Senator Joel Villanueva expressed concerns over the Department of Transportation's (DOTr) low loan utilization rate and project delays.

Villanueva, senior vice chairperson of the Senate Committee on Finance, questioned the rationale behind taking out foreign loans if the agency was not yet ready or capable of implementing the projects.

He highlighted the significant gap between the loans availed and the actual disbursements, and pointed out that the DOTr had an outstanding loan portfolio totaling $13.78 billion (approximately P813.86 billion) from 26 foreign loans, but the department’s loan utilization rate remains low, at only 33.8 percent. 

Villanueva noted that this inefficiency has led to the accrual of high commitment fees.

“Why are we taking these loans if we are not ready or if we don’t have the capacity to implement these projects?” Villanueva wondered.

He emphasized that the delay in major infrastructure projects, particularly big-ticket railway projects, was not only a waste of resources but also a huge financial burden on the government.

The senator drew attention to the South Commuter Railway Project, which incurred the highest commitment fee in 2023 at $2.41 million (about PHP 142 million).

“This PHP 142 million went to waste, and the public still hasn’t seen any tangible progress on these projects,” Villanueva stated.

Commitment fees are incurred by the government when funds from foreign loans are not drawn down as expected. Villanueva noted that these fees are a significant drain on national resources, which could otherwise be allocated to more immediate and effective programs. He called on the DOTr to outline a concrete catch-up plan to accelerate project implementation and minimize further commitment fees.

“We need to do something as legislators while we deliberate on the National Budget. If we continue with this cycle of delays, we will only be paying commitment fees without any real progress,” Villanueva stressed.

The senator also pointed out that, aside from the payment of commitment fees, interest rates on these loans should be a concern, as interest payments begin as soon as the loans are approved.

In 2023, the DOTr accounted for two of the top five projects with the highest commitment fees, including the South Commuter Railway and the Malolos-Clark Railway Project, both of which involved substantial payments to the Asian Development Bank (ADB). The Department of Finance reports that the total commitment fees capitalized by the National Government from 2002 to August 2024 amount to P6.72 billion, underscoring the long-standing issue of inefficient loan utilization.

He urged the DOTr to take immediate action to address the root causes of the delays, particularly issues related to land acquisition and right-of-way concerns, which have been key factors in the slow pace of development.

“We must be prudent in our use of public funds. The government must prove that it can effectively implement projects before taking on more loans. Otherwise, we will continue to pay for commitment and interest fees without seeing the intended benefits,” Villanueva concluded.