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Poe: Chinese loans renegotiation should address interest rates, payment terms issues

After three major railway projects were stalled amid Chinese funding issues, a lawmaker said over the weekend that the renegotiation of the loans should address interest rates and payment terms.

According to Senate Committee on Public Services Chairperson Senator Grace Poe, the renegotiation of deals with China could ensure that deals were beneficial to the country.

“The President’s directive presents an auspicious opportunity to go back to the drawing board and craft deals that are fair and will produce tangible benefits to the Filipino people,” Poe said in an emailed statement.

“Renegotiation should iron out issues that saddled the previous agreements, including interest rates and payment terms.”

This comes as President Ferdinand “Bongbong” Marcos Jr. last week ordered the Department of Transportation (DOTr) to renegotiate the loan agreements for three railway projects.

The projects include the Subic-Clark Railway Project, Philippine National Railways (PNR) South Long-Haul Project, and the Davao-Digos segment of the Mindanao Railway Project (MRP) which were contracted out to Chinese firms.

Transportation Undersecretary for Railways Cesar Chavez said the three railway projects were considered “withdrawn” after the Chinese government failed to act on the funding requests by the administration of former President Rodrigo Duterte.

Chavez explained that negotiations for the projects started in 2018, with the loan applications valid until May 31, 2022 but these would automatically be withdrawn if not approved by then.

Then Finance Secretary Carlos Dominguez III, however, decided to cancel the loan applications with China because of the transition of the government, and in deference to the new administration.

The contract for the P142-billion PNR South Long-Haul Project 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. in January.

The contract for the P51-billion Subic-Clark Railway Project was also awarded to the China Harbour Engineering Co. in December 2020.

The Department of Transportation (DOTr) earlier said that the P83-billion Tagum-Davao-Digos segment of the MRP failed to proceed after China was “unable” to submit a shortlist of contractors. — DVM, GMA News