Loan negotiations for stalled railway projects to be finalized by Q1 2023

After Chinese financing for three railway projects was considered “withdrawn,” the restarted loan negotiations for the projects were expected to be finalized by the first quarter of 2023, the Department of Transportation (DOTr) said Monday.

According to Transportation Secretary Jaime Bautista, the DOTr was prepared to start the PNR South Long Haul Project, the Subic-Clark Railway, and the Mindanao Railway after China agreed to restart negotiations.

“We’re expecting that we should be able to finalize the loan maybe by early next year and if that’s done by the DOF (Department of Finance), we can start again working on the project,” he said during the EJAP Infrastructure Forum in Pasay City.

“We have already worked on the technical aspect of the project. It’s a matter of getting the contractor and finalizing the contract with them,” he added.

Sought for more details, Bautista said the loans would be finalized as early as possible or by the first quarter of 2023.

The availability of the loans expired in June after the Chinese government did not act on former President Rodrigo Duterte’s administration's request for loan financing for the projects. The loans were thus considered “withdrawn.”

The contract for the construction of the P142-billion South Long Haul project of the Philippine National Railways (PNR) was initially awarded to a joint venture of China Railway Group Ltd., China Railway No. 3 Engineering Group Co. Ltd., and China Railway Engineering Consulting Group Co. Ltd. (CREC JV).

At least 85% of the project — connecting Banlic in Calamba to Daraga in Albay — was supposed to be financed through a loan from the Chinese government.

The P83-billion Tagum-Davao-Digos segment of the Mindanao Railway Project did not proceed as scheduled, as China was not able to submit a shortlist of contractors for the design-and-build contract. It was a campaign promise of former President Rodrigo Duterte.

Meanwhile, the construction of the P51-billion Subic-Clark Railway Project was awarded to China Harbour Engineering Co. in December 2020, with loan applications submitted by the Finance Department to China Eximbank. The loan applications were not acted upon.

The DOTr said in August it agreed to restart negotiations with the Chinese Embassy in Manila for the projects.

“We have started working with them, so the [Finance Department] initially met with them and they are talking about again renewing the line. But as far as the DOTr is concerned, it’s more of us implementing the project,” Bautista said.

“The loan part is being handled by the DOF but for us, we are preparing for it, we have a team that is working on the possible reimplementation,” he added.

Bautista said feasibility studies have already been conducted and funded by the Chinese government, and the loan agreements just have to be finalized before the projects can proceed. — DVM, GMA News