Northrail delays cost taxpayers P2.21B as of 2010 – COA

The delay in the implementation of the China-funded Northrail Project has cost taxpayers P2.21 billion in interest and penalties as of last year, according to the Commission on Audit’s yearend report on the North Luzon Railways Corp. (NLRC). “…Foreign borrowings used in the implementation of the Northrail Project amounted to US$242.53 million equivalent to P10.64 billion as of December 31, 2010, while the interest and commitment fees that were accruing thereon and advanced by the National Government had reached P1.94 billion. Besides, the interest accruing on these advances amounted to P274.30 million, or a total interest and financing charges equivalent to P2.21 billion,” state auditors said in their report. Work on Phase 1 of the project has been suspended since March last year while the Department of Transportation and Communication is reviewing the contract between NLRC and China National Machinery Industry Corporation (SINOMACH). The 80-kilometer project, shelved over corruption claims, would allow the country's main aviation gateway to be moved out of congested central Manila. President Benigno Aquino, who took over last year, decided to revive it after getting senior Chinese leaders to agree to reconfigure the funding terms as well as the design during his state visit to China last September. The Aquino administration required the re-evaluation following amendment to the original cost of the contract from $421.05 million to $593.88 for the Phase 1, Section 1, which covers the stretch of Caloocan City to Malolos City in the province of Bulacan.   “And yet, auditors noted that payments on the loan have been made in 2010 and early 2011 based on the higher contract cost which is still undergoing review,” the COA noted in its report.   “The funding source of the amended contract cost amounting to US$172.83 million is uncertain, but payments based on the amended contract cost were made in 2010 and 2011 for the 9th to the 16th progress billings,” it added.   Records showed eight payments made between May 20, 2010 to January 24, 2011 amounted to $55.68 million. At the same time, the government audit agency raised concern over the indefinite postponement of the project although Northrail and Sinomach had only agreed to a two-month suspension.   Likewise, the project re-evaluation report conducted by the DOTC that was supposed to be released last February was not available. - KBK, GMA News