Marcos orders DOTr to renegotiate loan agreements with China for 3 rail projects
President Ferdinand Marcos Jr. directed the Department of Transportation to go back to the negotiating table with China to secure the loan agreements for three big-ticket railway projects, the Department of Transportation 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),” Transportation 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 Peoples 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Chavez had said the loan agreements for three railway projects are now considered “withdrawn” after the Chinese government failed to act on the funding requests by the former Duterte administration.
He said negotiations for the three projects began in 2018 and have been approved by the National Economic and Development Authority (NEDA) to receive official development assistance (ODA) loan from China.
From 2021 to 2022, Chavez said the Department of Finance (DOF) 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China Eximbank that the submitted loan applications would only be valid until May 31, 2022, and would be automatically withdrawn if not then approved. Finance Secretary Carlos Dominguez III later decided to cancel the loan applications with China in the 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 it for the private sector since the government thrust is towards public-private-partnerships (PPP).
At the beginning of his term, President Rodrigo Duterte brought home $24 billion or about P1.2 trillion worth of pledges in loans and grants from China as part of his “Build, Build, Build” program after chief executive’s state visit to Beijing in October 2016.
On record, the Philippines has so far received from China about P12.18 billion loan for 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. Office of the Press Secretary
