Government wants China to fund P300 billion railways

MANILA, Philippines — The Department of Transportation (DOTr) has closed its doors to offering three rail projects worth around P300 billion to the private sector, keeping its hope that China will lend the amount required to deliver the railways.

Transportation Undersecretary Timothy John Batan told The STAR that the government, through the Department of Finance (DOF), has refiled its application for at least P308 billion in Chinese loans.

The government will deploy the amount for the construction of three rail lines, two of which will be put up in Luzon, and the other one will be built in Mindanao.

As a result, Batan said the government has turned down the option of offering the rail proposals to the private sector. He added that there was no instruction from President Marcos to bid the rail projects to potential investors, although this was raised as an option by the DOTr.

“The three railway projects are for China ODA [official development assistance] financing. The discussions are ongoing with China and the loan applications have been resubmitted by the DOF, all three of them,” Batan said.

“Further, there’s no direction on that (offering the railway projects to the private sector) as of this time,” he added.

Documents obtained by The STAR showed the loan application filed for the Philippine National Railways (PNR) South Long Haul, also called PNR Bicol, was raised to P175 billion from P142 billion prior.

A transport official privy to the loan negotiations said the government had to increase the amount of the loan request to cover for the procurement of the rolling stock for PNR Bicol.

Apart from this, the government has submitted its loan application for the P83-billion Mindanao Railway Phase 1 and P50-billion Subic-Clark Railway Project. Batan said the DOF is negotiating with China on the terms and conditions of the borrowing.

Last year, the Philippines withdrew its financing request from China to finance three rail projects. Former finance secretary Carlos Dominguez said the government took back the loan applications because Beijing failed to act on them on time.

Also, Dominguez warned the Marcos administration that China would slap an interest rate of three percent, surpassing the level charged by alternative financiers like Japan’s 0.1 percent.

The government had considered offering the big-ticket projects to the private sector, but found it difficult to remove China from the picture, particularly for PNR South Long Haul, which was designed by China Railway Design Corp.