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Marcos orders DOTr to renegotiate loan agreements for railway projects

President Ferdinand “Bongbong” Marcos Jr. ordered the Department of Transportation (DOTr) to renegotiate the loan agreements for three railway projects even as commented that, as a matter of policy, the government should encourage more investments in rail, an official of the DOTr bared on Saturday.

In a statement, DOTr Undersecretary for Railways Cesar Chavez said the three railway projects were the Subic-Clark Railway Project, Philippine National Railways (PNR) South Long-Haul Project, and Davao-Digos segment of the Mindanao Railway Project (MRP).

Chavez said China’s official development assistance (ODA) were to fund the projects through loan agreements between the Philippines and China.

“There was a policy discussion on three China ODA Rail Projects in last Tuesday’s Cabinet Meeting during which the President commented that as a matter of policy, we should encourage more investments in rail and that we should focus more on rail transport,” Chavez said.

Chavez said the contract for the P142 billion PNR South Long-Haul Project, also called the PNR Bicol Express, was awarded to the joint venture of China Railway Group Ltd., China Railway No. 3 Engineering Group Co. Ltd., and China Railway Engineering Consulting Group Co. Ltd. last January.

Meanwhile, the P83 billion Tagum-Davao-Digos segment of the MRP failed to proceed after “China was unable to submit a shortlist of contractors for its design-build contract,” according to the DOTr official.

The contract for the construction of the P51 billion Subic-Clark Railway Project, on the other hand, was awarded to China Harbour Engineering Co. in December 2020.

Chavez said the loan agreements for the three railway projects were now considered “withdrawn” after the Chinese government failed to act on the funding requests by the Duterte administration.

The DOTr official said negotiations for the three projects began in 2018 and approved by the National Economic and Development Authority (NEDA) to receive official development assistance (ODA) loans from China.

He said the Department of Finance (DOF) informed China Eximbank that the submitted loan applications would only be valid until May 31, 2022, adding that it would be automatically withdrawn if not then approved.

As it turns out, then Finance Secretary Carlos Dominguez III decided to cancel the loan applications with China due to the upcoming government transition and in deference to the new administration.

Chavez added that other funding options were also being considered for the three railway projects, such as “the possibility of opening it for the private sector since the government thrust is towards public-private-partnerships (PPP).” — DVM, GMA News