the upcoming transition of government and in deference to the incoming administration.

Chavez said other funding options are also being considered for the three railway projects such as the possibility of opening these to the private sector since the government thrust is towards public-private partnerships.

At the beginning of his term, then-President Duterte brought home USD24 billion or about P1.2 trillion worth of pledges in loans and grants from China as part of his “Build, Build, Build” program after his state visit to Beijing in October 2016.

On record, the Philippines has so far received from China about P12.18 billion loan for the Kaliwa Dam project, P5.9 billion grant for the Binondo-Intramuros and Estrella-Pantaleon bridges, P4.37 billion loan for the Chico River Pump Irrigation project and P998 million grant for the Marawi City rehabilitation. OPS