NextGen Day

In order to obtain the loan agreements for three expensive railway projects, President Ferdinand Marcos Jr. ordered the Department of Transportation (DOTr) to return to the bargaining table, the agency stated on Saturday. He wants additional investments in the rail transportation industry.

According to DOTr Undersecretary for Railways Cesar Chavez, “The President was alluding 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).

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

The President remarked that as a matter of policy, we should encourage more investments in rail and focus more on rail transit during a policy discussion on three China ODA Rail Projects in last Tuesday’s Cabinet Meeting, Chavez added.

Chavez provided an update on each of the three high-profile railroad projects:

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.

On the other hand, the PHP83 billion Tagum-Davao-Digos portion of the MRP was abandoned since China could not provide a shortlist of bidders for its design-build contract.

In the meantime, China Harbour Engineering Co. was given the contract for building the PHP51 billion Subic-Clark Railway Project in December 2020.

After the Chinese government ignored the financial requests made by the previous Duterte administration, Chavez claimed that the credit arrangements for three railway projects are now regarded as “withdrawn.”

He said that talks for the three projects had started in 2018 and that the National Economic and Development Authority (NEDA) had approved for them to receive an ODA loan from China.

Chavez said that between 2021 and 2022, the Department of Finance (DOF) advised China Eximbank that the filed loan applications would only be valid until May 31, 2022, and that if those applications were not approved by that date, they would be automatically removed.

Later, in consideration of the impending transition of power and out of respect for the next administration, former Finance Secretary Carlos Dominguez III made the decision to renounce the loan requests with China.

Chavez stated that the three railway projects are also being funded through other means, such as the prospect of opening it up to the private sector, given the government’s preference for public-private partnerships (PPP).

After the chief executive’s state visit to Beijing in October 2016, then-President Duterte brought back loans and grants from China for USD24 billion, or around PHP1.2 trillion, as part of his “Build, Build Build” campaign.

According to records, China has given the Philippines loans totaling PHP12.18 billion for the Kaliwa Dam project, grants totaling PHP5.9 billion for the Estrella-Pantaleon and Binondo-Intramuros bridges, loans totaling PHP4.37 billion for the Chico River Pump Irrigation Project, and grants totaling PHP998 million for the Marawi City rehabilitation.

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