THE Philippines Department of Transportation (DOTr) has rejected the idea of offering three rail projects worth around Pesos 300bn ($US 5.5bn) to the private sector as it has refiled an application with China for funding assistance for the rail sector that was withdrawn last year.

In a statement to The Philippine Star, transport undersecretary, Mr Timothy John Batan, said the Philippines government, through the Department of Finance (DOF), has filed an application for at least Pesos 308bn in Chinese loans to be used for the construction of three lines. Two of the lines will be on the island of Luzon and the other on Mindanao island.

Batan added that although the DoTr had proposed the option of offering the opportunity to invest in rail projects to the private sector, there had been no instruction from Philippines president, Mr Ferdinand Marcos, to take this proposal forward. Instead, the aim is that the three rail projects will be funded with China official development assistance (ODA) financing.

According to the Star, the loan application filed for the Philippine National Railways (PNR) South Long Haul, also called PNR Bicol, project has been raised from Pesos 142bn to Pesos 175bn to help cover the cost of rolling stock. Meanwhile, a loan application of Pesos 83bn has been submitted for the Mindanao Railway Phase 1 project, and Pesos 50bn is being sought for the Subic-Clark railway project. Negotiations are ongoing with China over the terms and conditions of borrowing.

An artist's impression of part of a station complex forming part of the Mindanao Railway project. Photo credit: DOTr

In July 2022 the government of newly-elected president Marcos said it was planning to renegotiate agreements to finance rail projects that had been concluded with China by the previous administration of president, Mr Rodrigo Duterte. The following month Marcos then used his first state of the nation address to announce a new focus on developing the country’s rail system and added that there were currently a dozen rail, metro and light rail projects under way with a combined cost of Pesos 1.9 trillion.

When the previous application for Chinese funding for rail projects was withdrawn last year, former Philippines finance secretary, Mr Carlos Dominguez, said it was because Beijing had failed to act on the requests in time. He also warned the Marcos administration that China was likely to add an interest rate to the loan of 3% - far higher than the rate imposed by alternative financiers, such as the 0.1% offered by Japan. However, China continues to have important involvement in the Philippines rail sector as the PNR South Long Haul line was designed by China Railway Design Corporation (CRDC).

Nevertheless, in February the Philippines government signed agreements with the Japan International Cooperation Agency (Jica) for ODA loans worth up to Yen 377bn ($US 2.8bn) for two Manila commuter rail projects forming sections of the 147km North-South Commuter Railway (NSCR).

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