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Duterte admin approves enormous cost increases of infra projects


Changes in structural and construction expenses has compelled the Duterte administration to approve enormous increases in the cost of infrastructure projects, the National Economic and Development Authority (NEDA) announced Monday

On July 10, the Investment Coordination Committee-Cabinet Committee (ICC-CabCom) approved to increase the cost of the Mindanao Railway Project Phase 1 to P82.9 billion.

This is P47 billion or 130.91% more than the previous cost estimate of P35.9 billion in 2017.  Phase 1 covers the Tagum-Davao-Digos Segment (MRP-TDD) of the project, a 102.28-kilometer commuter railway from Tagum City in Davao del Norte to Digos City in Davao del Sur.

“For the MRP-TDD, the project cost increase amounting to P82.9 billion—from its previously approved cost of P35.9 billion in 2017—will cover changes in cost of structural and construction works, among others,” NEDA said a prepared statement.

The Department of Transportation (DOTr) originally scheduled the bidding for the MRP-TDD in June 2018, but this was delayed due to adjustments.

Among the adjustments cited by Transportation Secretary Arthur Tugade were a double-tracked railway system with electric trains and a standard gauge.

This compares with the original plan which called for diesel-powered trains running on a single track.

“We see changes in scope and cost as opportunities to optimize the project components and update the estimates. The Government aims to speed up implementation while ensuring quality,” Socioeconomic Planning Secretary Ernesto Pernia was quoted as saying.

The ICC-CabCom also approved the cost of the Metro Manila Priority Bridges Seismic Improvement Project.

The project cost is now pegged at P7.9 billion, an increase of P3.6 billion or 83.7% more than the earlier approved cost of P4.3 billion.

According to NEDA, the adjustment will “cover the changes in construction technology to be applied to the Guadalupe Bridge, putting up of temporary detour bridges in Guadalupe, and additional work shift to reduce the construction period, among others.”

The implementation of the project will also be extended by one year and eight months until August 2023, including the defects liability period of one year.

In the case of the PNR South Long Haul Project, the government is adding a project management consultant that will cost P14.39 billion.

“The ICC-CabCom also noted the inclusion of the Project Management Consultant with a cost of P14.39 billion, inclusive of VAT and contingencies, in the scope of works for the PNR South Long Haul Project.

The project brief showed that the PNR Long Haul South has a total budget of P150 billion to be funded via official development assistance from China.

This includes a 581-kilometer standard-gauge railway connecting Manila to Legazpi, Matnog, and Batangas City.

“The PNR South Long Haul involves the complete reconstruction of the legacy PNR railway into a single-track (initial), at-grade railway,” it said.

“In order to ensure seamless interoperability for the entire Philippine railway network, ETCS signaling standards have been adopted for PNR Long Haul and for all railway projects integrated with the network,” it added.

An economist said the increase in costs could be warranted in light of the changes in the scope of the projects.

“I think the increases are justified given the higher prices and wider scope of activities. Also, it can contribute to better quality upgrades,” Cid Terosa, dean of the School of Economics at the University of Asia and the Pacific, told GMA News Online.

“It will create greater multiplier or ripple effects,” he emphasized.

The economic team plans to spend aggressively on infrastructure until the end of the year to catch up with the slow spending in the first quarter due to the reenacted budget.

Other changes approved by the ICC-CabCom include the following:

  • Extended implementation and loan validity of the Central Luzon Link Expressway (CLLEX) Project, Phase I of the Department of Public Works and Highways
  • Changes in project cost and scope of works and loan validity and implementation extension of the National Irrigation Sector Rehabilitation and Improvement Project (NISRIP) of the National Irrigation Authority
  • Changes in project scope and loan validity extension of the Metro Manila Wastewater Management Project (MWMP) of the Land Bank of the Philippines

The latter changes had been approved by the ICC-CabCom on May 17, 2019, NEDA said. —VDS, GMA News

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