As stated in the copy of the agreement, the $211.21- million loan from China carries an interest rate of two percent per annum, payable in 20 years, including a grace period of seven years.
DOF puts info on Kaliwa Dam deal on website
Mary Grace Padin (The Philippine Star) - March 23, 2019 - 12:00am

MANILA, Philippines — Amid calls for transparency, the Department of Finance (DOF) has made public the government’s $211.21-million loan agreement with China for construction of the Kaliwa Dam.

Uploaded in the DOF’s website is a copy of the Preferential Buyer’s Credit Loan Agreement on the Kaliwa Dam project between the Metropolitan Waterworks and Sewerage System (MWSS) as borrower and the Export-Import Bank of China as lender, signed on Nov. 20, 2018.

The DOF said the document was uploaded about four days ago even before groups, represented by human rights lawyer and opposition senatorial candidate Chel Diokno, invoked the Freedom of Information (FOI) Law for the release of contract.

“It was already released publicly before they called for it,” Finance Assistant Secretary Antonio Lambino said. “Also copies were previously provided to the Senate.”

As stated in the copy of the agreement, the $211.21- million loan from China carries an interest rate of two percent per annum, payable in 20 years, including a grace period of seven years.

The loan covers 85 percent of the project’s contract amount, and cannot be used to pay for brokerage fees, agency fees or commission.

It also carries a management fee of 0.3 percent, as well as a commitment fee of 0.3 percent per annum.

Earlier, Finance Secretary Carlos Dominguez said the Duterte administration was able to secure lower interest rates and fees, plus longer grace period under its loan agreements with China as compared to those obtained by the past administration.

The contract, however, provides a clause on the waiver of immunity, a provision that former Bayan Muna party-list representative Neri Colmenares earlier warned about.

“The borrower hereby irrevocably waives any immunity on the grounds of sovereignty or otherwise for itself or its property in connection with any arbitration proceeding... or with the enforcement of any arbitral award... except any other assets of the borrower located within the territory of the Philippines to the extent that the borrower is prohibited by the laws or public policies… from waiving such immunity,” it said

Lambino however said this provision is “standard” in loan agreements and gave assurance that there are no assets involved as collateral in case the country fails to pay the loan.

“It just means the creditor country has recourse if the borrower doesn’t pay. But we have not included any collateral in the loan agreement,” he said.

The copy of the agreement also states that it is “governed by and construed in accordance with the laws of China.”

“Any dispute arising out of or in connection with this agreement shall be resolved through friendly consultation. If no settlement can be reached through such consultation, each party shall have the right to submit such dispute to the Hong Kong International Arbitration Centre for arbitration,” it read.

However, the agreement also ensures that the arbitral award against the Philippines would only be enforced provided the arbitral tribunal had jurisdiction over the subject matter of the action; the borrower had prompt notice of proceedings; the arbitral award was not obtained through collision or fraud, and the award not contrary to laws of the Philippines.

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