NextGen Day

As a result of the Chinese government’s failure to respond to the Duterte administration’s finance demands, the loan agreements for three railway projects are now regarded as “withdrawn,” a Department of Transportation (DOTr) official said on Friday.

Negotiations for the three projects reportedly started in 2018 and have received NEDA approval to obtain official development assistance (ODA) loans from China, according to DOTr Undersecretary for Railways Cesar Chavez.

He claimed that the DOTr had previously sought out and awarded contracts for the engineering, procurement, construction, and commissioning of the Subic-Clark Railway Project, the design-build of the Philippine National Railways (PNR) South Long-Haul Project, and for the project management consultant of the Mindanao Railway Project based on “applicable executive agreements” between the Philippines and China (MRP).

He said that between 2021 and 2022, China Eximbank was advised by the Department of Finance (DOF) that the submitted loan applications would only be valid until May 31, 2022, and would be automatically withdrawn if then granted.

Former Finance Secretary Sonny Dominguez texted Chavez this morning, saying that he “canceled the application rather than maintaining it in suspended animation. “DOTr realizes that this is in consideration of the next administration and in light of the imminent transition of government.”

The current DOTr administration, according to him, “immediately” wrote and coordinated with the DOF to start “policy discussions” on the future of the three China-backed rail projects once the loan applications were withdrawn.

At the July 12 Cabinet Meeting, “President Ferdinand ‘Bongbong’ Marcos Jr. commented that as a matter of policy, we should encourage more investment in rail and that we should focus more on rail transport,” he said. “Policy discussion on the way forward for the above three China ODA Rail Projects has also been initiated at that meeting.

The joint venture of China Railway Group Ltd., China Railway No. 3 Engineering Group Co. Ltd., and China Railway Engineering Consulting Group Co. Ltd. was given the contract for the PHP142 billion PNR South Long-Haul Project, better known as the PNR Bicol Express, in January.

The PHP83 billion Tagum-Davao-Digos leg of the MRP, on the other hand, was unable to move forward since China was unable to provide a shortlist of contractors for its design-build contract.

China Harbour Engineering Co. was given the contract to build the PHP51 billion Subic-Clark Railway Project in December 2020.

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