PNR remits $14.7M to South Korean consortium

BY MARICEL E. ESTAVILLO, BusinessWorld Senior Reporter State-owned Philippine National Railways (PNR) has remitted $14.7 million in advance payment, representing 30% of the total cost of $49.096 million, to the South Korean consortium tapped to build the 34-kilometer Caloocan-to-Alabang rail line. "We made the advance payment last Friday. We expect light works such as clearing to start next week," PNR assistant general manager Rafael S. Mosura said in a phone interview Wednesday. PNR had already given the consortium of Daewoo Company, Hanjin Heavy Industries and Construction Co. Ltd. and Rotem Corp. a notice to proceed with the construction of the Caloocan-Alabang rail line last June 18. The rail line, also called the North-rail-Southrail linkage project, is the first phase of PNR’s Luzon line rehabilitation. PNR is also set to start this year the rehabilitation of the line from Calamba, Laguna to Lucena in Quezon, called Phase 1a; and rehabilitation of 27 kms of track from Alabang to Calamba, called Phase 2. The planned Northrail project, which will run for 32 kms from Caloocan to Malolos in Bulacan, will connect from the Caloocan-Alabang rail line. The consortium of the three South Korean companies was tapped by PNR for the project via a negotiated deal. PNR had decided to enter into a negotiated contract with the South Korean consortium after attempts for a public auction failed twice. PNR scheduled a public bidding last January, but only one firm — a Chinese-Filipino venture — submitted an offer. The auction was declared a failure since only South Korean firms and local partners were allowed to bid in the project that is funded by a tied loan. Funding will come from a $50.42-million loan of the national government from the Korean Export and Import Bank, with the remainder of the loan to be used to pay another South Korean firm, Yooshin Engineering Corp., for consultancy services. PNR staged a second bidding after the first failed bid, in which the consortium of Daewoo, Hanjin and Rotem was the sole bidder. That auction was also declared a failure. The final contract with the South Korean consortium includes the purchase of 18 diesel multiple units (DMUs) or six train sets — less than the original 21 units — since the budget of $49.096 million is not enough for the 21 rolling stock, as included in the 2002 feasibility study. Aside from the purchase of 18 new trains, work for phase one of the railway rehabilitation includes strengthening of tracks, reconstruction of bridges, improvement of stations and flagstops, installation of signaling and communications facilities, as well as for rehabilitation of maintenance depots. The rail line is expected to service up to 187,000 people a day and cut travel time from Caloocan to Alabang by half. Travel time, by bus or car, from Caloocan to Alabang now takes more than an hour on the average. PNR wants to rehabilitate a total of 1,060 kms of track in Luzon. After the rehabilitation, PNR plans to entice the private sector to invest in the operation and maintenance of the railway. To date, the only commercial operation left for PNR is the line from Tayuman, Manila to Biñan, Laguna.