President Ferdinand Marcos Jr. has directed the Department of Transportation (DOTr) to renegotiate the loan agreements for three big-ticket railway projects as he expressed his desire to secure more investments in the rail transport sector, a Transportation official said.
DOTr Undersecretary for Railways Cesar Chavez said Marcos had ordered them to return to the negotiating table to secure the loan agreements for the following projects:
- Subic-Clark Railway Project
- Philippine National Railways (PNR) South Long-Haul Project or the PNR Bicol Express
- Davao-Digos segment of the Mindanao Railway Project (MRP).
He added that the three railway projects were to be funded under China's official development assistance (ODA) through loan agreements between the two countries' governments.
"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," he said in a statement.
According to Chavez, the contract for the P142-billion 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 in January.
The P83-billion Tagum-Davao-Digos segment of the MRP, on the other hand, did not proceed after China failed to submit a shortlist of contractors for its design-build contract.
Meanwhile, the contract for the construction of the P51-billion Subic-Clark Railway Project was awarded to China Harbour Engineering Co. in December 2020.
Chavez explained that the loan agreements for three railway projects are now considered "withdrawn" after the Chinese government failed to act on the funding requests by the former Duterte administration.
Negotiations for the three projects began in 2018 and have been approved by the National Economic and Development Authority (NEDA) to receive official development assistance (ODA) loan from China.
From 2021 to 2022, Chavez said 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China Eximbank that the submitted loan applications would only be valid until May 31, 2022, and would be automatically withdrawn if not then approved. Former Finance Secretary Carlos Dominguez III later canceled the loan applications with China in light of the upcoming government transition and deference to the incoming administration.
Despite this, the Transportation official said other funding options are 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).
After pursuing a State Visit to Beijing in October 2016, former President Rodrigo Duterte brought home $24 billion or about P1.2 trillion worth of pledges in loans and grants from China as part of his "Build, Build, Build" program.
So far, the Philippines has received from China about P12.18 billion worth of loans for the Kaliwa Dam project, a P5.9-billion grant for the Binondo-Intramuros and Estrella-Pantaleon bridges, a P4.37-billion loan for the Chico River Pump Irrigation Project, and a P998-million grant for the Marawi City rehabilitation.