Overhaul of controversial NorthRail contract sought

The government is seeking a drastic change in the controversial Chinese-funded NorthRail contract to rid the deal of questionable provisions and introduce improvements that will meet the country’s current needs.

The NorthRail deal, approved by the previous administration, was one of the major infrastructure projects that the government had renegotiated due to alleged onerous provisions.

The Department of Transportation and Communications (DoTC) on Monday announced that it had submitted a proposal to change major provisions of the contract.

“Under the proposed new contract, the Philippine government will write the terms of reference to ensure that the contractor has the capability and track record to carry out a railway project,” Transportation Secretary Mar Roxas said.

The proposed new NorthRail project will contain an entirely new train section that will connect the Makati Central Business District to Caloocan, a 12-kilometer distance. The second phase will link Mabalacat in Pampanga to Clark airport, another 15-kilometer distance.

He said improving connectivity inside Metro Manila was a more pressing concern than creating new linkages to the provinces in the north.

He said the proposal was a result of his recent meetings with Chinese Ambassador to the Philippines Liu Jianchao, which followed the meeting between President Aquino and Chinese President Hu Jintao in September this year. The two state leaders have agreed to have the contract renegotiated.

The project, to be funded with a concessional loan from the Chinese Export Import Credit Agency, aimed to build a new train line connecting Metro Manila to the Diosdado Macapagal International Airport (DMIA) and other provinces in Northern Luzon for $1.2 billion.

But construction had been delayed—the deadline to complete the first phase was moved from 2007 to 2013—and its total estimated cost had ballooned to $1.8 billion.

The DoTC likewise earlier noted that the project’s Chinese contractor Sinomach had asked for more money for construction, despite the project’s scale being reduced.

Roxas declined to comment on the new estimated cost for the project, saying that full details would be announced once a new deal is signed.

He said discussions with the Chinese government would be put on hold until after the holidays this December.