Palace: Colmenares just seeking publicity in criticizing Chico River irrigation deal

Presidential spokesperson Salvador Panelo on Saturday said senatorial candidate Neri Colmenares is "just desperately seeking media mileage" when he criticized the Chico River irrigation deal with China.

"Mr. Colmenares is just desperately seeking media mileage by unduly compartmentalizing the loan agreements of the country without the benefit of context and by maliciously labeling it as a China issue," Panelo said in a statement.

"We find it pitiful that candidate Neri Colmenares is politicizing our bilateral relations with China in aid of his senatorial bid by uttering financial nonsense at the altar of politics," he added.

The Chico River Pump Irrigation facility of the National Irrigation Administration will be financed partly by a loan from China. 

The deal was among those signed in November 2017 during the visit to Manila of Chinese Premier Li Keqiang.

Colmenares said on Wednesday that the "onerous" loan agreement between the Philippines and China would "highly favor" the latter.

"This P3.6 billion loan may just be one of the many secret loan agreements between China Philippines and China which could run in the billions," he said.

Colmenares said the contract sets an annual interest rate of two percent for the US $62.086 million loan (P3.2 billion at current exchange rates but amounts to P3.6 billion as what is stated under Section 1.8 of the deal) and an annual commitment fee of .3 percent of the loan and management fee of .3 percent.

"For the information of Mr. Colmenares, the Philippines and China signed a USD 62.09 million (about RMB 430.26 million) last year to help fund the construction of the Chico River Pump Irrigation Project, which will provide a stable supply of water to around 8,700 hectares of agricultural land, benefit 4,350 farmers and their families and serve 21 barangays in the provinces of Kalinga and Cagayan in Northern Luzon once completed," Panelo said.

"On the concessional interest rate, according to the DOF [Department of Finance], if we account for all salient factors and not just the nominal rate (e.g., project cost, denomination of loan, and foreign exchange depreciation risk, among others), the effective interest rates between the recently signed Japanese and Chinese loan agreements are actually quite close to each other," he added.

"With regard to the interest rate, on the other hand, our Chinese loans are fixed and not subject to change over time," Panelo said.

"For each loan agreement, the DOF mentions that an arbitration clause is negotiated. We negotiate to make sure that the arbitration mechanism protects our interests," he said.

"Contrary to what others believe, project debt to China is but a fraction of our project debt to Japan. By 2022, project debt to China is estimated to be at around 4.5% of the total debt, while that of Japan will be at around 9.5%," Panelo added.

The Palace official also said the project had been examined and approved by the Investment Coordinating Committee. It was also approved by the Monetary Board.

"The loan agreement was reviewed, negotiated, and approved by the Interagency Committee composed of the Department of Justice, the Department of Finance (DOF) and the Bangko Sentral ng Pilipinas (BSP)," Panelo said.

Colmenares said China wants a Chinese firm to be the contractor for the project. He  said a Chinese company would only hire Chinese nationals as workers which will lead to further displacement of Filipino workers.

Panelo however said that based on the DOF report on procurement, China gave a list of three contractors of good standing. The implementing agency was also given the opportunity to vet and request for a replacement if needed.

"We hope the political and left-leaning opposition would exercise completed staff work (CSW) before issuing statements. It is clear that the matter has been studied at length by our economic managers, particularly the DOF, unlike Mr. Colmenares who has only shown himself to be ignorant of the intricacies of finance and immature with political pettiness," Panelo said. —KG, GMA News