Gov't seeks World Bank loan cut for delayed Cebu BRT
The Philippine government is moving to downsize the long-delayed Cebu Bus Rapid Transit (BRT) project, requesting the World Bank to cancel a significant portion of its original loan after years of implementation hurdles and “unsatisfactory” performance ratings.
In a restructuring paper dated March 13, the World Bank disclosed that the Department of Finance (DOF) has officially sought the cancellation of $59.9 million from the project’s $116-million International Bank for Reconstruction and Development (IBRD) loan. IBRD is the World Bank Group’s (WBG) lending arm for developing countries like the Philippines.
The move comes as the flagship transport project—originally approved in 2014—continues to struggle with what the Washington-based multilateral lender describes as persistent delays in procurement and civil works.
Cebu BRT, once envisioned as a transformative solution to the Queen City of the South’s traffic woes, has faced a string of setbacks that have pushed its full completion date further into the horizon.
According to the World Bank, the project’s implementation progress and achievement of project development objective (PDO) have both been downgraded to “unsatisfactory.”
The lender noted that the Philippine government’s request for partial cancellation is a strategic move to reduce commitment fees on undisbursed funds that are no longer expected to be utilized within the current project timeline.
The loan portion being scrapped was originally allocated for various goods, works, and consultancy services under the project’s later phases, including the area traffic control (ATC) system and certain civil works packages that have seen little to no movement.
Aside from the loan reduction, the restructuring also includes a formal extension of the project’s closing date. Initially set to close in mid-2021 and subsequently moved several times, the restructuring paper confirms the project’s lifespan has been extended to Sept. 30, 2026, or just six months from now.
Projected full disbursement of the remaining loan amount is now expected until Jan. 31, 2027.
The Department of Transportation (DOTr), the project’s implementing agency, has struggled with right-of-way (ROW) acquisitions and the redesign of specific segments, which were flagged for heritage and technical concerns, the World Bank said.
The decision to cancel part of the loan mirrors recent government actions on other troubled infrastructure projects. Last month, the government similarly moved to cancel portions of World Bank and Asian Infrastructure Investment Bank (AIIB) loans for the Metro Manila Flood Management Project due to slow execution.
Despite the downsizing, the World Bank stated it remains committed to supporting the DOTr in completing the revised scope of the project, emphasizing that the focus will now shift to ensuring the operationalization of the first phase to demonstrate the system’s viability to the Cebuano public.
The Cebu BRT project is co-financed by Agence Française de Développement (AFD) and CTF, alongside IBRD.