Up to Marcos admin to finance 3 major railway projects in limbo

July 20, 2022 0 Comments

The Philippines has been banking on aggressive infrastructure spending and development as among the key economic recovery drivers. However, the development of three major railways has been stalled after the Chinese government failed to act on the Duterte administration’s request for loan financing. ,Now, the ball is in the hands of the Marcos administration to ensure that the Department of Transportation (DoTr) — now headed by former Philippine Airlines top honcho Secretary Jaime J. Bautista — can sustain the game momentum.,Transportation Undersecretary for Railways Cesar Chavez, on Friday, announced that the Chinese government withdrew funding for the multi-billion railway projects under the massive “Build Build Build” program of the previous administration. ,The financing covers contracts of the first package of the Philippine National Railways (PNR) Bicol Project, the Subic-Clark Railway Project (SCRP), and the first phase of the Mindanao Railway Project (MRP).,The announcement was made on the sidelines of a press briefing in Pasay City, of which an invitation for coverage was sent to only a few selected media outlets despite the topic being a matter of public interest.,Pending next move,In a Viber message to reporters, Chavez clarified that the DoTr already coordinated with the Department of Finance (DoF) to initiate policy discussions on the way forward for the three projects.,“Policy discussion on the way forward for the above three China ODA (Official Development Assistance) Rail Projects has also been initiated at the July 12 Cabinet Meeting, during which PBBM commented that as a matter of policy, we should encourage more investment in rail and that we should focus more on the rail in transport,” he said.,Chavez also added that former DoF Secretary Carlos G. Dominguez III informed him that he “canceled the application instead of keeping it in suspended animation.”,“DoTr understands that this is in light of the upcoming transition of government, and in deference to the incoming administration,” Chavez said.,The P142-billion Calamba to Bicol project is a 380-kilometer railway from Banlic in Calamba, Laguna to Daraga, Albay.,The P50.03-billion Subic-Clark railway is a 71.13-kilometer railway. It is divided into two sections — a 64.19-kilometer main line connecting Subic Bay Freeport Zone and Clark Freeport Zone and a 6.94-kilometer link to the Subic Bay Port’s New Container Terminal.,On the other hand, the P82-billion Mindanao railway project phase 1 stretches from the Tagum Station and depot in Davao del Norte to Digos City in Davao del Sur. It will have stations in Carmen, Panabo, Santa Cruz, and three in Davao City, including a sub-depot.,Agonizing loan process,According to the applicable Executive Agreements between the Government of the Philippines (GOP) and the Government of the People’s Republic of China (PRC), the DOTr has procured and awarded contracts for the Subic-Clark Railway Project (SCRP) Engineering, Procurement, Construction, and Commissioning (EPCC) Contractor, the PNR South Long Haul (SLH) Project’s Design-Build (DB) Contractor, and the Mindanao Railway Project’s (MRP) Project Management Consultant (PMC).,Following DOTr’s award and signing of the above contracts, and also under the applicable GOP-GoPRC Executive Agreements, DOTr endorsed the contracts to the DOF for the DOF to submit and negotiate the corresponding Loan Applications with GoPRC.,In 2021-2022, DoF submitted Loan Applications to China Eximbank for the SCRP EPCC Contract and the PNR SLH DB Contract, among other contracts awarded by other GOP Implementing Agencies.,Just last May, the DoF informed China Eximbank that the submitted Loan Applications will only be valid up to 31 May and that if the Loan Applications are not approved, then Loan Applications shall be automatically withdrawn. ,The Loan Applications for the SCRP EPCC Contract and the PNR SLH DB Contract were not approved as of 31 May. Accordingly, in June, the DOF advised China Eximbank that the Loan Applications for these contracts, among other contracts of other Implementing Agencies, are deemed automatically withdrawn.,It can be recalled that the World Bank (WB), in its 2021 Philippine Economic Update, already warned that “the government faces a significant risk that the transition process could lead to a large gap in service delivery, as a lack of coordination between the national and local government and weak implementation capacity could delay the transition towards increased decentralization.”,“Underspending by local governments may worsen, as many local governments (cannot) absorb a significant increase in revenues,” the WB said.