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Manila Bulletin devider Business devider DOF cancels ODA application for P300-B Chinese railway projects

DOF cancels ODA application for P300-B Chinese railway projects

Published Jul 15, 2022 06:05 pm

In deference to the incoming Marcos administration, the Philippine government itself cancelled the Chinese funding application for close to P300-billion big ticket railway projects promised during Duterte's time.

Department of Transportation (DOTr) Undersecretary for Rails Cesar Chavez issued the statement Friday, July 15.

The move was meant to avoid keeping the Chinese party in “suspended animation." A renegotiation, however, is likely.

The cancellation left the Philippine National Railway (PNR's) P142-billion Calamba to Bicol project, the P51-billion Subic to Clark railway and the P83-billion Mindanao Railway from Tagum, Davao-Digos, on the lurch.

However, "The current DOTr leadership immediately wrote and coordinated with the Department of Finance (DOF) to initiate policy discussions on the way forward for the three China Official Development Assistance (ODA) Rail Projects," he clarified.

"Pursuant to the applicable Executive Agreements between the Government of the Philippines (GoP) and the Government of the People's Republic of China (GoPRC), the DOTr has procured and awarded contracts for the Subic-Clark Railway Project's (SCRP) Engineering, Procurement, Construction, and Commissioning (EPCC) Contractor, the PNR South Long Haul (SLH) Project's Design-Build (DB) Contractor, and the Mindanao Railway Project's (MRP) Project Management Consultant (PMC)," according to Chavez' statement.

Following DOTr's award and signing of the contracts and the applicable GoP-GoPRC Executive Agreements, DOTr endorsed the contracts to the the Department of Finance (DOF).

In 2021-2022, the DOF submitted the Loan Applications to China Eximbank for the SCRP EPCC Contract and the PNR SLH DB Contract.

But in May, 2022, the DOF informed China Eximbank that the submitted Loan Applications will only be valid up to the end of that month.

If the Loan Applications are not approved, they shall be automatically withdrawn.

"DOTr understands that this is in light of the upcoming transition of government, and in deference to the incoming administration," Chavez pointed out.

Because the loan applications were not approved on deadline, the DOF advised China Eximbank in June that they "are deemed automatically withdrawn".

"In his text message to me this morning, former Finance Secretary Sonny Dominguez said that he "cancelled the application instead of keeping it in suspended animation", Chavez stated.

Anyway, "Policy discussion on the way forward for the three China ODA Rail Projects has been initiated at the July 12 Cabinet Meeting, during which President Ferdinand Marcos Jr. commented that as a matter of policy, we should encourage more investment in rail, and that we should focus more on rail in transport."

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CHINESE ODA FINANCING FOR RAILWAYS DOTr
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