President Ferdinand Marcos Jr. has ordered the Department of Transportation (DOTr) to renegotiate loan agreements for three major rail projects as he expressed his desire to secure more investment in the rail sector, a transit official said.
DOTr Secretary of State for Railroads Cesar Chavez said Marcos ordered them to return to the negotiating table to secure loan agreements for the following projects:
- Subic-Clark Railroad Project
- Philippine National Railways (PNR) South Long-Haul Project or the PNR Bicol Express
- Davao-Digos segment of the Mindanao Railway Project (MRP).
He added that the three railway projects were to be financed under China’s official development assistance (ODA) through loan agreements between the governments of the two countries.
“At last Tuesday’s cabinet meeting, there was a policy discussion on three Chinese ODA railway projects, at which the president commented that we should fundamentally encourage more investment in rail and focus more on rail transport,” he said in a statement.
According to Chavez, the order for the PNR Bicol Express, worth PNR 142 billion, was awarded to China Railway Group Ltd. joint venture China Railway No. 3 Engineering Group Co.Ltd. and China Railway Engineering Consulting Group Co.Ltd. forgive .
The P83 billion Tagum-Davao-Digos segment of the MRP, on the other hand, did not go ahead after China failed to submit a shortlist of contractors for its design-build contract.
Meanwhile, the contract to build the P51 billion Subic-Clark railway project was awarded to China Harbor Engineering Co. in December 2020.
Chavez said loan agreements for three railway projects are now considered “withdrawn” after the Chinese government failed to meet the former Duterte government’s requests for funding.
Negotiations for the three projects began in 2018 and were approved by the National Economic and Development Administration (NEDA) to receive an Official Development Assistance (ODA) loan from China.
From 2021 to 2022, Chavez said, the Department of Finance (DOF) informed China Eximbank that the loan applications submitted were only valid until May 31, 2022, and would be automatically withdrawn if not approved then. Former Finance Minister Carlos Dominguez III. later canceled the loan applications with China in view of the impending change of government and out of deference to the new government.
Despite this, the transport official said other funding options for the three railway projects are being considered, such as opening them up to the private sector as the government is biased towards public-private partnerships (PPP).
After a state visit to Beijing in October 2016, former President Rodrigo Duterte brought pledges in loans and grants worth US$24 billion, or about 1.2 trillion pesos, from China as part of his “Build, Build, Build” program home.
So far, the Philippines has received from China loans worth about 12.18 billion pesos for the Kaliwa Dam project, a 5.9 billion pesos grant for the Binondo-Intramuros and Estrella-Pantaleon bridges, and a loan of 4, Chico River Pump Irrigation Project will receive 37 billion pesos for the Kaliwa Dam project and a grant of P998 million for the rehabilitation of Marawi City.
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