DOTr's Bautista: PH no longer seeking China funding for two more railway projects

Apart from the P83-billion first phase of the Mindanao Railway Project, the Philippines is also withdrawing its plan to seek Chinese loan financing for two more railway projects, Transportation Secretary Jaime Bautista said Thursday.

At the sidelines of the German-Philippine Chambers of Commerce and Industry forum in Makati City, Bautista confirmed that the government is also looking for other funding sources for the Philippine National Railways South Long and the Subic-Clark Railway projects.

“‘Yun ang hinahanapan namin ng funding (These are what we’re seeking funding for),” the Transportation chief said.

The two railway projects, along with the Phase 1 or Tagum-Davao-Digos segment of the Mindanao Railway Project, were supposed to be financed through Chinese official development assistance (ODA).

To recall, in July 2022, Transportation Undersecretary for Railways Cesar Chavez said the Chinese government did not act on the Duterte administration’s request for loan financing for the Philippines’ three major railway projects.

In September 2022, however, the Transportation Department said the Philippines will be resubmitting its loan applications for three China-funded projects.

Fast-forward to October this year, Bautista said, “We inherited these projects and since there's not much movement on the financing [so] we requested the Department of Finance to help us look for other funding sources.”

On Wednesday, the Transportation chief confirmed that the Philippines is no longer pursuing Chinese loan financing for the Mindanao Railway Project.

“In fact, the Department of Finance already sent a letter to China informing them that we will not pursue the loan anymore,” Bautista said, referring to the Chinese ODA financing for the Mindanao Railway Project.

In a letter to Chinese Ambassador to the Philippines Huang Xilian dated September 22, Finance Secretary Benjamin Diokno informed Beijing that the Philippine government is “no longer inclined to pursue Chinese ODA financing for the Mindanao Railway Project Phase 1-Tagum-Davao-Digos Segment.”

While the Finance chief did not cite any reason, Bautista had said that negotiations for loan financing were not moving.

Asked if the rising tension between Manila and Beijing was to blame, the Transportation chief said, “Hindi naman (Not necessarily) because that problem has been there even before this tension in the West Philippine Sea.”

Railway projects

The Philippines has existing contracts for the two railway projects with Chinese companies.

In particular, the contract for the construction of the P142-billion Philippine National Railways South Long Haul project or the PNR Bicol from Banlic, Calamba to Daraga, Albay was awarded to joint venture of China Railway Group Ltd., China Railway No. 3 Engineering Group Co. Ltd., and China Railway Engineering Consulting Group Co. Ltd. (CREC JV) in January.

At least 85% of the PNR Bicol’s cost was supposed to be financed through a loan from the Chinese government.

On the other hand, the construction of the P51-billion Subic-Clark Railway project was awarded to China Harbour Engineering Co. in December 2020.

Meanwhile, the Tagum-Davao-Digos segment of the Mindanao Railway Project —a campaign promise of former President Rodrigo Duterte — did not proceed as scheduled as China was not able to submit a shortlist of contractors for the project’s design-and-build contract.

Unlike the process with other bilateral or multilateral partners, ODA-funded projects from China require that procurement must go first before a loan agreement can be signed.

Bautista said the Philippines “can still go to other ODA [partners] such as JICA (Japan International Cooperation Agency), ADB (Asian Development Bank), and World Bank.”

“There are other governments that are helping us, there’s a possibility of them supporting the financing of these projects,” the Transportation chief said.

Tensions between Manila and Beijing have been escalating recently.

Just this week, the Philippines and China accused each other of raising tension in the West Philippine Sea, with Manila saying the China Coast Guard intentionally collided with its boats on a resupply mission to a small contingent of troops stationed at BRP Sierra Madre grounded on Ayungin Shoal (Second Thomas Shoal) two decades ago.

Defense Secretary Gilbero Teodoro said on Wednesday the country will boost multilateral activities including freedom of navigation patrols in the West Philippine Sea, expressing hope that more countries would "join our fight" after an altercation with China this week. — RSJ, GMA Integrated News