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The Philippine government is bent on proceeding with stalled railway projects
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President Ferdinand Marcos Jr. has directed the Department of Transportation to go back to the negotiating table to secure the loan agreements
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Transportation Undersecretary Cesar Chavez earlier said deal with China considered “cancelled” after negotiations stall on Chinese bank’s insistence on 3% interest for ODA loan
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A Chinese embassy statement said the talks are still ongoing
The Philippine government is bent on pursuing the Calamba-Bicol, Clark-Subic, and Mindanao railway projects after the three projects remained unfunded by China since the signing of their contract in 2020.
President Ferdinand Marcos Jr. has directed the Department of Transportation (DOTr) to go back to the negotiating table to secure the loan agreements for the three big-ticket railway projects, Transportation Undersecretary Cesar Chavez said on July 16.
“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 investment in rail and that we should focus more on rail transport,” Chavez said in a statement.
Chavez said the Philippines’ applications for funding were terminated after former Finance Secretary Carlos Dominguez III noted that China wanted to charge an interest rate of 3% for the Chinese overseas development assistance loans.
Chavez said the government asked China for a lower rate due to the more competitive offer of Japan at a 0.1% interest rate for its ODA loans.
The Subic-Clark Railway Project was awarded to the China Harbour Engineering Co. as early as December 2020 with a price tag of P51 billion, data from the Department of Transportation showed.
The development of the PNR’s Bicol Express service was supposed to be built by three Chinese firms for P142 billion, while the P83 billion extension of the MRP did not proceed “after China was unable to submit a shortlist of contractors for its design-build contract,” the DOTr said.
The P83-billion Mindanao Railway Project was set to begin its Phase 1 construction for the Tagum-Davao-Digos segment in January 2019.
While the National Economic and Development Authority has already approved the three projects, funding was “considered withdrawn after the Chinese government failed to act on the funding requests by the former Duterte administration,” the statement read.
“From 2021 to 2022… the Department of Finance (DOF) informed China Eximbank that the submitted loan applications would only be valid until May 31, 2022, and would be automatically withdrawn if not then approved,” it read.
Dominguez “later decided to cancel the loan applications with China in the light of the upcoming transition of government and in deference to the incoming administration.”
On Sunday, China said it is “negotiating” with the Philippines funding for the projects. The statement did not directly mention the funding withdrawal but China vowed to “tap its own advantage and support the Philippines to improve its infrastructure.”
“Our two sides have been negotiating technical issues and made positive progress to move the projects forward,” the embassy said.
The embassy said “China is open for technical discussions over our G-to-G [government-to-government] projects, and is ready to carry our cooperation forward, in close communication with the Philippine new administration.”
According to the embassy, China has helped the Philippines complete 17 projects while more than 20 projects are in the pipeline.
“Over the past two years, Covid-19 has impacted implementation of some projects, hindering the site availability, causing delays of procurement, affecting goods mobility, and so on. Despite those difficulties and challenges, our two sides have worked tirelessly to push the projects forward and yielded rich outcomes, spanning from anti-pandemic response, disaster relief to infrastructure, agriculture, and other fields,” the embassy said.
Meanwhile, the government has received loans from China for the following projects:
- 18 billion – Kaliwa Dam project
- 9 billion – Binondo-Intramuros and Estrella-Pantaleon bridges
- 37 billion – Chico River Pump Irrigation project
- P998 million grant – Marawi City rehabilitation
Former President Rodrigo Duterte urged the Marcos administration in the last days of his term to keep pursuing railway projects, saying these will provide “better opportunities” to Filipinos.
