China’s loan request for three ‘deemed cancelled’ railway projects; PPP, funding from other countries in sight

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The Balagtas Station of the Philippine National Railway Clark Phase 1 project is currently under construction. Photo taken on June 14. — PHILIPPINE STAR/ MICHAEL VARCAS

By Arjay L. Balinbin, Senior Reporter

Beijing’s funding commitment for the Calamba-Bicol, Clark-Subic and Mindanao rail projects is “deemed cancelled” because China has not responded to the Philippine government’s loan request since 2019, a government official said on Friday. transport.

“There was no explicit communication” from China that it was withdrawing its commitment to lend money for the three projects, said the undersecretary of transport for rails, Cesar B. Chávez. Business world in a telephone interview.

“But it is deemed canceled because Beijing has not responded despite repeated meetings and communication letters asking them to provide us with a shortlist of contractors so that we can start sourcing the contractor,” a- he declared.

After the selection of the contractor, the transport department may enter into a contract with the successful bidder, and then proceed to the signing of the loan agreement.

Wala silang binigay (They didn’t give us any shortlist),” Chavez said.

He said the government, through the Department of Finance (DoF), had written a letter to China stating that if it did not provide the shortlist or confirmation that Beijing would lend money to the Philippines, the loan application would be “considered withdrawn”.

The Philippine government has been waiting for a response from Beijing since 2019, he noted.

“The DoF, according to former secretary Carlos G. Dominguez III who phoned me this morning, canceled the loan request because the Chinese government is not responding.”

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The Marcos administration is considering three financing alternatives for the three projects.

Chavez said the government “could go back to the negotiating table and also look at the mode of public-private partnership”.

“The DoTr (Department of Transportation) has already written and started coordinating with the DoF to initiate policy discussions on the way forward for China’s three ODA (Official Development Assistance) railway projects, taking into account China’s willingness to lend and the Philippines’ government’s ability to borrow, for example the current fiscal situation affected by COVID-19 and headwinds in the global economy,” he explained.

He noted that the government is also open to negotiation with countries other than China.

“The policy discussion on the way forward for the three projects was…initiated at the July 12 Cabinet meeting, at which (Chairman Ferdinand R. Marcos, Jr.) stated that as a matter policy, foreign sector and private sector support will be continued to develop the railways,” Chavez said.

“There is no specific (country or mode), but the president’s statement is very clear that as a policy we should have more investment in the rail sector.”

The 142 billion peso Calamba to Bicol project is a 380 kilometer railway linking Banlic to Calamba, Laguna, to Daraga, Albay, while the 50.03 billion peso Subic-Clark railway is a 71.13 kilometer railway divided into two sections: a 64.19 kilometer main line linking the Subic Bay freeport area and the Clark freeport area and a 6.94 kilometer link to the new container terminal at the Port of Subic Bay.

Phase 1 of the 82 billion peso Mindanao Railway Project runs from Tagum Station and Depot in Davao del Norte to Digos City in Davao del Sur. It will have stations in Carmen, Panabo, Santa Cruz and three in Davao City, including a sub-depot.

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